## Abstract

To communicate effectively with different groups of consumers, firms have long relied on targeting—the segmentation of a market into smaller groups based on a meaningful variable and selection of a particular segment as the target ( Aaker, Brumbaugh, and Grier 2000 ; Blattberg, Buesling, and Sen 1980 ). Commonly used segmentation variables include demographic variables like ethnicity ( Deshpandé and Stayman 1994 ) or gender ( Stafford 1996 ) and psychographic variables such as values, personality, and lifestyle ( Wells 1975 ). Due to widespread Internet use and advances in technology that tracks online behavior, a new form of targeting has emerged.

## THEORETICAL DEVELOPMENT

### How Is Behaviorally Targeted Advertising Unique?

Second, behaviorally targeted ads are distinct from other forms of advertising because they are based on consumers’ past individual-level behavior. By placing data onto consumers’ hard drives (i.e., cookies), firms are able to collect information about consumers’ viewing and clicking patterns, Web searches, purchase histories, and social media use, from both their personal computers and mobile devices ( Yan et al. 2009 ). Advertising networks then create a user profile from this data and deliver ads for products that their software predicts will be appealing to the individual consumer. In contrast, other marketing communications draw on broad classifications of people using demographic variables like ethnicity ( Deshpandé and Stayman 1994 ), psychographic traits such as values, personality, and lifestyle ( Wells 1975 ), or social identities (e.g., athletes; Forehand and Deshpandé 2001 ), under the assumption that members of these groups share certain characteristics, preferences, and behaviors. We next discuss how these unique characteristics of behaviorally targeted ads cause them to function as implied social labels.

### Social Labels, Self-Perceptions, Identity, and Behavior

Social labels have generally been defined as explicit characterizations of individuals based on their behavior, beliefs, or personality ( Goffman 1963 ). Past research has demonstrated that people behave consistently with a variety of explicit social labels ( Kraut 1973 ; Miller, Brickman, and Bolen 1975 ; Tybout and Yalch 1980 ). For example, Kraut (1973) found that people who were explicitly labeled “charitable” after donating to a charity were more likely to contribute to a second charity than people who had also donated but were not labeled. These findings are consistent with self-perception theory ( Bem 1972 ), which proposes that people perceive themselves to have certain qualities as a result of observing their own behavior and act according to the traits they believe they possess. Explicit social labels reinforce this tendency to learn about the self and evaluate the implications of one’s behavior by providing a characterization of the self from an external source.

It is important to distinguish between the nature and the effects of an implied social label and the activation of an element of a consumer’s identity. Current work in consumer identity explicitly defines identities as social category labels, with Reed et al. noting that “a category label becomes an identity once the consumer has begun to incorporate it into his or her sense of who he or she is and has initiated the process to become that kind of person” (2012, 312). An identity, then, is a label that the consumer has come to accept about oneself, whether it is a personal identity (e.g., being sophisticated or outdoorsy) or a social identity (e.g., being an American or a parent; Oyserman 2009 ). Advertisements can prime identities, such as when an ad featuring an image of the Great Wall of China makes a Chinese consumer’s Chinese identity more salient ( Forehand, Deshpandé, and Reed 2002 ).

Unfortunately, little research has clarified the commonalities and distinctions between identity priming and social labeling. It is clear from past research that advertising can successfully execute both processes ( Allen 1982 ; Forehand et al. 2002 ) and that both processes can increase purchase and behavioral intentions ( Allen 1982 ; Reed 2004 ). The critical difference between these two constructs is that making an identity salient temporarily heightens the consumer’s internal awareness that he or she has a specific trait (i.e., a consumer applies a label to the self), whereas social labeling serves as an external recognition that one has exhibited a pattern of behavior that reflects a specific trait (i.e., another person or entity applies a label to the consumer). Behaviorally targeted ads provide the consumer with information about the self that comes from an external source: the marketer. Thus the key distinction between an advertisement making an identity salient and one that implies a social label lies in whether the information the ad provides about the self stems from a characterization that is generated internally, by the self, or from an external source.

This internal versus external distinction shares some commonality with the literature in judgment and decision making on stated versus revealed preference. Revealed preferences are “revealed” by observing actual choice (vs. simply asking consumers to state their preferences). Both types of preferences provide useful information for marketers ( Hensher and Bradley 1993 ), but revealed preferences are generally more reliable in predicting future behavior ( Carson et al. 1996 ). The notion of revealed preferences parallels that of constructed preferences, which are constructed on the fly as a result of the interaction between the (internal) properties of the human decision making system and the (external) properties of the environment in which a decision is made ( Bettman, Luce, and Payne 1998 ). We propose that the effects of a social label implied by a behaviorally targeted ad are akin to informing a consumer of their revealed preferences (based on past choices that are affected by the external environment), and those of identity priming are akin to reminding a consumer of their stated preferences (generated from accessing internal information).

H1: Behaviorally targeted advertisements can act as implied social labels, resulting in adjustments to self-perceptions and behavior consistent with the label.

H2: Changes in consumer behavior in response to behaviorally targeted ads are mediated by the recognition that the ad implies information about the consumer based on his or her past behavior and the subsequent self-perception adjustments that result as a function of recognizing this implied label.

### The Role of Accuracy in Determining the Effects of Behavioral Targeting

In order for consumers to adjust their self-perceptions and behaviors in response to the receipt of a behaviorally targeted ad, they must accept the social label implied by the ad. We propose that acceptance of the label will depend on the accuracy of the targeting—that is, the extent to which the label is plausibly connected to consumers’ past behavior. Prior research on social labeling suggests that two conditions must be met for social labels to affect behavior. First, people must engage in behavior that can be used as the basis for self-perception ( Bem 1972 ). This could include filling out a survey about attitudes toward voting ( Tybout and Yalch 1980 ), donating (or not) to a charitable organization ( Kraut 1973 ) or, in the context of behaviorally targeted advertising, engaging in a variety of activities online, from shopping to search. Second, people must receive information from an external source that somehow characterizes this behavior. In the context of our research, this information is the receipt of a behaviorally targeted ad. We propose that the influence of this implied label on consumers’ self-perceptions depends on the extent to which the consumer believes the label accurately reflects his or her past behavior. Specifically, if someone has never expressed any interest in outdoor activities like camping, being labeled as an outdoor enthusiast would be perceived as inconsistent with his or her past actions. In such a situation, consumers would not perceive the label to be generated as a result of their own behavior and, as a result, that label would not be accepted and would therefore not impact their self-perceptions and future actions ( Bem 1972 ; Miller and Turnbull 1986 ). However, if there is a plausible connection between the label and past behavior, the label is accepted and consumers adjust self-perceptions and behavior in line with that label.

We therefore predict that when the label implied by a behaviorally targeted advertisement is plausibly connected to the consumer’s prior behavior (i.e., the targeting is at least moderately accurate), consumers perceive that the marketer has labeled them correctly and respond accordingly, altering their self-perceptions and hence behavior to be consistent with the identity implied by the ad. In contrast, when the label is unconnected with their prior behavior (i.e., targeting is inaccurate), consumers will not accept the implied label and will not adjust their self-perceptions and behavior. Formally:

H3: The effects proposed in hypotheses 1 and 2 only hold when the implied label is plausibly connected to consumers’ prior behavior (i.e., when behavioral targeting is at least moderately accurate).

## STUDY 1

Study 1 was designed to test whether an ad that is purportedly behaviorally targeted acts as an implied social label and whether this implied label results in greater purchase likelihood for the advertised product compared to when the product appears either within an ad that is purportedly demographically targeted or nontargeted.

### Results

#### Manipulation Check

An analysis of variance (ANOVA) on perceptions of whether the ad was matched to the participant’s information revealed a significant effect of condition ( F (2, 185) = 5.87, p < .01, η 2 = .06). Bonferroni-adjusted contrasts revealed that participants in the behaviorally targeted condition ( M = 4.35) believed that the advertisement was matched to information collected about them during the study session more than participants in the nontargeted condition ( M = 3.50; F (1, 185) = 11.73, p < .001, η 2 = .06) but not more than those in the demographic targeting condition ( M = 3.95; F (1, 185) = 2.57, p = .11). Participants in the demographic targeting condition also believed the ad was matched to their information to a marginally greater extent than those in the nontargeted condition ( F (1, 185) = 3.27, p = .07, η 2 = .02), indicating that our manipulations were successful.

#### Implied Social Labels

An ANOVA on the labeling index revealed a significant difference between conditions ( F (2, 185) = 7.11, p < .01, η 2 = .07). Bonferroni-adjusted contrasts revealed that participants in the behaviorally targeted condition ( Mbehavioral = 4.80) recognized an implied label to a greater extent than did participants in the demographically targeted ( Mdemographic = 4.34; F (1, 185) = 4.02, p < .05, η 2 = .02) and nontargeted conditions ( Mnontargeted = 3.95; F (1, 185) = 14.21, p < .001, η 2 = .07). Participants in the demographically targeted condition recognized an implied label marginally more than those in the nontargeted condition ( F (1, 185) = 3.06, p = .08, η 2 = .02). Thus, as expected, consumers in the behaviorally targeted ad condition recognized that the ad implied a social label to a greater extent than those in the other conditions.

#### Implied Social Labels Mediate Purchase Intentions

An ANOVA on purchase intentions for the restaurant Groupon revealed a significant difference between the conditions ( F (2, 185) = 3.81, p < .05, η 2 = .04). Bonferroni-corrected contrasts revealed that participants in the behaviorally targeted ( M = 4.18) condition were more likely to purchase the Groupon than participants in the demographically targeted ( M = 3.39; F (1, 185) = 6.90, p < .05, η 2 = .04) and nontargeted conditions ( M = 3.56; F (1, 185) = 4.24, p < .05, η 2 = .02). There was no difference in willingness to purchase the Groupon between participants in the demographically targeted and nontargeted conditions ( F (1, 185) = .35, p = .56) ( figure 1 ).

FIGURE 1

FIGURE 1

To test whether the effect of behavioral targeting on purchase intentions is driven by recognition of an implied social label, we conducted a mediation analysis using PROCESS Model 4 ( Hayes 2013 ). The model estimated a significant indirect effect (b = .06, standard error [SE] = .04, 95% confidence interval [CI], .0046–.1719), indicating that behavioral targeting increases purchase intentions for the advertised product through the recognition of the implied social label.

### Discussion

The results from study 1 provide support for the hypothesis that behaviorally targeted advertisements can act as implied social labels, resulting in adjustments to behavior consistent with the label. Consumers in the behaviorally targeted and the demographically targeted condition felt equally that the ad was matched to personal information from earlier in the experimental session (to a significantly greater extent than participants in the control, nontargeted condition). However, participants in the behaviorally targeted condition recognized a label from the marketer as a result of this individual-level information matching to a greater extent than participants in the demographic targeting and nontargeting condition and demonstrated higher willingness to purchase the advertised product because of its consistency with this implied identity. These results suggest that mere awareness of being targeted does not drive the observed effects on purchase intentions because this feature was present in the demographically targeted condition; such awareness must be coupled with a behavior-based characterization in order for an ad to function as an implied social label. Demographic targeting, while based on the notion that others in one’s broad demographic group share the same behaviors, does not imply a social label because it is not directly based on one’s own individual-level behavior. The data also show that the effects of behavioral targeting are not due to differences in liking for the advertisement because consumers liked the ad equally in all conditions.

Unanswered questions about the nature of the label implied by a behaviorally targeted ad remain. Does the implied label simply indicate that the consumer is someone who would like the advertised offering, or does it speak to something deeper about the consumer’s identity? Study 2 sheds light on this process by measuring consumers’ self-perceptions.

## STUDY 2

The purpose of study 2 was threefold. First, in order to test the full serial mediation proposed in hypothesis 2, we measure both the extent to which consumers recognize an implied social label when receiving a behaviorally targeted ad (vs. a non-behaviorally targeted ad) and their subsequent self-perceptions. Second, we increase the external validity of our work by manipulating awareness of whether the ad is behaviorally targeted using the industry-standard AdChoices icon. Finally, given that activating an identity can lead to identity-consistent behavior, such as buying an identity-consistent product ( Reed 2004 ), we also seek to provide evidence to distinguish empirically the effects of an implied social label stemming from receiving a behaviorally targeted ad from the effects of identity salience. We also collect two behavior measures: one collected at the time of the main study and one collected 7 to 14 days later. Simply making an identity salient during the initial study should not produce effects on behavior more than one week later because identity salience is a temporary state ( Forehand et al. 2002 ; Reed 2004 ). In contrast, if consumers adjust self-perceptions in response to behaviorally targeted ads, then behavior consistent with these adjusted self-perceptions should persist after a time delay.

### Participants and Procedure

A total of 197 undergraduate students (56% females; Mage = 20.7) participated in exchange for course credit. The study involved two phases: a behavioral lab session and a follow-up online survey made available to participants one week later that remained open for seven days. We separately detail the procedure for these phases.

#### Lab Session

Before reading the information about behavioral targeting and seeing the ad, participants in the identity salience condition completed an additional step in the study procedure. They were first asked to write about what being sophisticated means to them and to write (for at least two minutes) about an event in which they felt sophisticated in order to activate this aspect of their identity (adapted from Reed 2004 ).

#### Follow-up Survey

Everyone who completed the lab session was invited to participate in a follow-up online survey one week later. The cover story indicated that researchers were interested in participants’ memory for the WishList items they selected during the lab session. Thus everyone was asked to recall as many WishList items as they could and to respond to several related filler questions. The real purpose was to assess participants’ response to the question, “To what extent are you ‘in the market’ for (i.e., thinking about buying) a Movado watch?” (1 = Not at all, 7 = Very much). Overall, 108 participants (61% females; Mage = 20.7) completed the follow-up survey; these response rates varied marginally by condition (n behavioral = 27, n nontargeted = 45, n identity salience = 36; χ 2 (2,147) = 4.77, p = .09).

### Results

#### Manipulation Check

An ANOVA on the targeting manipulation check yielded a significant difference between conditions ( F (2, 147) = 15.47, p < .0001, η 2 = .18). Bonferroni-corrected contrasts revealed that participants in the behaviorally targeted condition ( Mbehavioral = 5.00) believed that the ad was matched to their information to a greater extent than did participants in either the identity salience ( Midentity salience = 3.25; F (1, 147) = 22.18, p < .0001, η 2 = .13) or control, nontargeted condition ( Mnontargeted = 3.07; F (1, 147) = 28.24, p < .0001, η 2 = .17); these latter two conditions did not differ from one another ( F (1, 147) = .38, p = .81).

#### Implied Social Labels

An ANOVA on the labeling index yielded a significant difference between conditions ( F (2, 144) = 8.19, p < .001, η 2 = .10). Bonferroni-adjusted contrasts revealed that participants in the behaviorally targeted condition ( Mbehavioral = 5.41) recognized an implied label to a greater extent than did participants in the identity salience ( Midentity salience = 4.37; F (1, 144) = 10.28, p < .01, η 2 = .07) and nontargeted conditions ( Mnontargeted = 4.15; F (1, 144) = 15.70, p < .001, η 2 = .10); the latter conditions did not differ from one another ( F (1, 144) = .69, p = .41). Thus participants recognized that receipt of the ad implied a social label to a greater extent in the behaviorally targeted condition.

#### Self-Perceptions

An ANOVA with participants’ scores on the sophistication index as the dependent variable revealed a significant difference between conditions ( F (2, 144) = 4.18, p < .05, η 2 = .05). Bonferroni-corrected contrasts revealed that participants in the behaviorally targeted condition ( Mbehavioral = 5.15) perceived themselves as consumers with more sophisticated preferences than did participants in the identity salience ( Midentity salience = 4.54 ; F (1, 144) = 4.70, p < .05, η 2 = .03) and nontargeted conditions ( Mnontargeted = 4.36; F (1, 144) = 8.21, p < .01, η 2 = .05), which did not differ from one another ( F (1, 144) = 0.61, p = .44) ( figure 2 ).

FIGURE 2

CONSUMER SELF-PERCEPTIONS OF SOPHISTICATION BY CONDITION

FIGURE 2

CONSUMER SELF-PERCEPTIONS OF SOPHISTICATION BY CONDITION

#### Implied Social Labels and Self-Perceptions Mediate Purchase Likelihood for Advertised Product

We conducted three mediation analyses to test separately the components of our conceptual model. First, using PROCESS Model 4, we assessed whether condition affected purchase intentions for the advertised product because participants recognized an implied label about their identity; as expected, condition affected purchase intentions for the advertised watch through the labeling index (b = .07, SE = .04, 95% CI, .0130–.1832). Next, using the same model, we examined whether condition affected purchase intentions by increasing self-perceptions of sophistication. As predicted, the model estimated a significant indirect effect of condition on purchase intentions through higher self-perceptions of sophistication (b = .04, SE = .03, 95% CI, .0006–.1295). Finally, we analyzed whether these effects occurred sequentially by conducting a serial mediation analysis using PROCESS Model 6, with the labeling index entered as the primary mediator and self-perceptions of sophistication entered as the secondary mediator. In support of our hypothesized process, this serial mediation was significant (b = .01, SE = .01, 95% CI, .0003–.0560), whereas mediation was not present when the order of the mediators was reversed (b = .0123, SE = .0115, 95% CI, −.0001 to .0501).

Effects of Behaviorally Targeted Ads on Purchase Intentions After a Time Delay. An ANOVA on the extent to which participants reported being in the market for a Movado watch in the online survey conducted after the initial lab session revealed a significant difference between conditions ( F (2, 105) = 3.05, p = .05). Bonferroni-corrected contrasts revealed that participants in the behaviorally targeted condition ( Mbehavioral = 3.07) were more likely to be “in the market” for buying a Movado watch than were participants in the identity salience ( Midentity salience = 2.28; F (1, 105) = 5.41, p < .05, η 2 = .05) and nontargeted conditions ( Mnontargeted = 2.40; F (1, 105) = 4.24, p = .08, η 2 = .04), which did not differ from one another ( F (1, 105) = .17, p = .69). A serial mediation analysis with the labeling index entered as the primary mediator and self-perceptions of sophistication entered as the secondary mediator revealed significant mediation of these purchase intentions (b = .01, SE = .01, 95% CI, .0003–.0618).

### Discussion

The results of study 2 show that consumers recognize an implied social label to a greater extent when receiving a behaviorally targeted ad versus a non-behaviorally targeted ad and demonstrate that this recognition prompts adjustments to self-perceptions that serially mediate behavioral intentions, as proposed in hypothesis 2. Importantly, given that activating an identity can lead to identity-consistent behavior like buying an identity-relevant product ( Reed 2004 ), study 2 also provides empirical evidence that the effects of recognizing the implied label from receipt of a behaviorally targeted ad are distinct from the effects of making an identity salient. We observe the predicted changes in self-perceptions only in the behaviorally targeted ad condition and not in the condition in which the related identity was made salient using a traditional identity salience manipulation ( Coleman and Williams 2013 ; Reed 2004 ).

We also note that the identity salience manipulation did not produce increased self-perceptions of sophistication relative to the control, nontargeted ad condition. We believe that this is because an identity salience prime serves as an internal reminder of one’s level of sophistication but does not lead to a change in one’s perceptions of one’s sophistication. It is only when an implied social label introduces information about how an external agent views one’s level of sophistication that self-perceptions change (in this case, being adjusted upward as a result of a marketer’s characterization that one is sophisticated). This explanation for our results is consistent with our finding that behaviorally targeted ads result in higher purchase intentions for the advertised product after a one- to two-week time delay, whereas making a relevant identity temporarily salient does not. However, given the lack of a significant effect in the identity prime condition (relative to the control), we conducted a posttest to ensure that the prime was successful.

A total of 147 English-speaking undergraduates from the same population as participants in the main study were asked to complete either the sophisticated identity prime described earlier or a control prime that directed them to write about the geography of their home state (adapted from Wheeler and Berger 2007 ). Immediately afterward, we asked all participants to indicate their interest (1 = Not at all interested, 7 = Very interested) in participating in potential future studies on eight topics, four of which were intended to be relatively more sophisticated (i.e., classical music, fine dining, international travel, and high fashion) and four of which were intended to be less sophisticated (i.e., popular music, fast food, local travel to destinations in state, and fast fashion). An ANOVA revealed that participants in the sophisticated (vs. control) prime condition were more interested in the studies on sophisticated topics ( Msophisticated = 4.83, Mcontrol = 4.41, F (1, 145) = 4.27, p < .05, η 2 = .03) but were equally interested in the studies on less sophisticated topics ( Msophisticated = 4.89, Mcontrol = 4.87, F (1, 145) = .01, p = .91). To ensure that the options varied in perceived sophistication as intended, participants were subsequently asked to rate how sophisticated each activity was on a 7 point scale (1 = Not at all sophisticated, 7 = Very sophisticated). Perceptions of sophistication were not differentially affected by priming condition for either the sophisticated options ( Msophisticated = 5.71, Mcontrol = 5.89, F (1, 145) = 1.31, p = .25) or the unsophisticated options ( Msophisticated = 2.93, Mcontrol = 2.97, F (1, 145) = .09, p = .77). As expected, the sophisticated options were rated, on average, as more sophisticated than the scale midpoint ( M = 5.80, t = 22.3, p < .0001), whereas the unsophisticated options were rated as less sophisticated than the scale midpoint ( M = 2.95, t = −13.13, p < .0001). These results therefore show that the identity prime used in the main study was successful in at least temporarily increasing interest in sophisticated activities, even though we did not observe an effect of the prime on purchase intentions in the main study.

The results of study 2 therefore support our proposition that the effect of receiving a behaviorally targeted ad is distinct from that of successful identity salience manipulations, but they do not necessarily imply that targeted ads are more impactful under all circumstances. We speculate on the conditions that strengthen and weaken each of these processes in the general discussion section. We also note that the results of this study reflect only those participants who correctly identified whether the ad they were shown was behaviorally targeted. This may have inflated effect sizes relative to a real-world scenario in which not all participants correctly identity a behaviorally targeted ad as such. However, effect sizes are likely to have also been lowered relative to a completely naturalistic setting because we do not use actual targeting software and instead show all participants the same ad.

## STUDY 3

In study 3 we examine whether receiving a behaviorally targeted ad for an environmentally friendly green product causes consumers to adjust their self-perceptions of their own environmental values, which may then affect their subsequent donation behavior for an environmental charity. We also include an additional control condition with an ad that has ostensibly been behaviorally targeted but that does not imply a label that is diagnostic of the self-perceptions and behavior we measure.

### Participants and Procedure

Undergraduate students (n = 178, 48% females, Mage = 20.8) participated in the study for course credit and were randomly assigned across conditions in a 2 (Ad identified as behaviorally targeted: yes vs. no) × 2 (Product: environmentally friendly vs. control) between-subjects design. In part 1 of the study, participants completed a simulated shopping task in which they were asked to choose one product from a set of four options from eight different product categories (e.g., light bulbs, laundry detergent; appendix D). Five of these choice sets contained options that a pretest (n = 45 from same population as the main study) indicated were perceived as relatively environmentally friendly. Once participants completed the initial shopping task, they were directed to an “advertisement evaluation” study.

After viewing the ad, all participants completed the six-item Green Consumption Values scale ( Haws, Winterich, and Naylor 2014 ). This scale assesses consumers’ tendency to express the value of environmental protection through purchases and consumption behaviors. The six scale items were averaged to form an overall Green Consumption Values score (α = .92, M = 4.37, SD = 1.15) that serves as our measure of self-perceptions. As a check of our manipulations, participants completed the same item assessing whether their information was used to deliver an ad to them as in prior studies and rated their agreement that Houd speakers are an eco-friendly product (1 = Strongly disagree, 7 = Strongly agree). As in previous studies, participants’ liking for the ad did not differ across conditions because there was neither a main effect of targeting ( Mbehavioral = 4.15, Mnontargeted = 4.16; F (1, 174) = .01, p = .94) nor product positioning ( Menvironmentallyfriendly = 4.21, Mcontrol = 4.09; F (1, 174) = .27, p = .60), and no interactive effect ( F (1, 174) = .36, p = .55) of these factors. Finally, everyone completed the following items assessing the extent to which they recognized an implied label of environmental friendliness (α = .91, M = 4.04, SD = 1.47): “The advertiser thinks I am the kind of person who likes environmentally friendly products,” “The advertisement was selected for me based on an inference about the type of person I am,” and “The algorithm that presented me with an advertisement inferred that I have environmentally friendly preferences.”

All participants then proceeded to an ostensibly unrelated survey that informed them that the committee in charge of the behavioral lab “has decided to feature a different charity each month during lab studies” and that the current “Charity of the Month” was the Rainforest Alliance, an environmental charity focused on rainforest protection. Everyone was given information about the mission of the Rainforest Alliance and was then directed to a new screen that displayed the following:

All participants in today’s study will automatically be entered into a drawing to receive $10.00. Five winners will be randomly chosen from participants in this study. If you are selected as one of the winners, you may choose to donate some of the winnings to the Rainforest Alliance ( http://www.rainforest-alliance.org/ ). The rest will be given to you in cash. The researchers will match any donation that you make to the charity, so you could, for example, keep$5 of your winnings and cause $10 in rainforest-protecting donations. Participants then indicated what they would prefer to do if selected as a winner of the raffle (“have all of the winnings given to you in cash” or “make a donation to the Rainforest Alliance”), and if they selected “make a donation,” they were asked to specify how much money they wished to donate on a sliding scale from$0 to $10. Participants who declined to donate were recorded as donating$0. Winners were randomly selected, and the prize money was distributed to participants and the charity.

### Results

#### Manipulation Checks

A 2 (Ad identified as behaviorally targeted: yes vs. no) × 2 (Advertised product: environmentally friendly vs. control) ANOVA on the manipulation check for how “eco-friendly” the advertised speaker was revealed only a main effect of product positioning, such that participants viewed the speaker as more “eco-friendly” in the environmentally friendly positioning condition ( Menvironmentallyfriendly = 4.97, Mcontrol = 3.79; F (1, 174) = 24.68, p < .0001, η 2 = .12), indicating that this manipulation was successful. The same ANOVA on the targeting manipulation check item revealed only a main effect of targeting ( Mbehavioral = 4.37, Mnontargeted = 3.46; F (1, 174) = 14.37, p < .001, η 2 = .08).

#### Implied Social Labels

An ANOVA on the labeling index revealed that participants recognized an implied green label to a greater extent in the behaviorally targeted condition ( Mbehavioral = 4.35, Mnontargeted = 3.76; F (1, 174) = 7.98, p < .01, η 2 = .04) and when the product was positioned as environmentally friendly ( Menvironmentallyfriendly = 4.48, Mcontrol = 3.64; F (1, 174) = 15.96, p < .0001, η 2 = .16). There was no significant interactive effect of these factors ( F (1, 174) = .31, p = .58).

#### Self-Perceptions

A two-way ANOVA on the Green Consumption Values Scale yielded neither a main effect of behavioral targeting ( Mbehavioral = 4.47, Mnontargeted = 4.30; F (1, 174) = .90, p = .34) nor a main effect of product positioning ( Menvironmentallyfriendly = 4.44, Mcontrol = 4.33; F (1, 174) = .38, p = .54). However, as expected, a significant interaction qualified these results ( F (1, 174) = 4.89, p < .05, η 2 = .03). Simple effects analyses revealed that, when the speaker was advertised as environmentally friendly, behavioral targeting had a significant positive effect on consumers’ self-perceptions of greenness ( Mbehavioral = 4.71, Mnontargeted = 4.17; F (1, 174) = 4.88, p < .05, η 2 = .06) ( figure 3 ). In contrast, when the speaker was not positioned as environmentally friendly, there was no difference in self-perceptions of greenness as a function of behavioral targeting ( Mbehavioral = 4.22, Mnontargeted = 4.44; F (1, 174) = .82, p = .37). Additionally, the effect of behavioral targeting on green consumption values was marginally higher in the environmentally friendly positioning condition (vs. the control positioning condition) ( F (1, 174) = 3.14, p = .08, η 2 = .02).

FIGURE 3

GREEN CONSUMPTION VALUES BY ADVERTISEMENT CONDITION AND PRODUCT POSITIONING

FIGURE 3

GREEN CONSUMPTION VALUES BY ADVERTISEMENT CONDITION AND PRODUCT POSITIONING

#### Implied Social Labels and Self-Perceptions Mediate Purchase Intentions

To test the components of our conceptual model, we conducted several mediation analyses. First, we used PROCESS Model 7 to test whether targeting affected purchase intentions for the advertised speakers through the labeling index, but only when the speakers were positioned as environmentally friendly. As expected, the effect of targeting on willingness to purchase the speakers was mediated by the labeling index in the environmentally friendly condition (b = .09, SE = .05, 95% CI, .0179–.2027) but not in the control condition (b = .06, SE = .04, 95% CI, −.0034 to .1722). Next, we used the same model to test whether behavioral targeting affected purchase intentions by boosting participants’ self-perceptions of greenness, but only in the environmentally friendly positioning condition. The analyses revealed that self-perceptions of greenness significantly mediated the effect of behavioral targeting on purchase intentions when the speaker was positioned as environmentally friendly (b = .14, SE = .06, 95% CI, .0396–.2932) but not in the control positioning condition (b = −.06, SE = .07, 95% CI, −.2011 to .0682).

Finally, we sought to identify whether the effect of behavioral targeting on purchase intentions was driven by serial mediation through the labeling index and self-perceptions, as in study 2. We conducted a serial mediation analysis using PROCESS Model 6 with the labeling index as the primary mediator and self-perceptions as the secondary mediator. As expected, behavioral targeting affected purchase intentions through recognition of being labeled and the resultant self-perceptions of greenness (b = .06, SE = .04, 95% CI, .0106–.1966]). This effect was not present when the order of the mediators was reversed (b = .0046, SE = .02, 95% CI, −.0297 to .0607).

#### Implied Social Labels and Self-Perceptions Mediate Donation Behavior

To analyze the effects of behavioral targeting on donation behavior, we followed a similar procedure as with purchase intentions. First, using PROCESS Model 7, we tested whether behavioral targeting affected donation amounts to the Rainforest Alliance through the labeling index, but only when the advertised product was positioned as environmentally friendly. As expected, the effect of behavioral targeting on donation amount was mediated by the labeling index in the environmentally friendly condition (b = .17, SE = .12, 95% CI, .0079–.4907) but not in the control condition (b = .11, SE = .09, 95% CI, −.0142 to .3684). Next, we used the same model to test whether behavioral targeting affected donation amount by boosting participants’ self-perceptions of greenness, but only in the environmentally friendly positioning condition. The analysis revealed that self-perceptions significantly mediated the effect of behavioral targeting on donation amount when the speaker was positioned as environmentally friendly (b = .25, SE = .12, 95% CI, .0685–.5482) but not in the control condition (b = −.10, SE = .13, 95% CI, −.4455 to .0980). Finally, we also sought to identify whether the effect of targeting on donation amount was driven by serial mediation through the labeling index and self-perceptions, just as it was for purchase intentions for the advertised speaker. Serial mediation analysis using PROCESS Model 6 with the labeling index as the primary mediator and self-perceptions as the secondary mediator revealed that, as was true with purchase intentions for the speaker, behavioral targeting affected donation amounts through recognition of being labeled and the resultant self-perceptions of greenness (b = .06, SE = .04, 95% CI, .0132–1966), and this effect was not present when the order of the mediators was reversed (b = .0046, SE = .02, 95% CI, −.0297 to .0607).

### Discussion

The next study investigates whether acceptance of a social label implied by a behaviorally targeted ad (and subsequent adjustments to self-perceptions and behavior) depends on the accuracy of the targeting by including choices during the initial shopping task as an independent variable. Although the current study was not designed for this purpose, the same analysis could theoretically be conducted here. Unfortunately, participants did not perceive the items used in this initial shopping task as uniformly green or not. The variance for greenness ratings in the pretest was high, as the midpoint of the 7 point scale (1 = Not at all green, 7 = Very green) fell within 1 SD of the mean in 90% of the product options. As a result, these perceptual differences created a plausible manipulation of behavioral targeting based on prior choices but did not provide enough differentiation to test our hypothesis about the role of accuracy on the effects of behaviorally targeted ads. In study 4, we directly test hypothesis 3 by using choice sets with options that are clearly differentiable on the relevant trait.

## STUDY 4

The primary purpose of study 4 is to test hypothesis 3 by exploring whether acceptance of an implied social label depends on the accuracy of the behavioral targeting—that is, the extent to which the label is plausibly connected to consumers’ past behavior.

### Participants and Procedure

A total of 269 adults (46% females, Mage = 34.9) were recruited on Mechanical Turk and were paid for their participation. In the first part of the study, participants were asked to engage in a shopping task. They were presented with 20 binary choice sets from a variety of product categories (e.g., boots, blankets; appendix F), 10 of which featured a choice between an item associated with outdoor activities like camping and hiking and an item not associated with the outdoors (e.g., hiking boots vs. fashion boots). A pretest (n = 49 undergraduate students) confirmed that the items significantly differed in how outdoors-related they were perceived to be (appendix F provides details). This allowed us to create a scale from 0 to 10 for the number of outdoors-related products each participant selected ( M = 5.90, SD = 2.17). The purpose of this task was not only to collect data to make the behavioral targeting manipulation plausible, as in prior studies, but also to measure participants’ a priori interest in the outdoors.

After viewing their assigned ad, all participants were then asked to rate how likely they would be to purchase the hot chocolate (1 = Very unlikely, 7 = Very likely). All participants then rated the extent to which they agreed with the following items as a measure of their self-perceptions of their own outdoorsiness (1 = Strongly disagree, 7 = Strongly agree): “Camping and hiking are my idea of a good time,” “I like to explore nature whenever possible,” “I am someone who chooses products that are suitable for an outdoorsy lifestyle,” and “I am an outdoorsy person.” These items were collapsed into an outdoorsiness index that served as our measure of self-perceptions (α = .90, M = 5.09, SD = 1.67). Everyone then completed the labeling measures from study 1 (adapted for an outdoorsy product context; α = .81, M = 4.57, SD = 1.53) and the same manipulation check used in prior studies to assess perceptions of whether the advertisement was believed to be matched to the information they had provided during the shopping task. Finally, at the end of the study, participants were shown a real Groupon for a portable solar charger designed for outdoor use and asked to indicate how likely they were to purchase it (1 = Not at all likely, 7 = Very likely). Thus we assessed purchase likelihoods for two different products that vary in how associated they are with the focal self-perception of outdoorsiness: hot chocolate (which can be positioned as suitable for indoor or outdoor consumption) and the solar charger (intended for outdoor use).

### Results

#### Manipulation Check

A 2 (Ad identified as behaviorally targeted: yes vs. no) × 2 (Advertised product positioning: indoors vs. outdoors) ANOVA on the targeting manipulation check revealed a main effect of targeting condition ( Mbehavioral = 5.31, Mnontargeted = 4.24, F (1, 263) = 26.64, p < .0001, η 2 = .09) and product positioning ( Moutdoors = 4.99, Mindoors = 4.57, F (1, 263) = 4.06, p < .05, η 2 = .02), such that participants felt that the hot chocolate ad was targeted to them based on their choices to a greater extent in the behaviorally targeted condition and when they saw an ad featuring the outdoors positioning. These results were not qualified by a significant interaction ( F (1, 263) = .73, p = .39).

#### Implied Social Labels

We regressed scores on the labeling index on targeting (ad identified as behaviorally targeted: yes vs. no), hot chocolate positioning (indoors vs. outdoors), a priori interest in outdoors-related products (i.e., number of outdoors-related choices in the binary shopping task, mean centered), and the interactions of these variables. This analysis revealed that participants recognized an implied outdoorsy label to a greater extent in the behaviorally targeted condition (b = .27, t (259) = 3.39, p < .001, η 2 = .04) and when the hot chocolate was positioned as appropriate for the outdoors (b = .66, t (259) = 8.20, p < .0001, η 2 = .21). Participants also recognized an implied outdoorsy label to a greater extent when they had higher a priori interest in outdoors-related products (b = .13, t (259) = 3.35, p < .001, η 2 = .04). A significant interaction between targeting and positioning qualified these results (b = .25, t (259) = 3.15, p < .01, η 2 = .04; all other interactions p > .28). When the hot chocolate was positioned as appropriate for the outdoors, participants recognized an implied outdoorsy label to a greater extent in the behaviorally targeted (vs. nontargeted) condition (b = .52, t (262) = 4.64, p < .0001, η 2 = .07); however, participants’ recognition of an implied label that they were outdoorsy did not differ by targeting condition in the indoors ad condition (b = .02, t (262) = .24, p = .81), which is in accord with the fact that the labeling items assessed the extent to which participants felt labeled as outdoorsy (and not indoorsy).

Given that there was not a significant three-way interaction between the factors and that we wished to examine the role of accuracy on recognizing an implied label, we next examined the results separately in the indoors and outdoors positioning conditions. We note that a greater a priori interest in outdoors-related products corresponded to increasingly accurate targeting when the hot chocolate was positioned as appropriate for the outdoors, whereas this pattern reversed when the hot chocolate was positioned as appropriate for the indoors.

In the outdoors positioning condition, regressing the labeling index on targeting, a priori interest in outdoors products, and their interaction revealed that participants recognized an outdoorsy label to a greater extent in the behaviorally targeted (vs. nontargeted) condition (b = .53, t (131) = 5.14, p < .0001, η 2 = .17) and as their a priori interest in outdoors products increased (b = .09, t (131) = 2.03, p < .05, η 2 = .03). An interaction did not qualify these results (b = −.05, t (131) = −1.08, p = .28). Floodlight analysis using the Johnson-Neyman technique ( Spiller et al. 2013 ) revealed a significant positive effect of behavioral targeting on participants’ self-perceptions of outdoorsiness among participants who made nine or fewer outdoors-related purchase choices (B JN = .36, SE = .18, p = .05).

The same regression model within the indoors positioning condition revealed only a significant positive effect of a priori interest in outdoors products (b = .15, t (132) = 2.69, p < .01; all other p > .60). Floodlight analysis using the Johnson-Neyman technique revealed no significant effect of behavioral targeting on participants’ self-perceptions of outdoorsiness among participants at any level of accuracy. Thus receiving an ad positioning hot chocolate as appropriate for the indoors did not cause participants to feel labeled as outdoorsy regardless of whether the ad was behaviorally targeted. We note that if the measure of feeling labeled had instead asked about feeling labeled as indoorsy, we would expect to see differences by targeting condition, such that those who received a behaviorally targeted indoors positioned ad would recognize being labeled as indoorsy to a greater extent.

#### Self-Perceptions

We regressed self-perceptions of outdoorsiness on targeting (Ad identified as behaviorally targeted: yes vs. no), hot chocolate positioning (indoors vs. outdoors), a priori interest in outdoors products (i.e., number of outdoors-related choices in the binary shopping task, mean centered), and their interactions. This analysis revealed that participants perceived themselves to be more outdoorsy in the outdoors positioning condition (b = .27, t (261) = 3.11, p < .01, η 2 = .04) and when they had greater a priori interest in outdoors products (b = .38, t (261) = 9.47, p < .0001, η 2 = .26). There were also significant interactions between targeting and product positioning (b = .30, t (261) = 3.44, p < .001, η 2 = .04) and between positioning condition and a priori interest in outdoors products (b = −.09, t (261) = −2.32, p < .05, η 2 = .02); all other main or interactive effects were nonsignificant (all p > .29).

To test hypothesis 3 and interpret these interactions, we examined the impact of targeting accuracy on self-perceptions by running separate regressions within the outdoors and indoors conditions. In the outdoors positioning condition, regressing the self-perception index on targeting condition, a priori interest in outdoors-related products, and their interaction revealed that participants felt more outdoorsy in the behaviorally targeted (vs. nontargeted) condition (b = .32, t (131) = 2.76, p < .01, η 2 = .06) and as their a priori interest in outdoors-related products increased (b = .29, t (131) = 5.31, p < .0001, η 2 = .18). An interaction did not qualify these results (b = .02, t (131) = .43, p = .66). Floodlight analysis using the Johnson-Neyman technique revealed a significant positive effect of behavioral targeting on participants’ self-perceptions of outdoorsiness only among participants who made four through nine outdoors-related choices in the shopping task (i.e., at moderate and high levels of accuracy; B JN = .28, SE = .14, p = .05). Simple effects analyses using three levels of a priori interest in outdoors-related products confirmed this pattern ( figure 4 ). The lack of significance at the top of the scale (i.e., 10 of 10 choices) likely reflects either a ceiling effect (due to the fact that participants who made 10 outdoors-related choices already perceive themselves as so outdoorsy that there is no room for movement as a result of an implied social label) or a lack of power (as only seven people made 10 outdoors-related choices: Mbehavioral = 6.80, Mnontargeted = 7.00; F (1, 5) = .36, p = .58). Thus changes in self-perception as a result of behavioral targeting only occur when targeting is at least moderately accurate.

FIGURE 4

SELF-PERCEPTIONS OF OUTDOORSINESS AFTER RECEIVING OUTDOORS POSITIONED AD BY TARGETING CONDITION AND PRIOR OUTDOORS-RELATED SHOPPING CHOICES

* p < .05

FIGURE 4

SELF-PERCEPTIONS OF OUTDOORSINESS AFTER RECEIVING OUTDOORS POSITIONED AD BY TARGETING CONDITION AND PRIOR OUTDOORS-RELATED SHOPPING CHOICES

* p < .05

The same regression model within the indoors positioning condition revealed that participants viewed themselves as less outdoorsy when the ad was identified as behaviorally targeted (b = −.27, t (134) = −2.16, p < .05, η 2 = .01) and when they had made fewer outdoors-related prior choices (b = .47, t (134) = 8.03, p < .0001, η 2 = .33). These results were not qualified by a significant interaction (b = .06, t (134) = 1.03, p = .30). A floodlight analysis revealed that there was a negative effect of behavioral targeting on self-perceptions of outdoorsiness among participants who selected one to six outdoors products in the shopping task (i.e., at moderate and high levels of accuracy; B JN = −.25, SE = .13, p = .05). Follow-up simple effects analyses at each level of the trichotomous measure of a priori outdoor product choices confirmed this pattern ( figure 5 ). These results indicate that receiving an ad accurately targeted for someone who does not like outdoor activities can lead the consumer to feel even less like they like outdoor activities. Thus implied social labels appear to be able to lower participants’ self-perceptions on a trait as long as the behavioral targeting is at least moderately accurate.

FIGURE 5

SELF-PERCEPTIONS OF OUTDOORSINESS AFTER RECEIVING INDOORS POSITIONED AD BY TARGETING CONDITION AND PRIOR OUTDOORS-RELATED SHOPPING CHOICES

* p < .05

FIGURE 5

SELF-PERCEPTIONS OF OUTDOORSINESS AFTER RECEIVING INDOORS POSITIONED AD BY TARGETING CONDITION AND PRIOR OUTDOORS-RELATED SHOPPING CHOICES

* p < .05

#### Implied Social Labels and Self-Perceptions Mediate Purchase Likelihood

Next, we sought to test our prediction that recognizing an implied outdoorsy label would mediate the effect of targeting on purchase intentions for the portable solar charger, a product that is clearly associated with being outdoorsy, but not for the hot chocolate, a product that may be enjoyed by people across a wide variety of outdoorsiness (regardless of its positioning in a particular ad). We tested this by conducting two separate mediation analyses using PROCESS Model 4. In support of our expectation, the analyses revealed that the outdoorsy labeling index mediated the effect of targeting on purchase intentions for the solar charger (b = .04, SE = .02, 95% CI, .0064–.1146]) but not the hot chocolate (b = −.01, SE = .02, 95% CI, −.0578 to .0309).

Next, we tested whether acceptance of the implied social label (i.e., self-perception adjustments) mediated the effect of targeting on purchase intentions for both products. We first considered the results for hot chocolate separately by positioning. In the condition in which the hot chocolate was positioned as appropriate for the outdoors, we expected significant mediation only at moderate and high levels of a priori interest in outdoors products (i.e., when targeting was at least moderately accurate). In contrast, in the condition in which the hot chocolate was positioned as appropriate for the indoors, purchase intentions should be noncontingent on self-perceptions at any level of a priori interest in outdoorsy products because perceiving oneself as more or less outdoorsy should not have much influence on interest in purchasing hot chocolate for indoor use—even outdoorsy people may drink hot chocolate indoors. We tested both of these predictions using PROCESS Model 7 and found that, within the outdoors condition, the effect of targeting on willingness to purchase the hot chocolate was mediated by increases in self-perceptions of outdoorsiness at moderate (b = .08, SE = .05, 95% CI, .0129−.2175) and high levels of accuracy (b = .11, SE = .07, 95% CI, .0189−.2784), but not when the ad was inaccurate (b = .05, SE = .08, 95% CI, −.0711 to .2711), as predicted. Further, in the indoors positioning, self-perceptions did not mediate willingness to purchase the hot chocolate at any level of accuracy (all CIs contained zero).

We then conducted the same analysis on purchase intentions for the portable solar charger, a product for which higher and lower self-perceptions of outdoorsiness have clearer implications for behavior. We expected that mediation of purchase intentions by self-perceptions would occur only at moderate and high levels of accuracy. We tested this using PROCESS Model 7 and found that, in the outdoors positioning condition, the effect of targeting on willingness to purchase the solar charger was mediated by increases in self-perceptions of outdoorsiness at moderate (b = .11, SE = .06, 95% CI, .0203–.2459) and high levels of accuracy (b = .14, SE = .06, 95% CI, .0390–.2991), but not when the ad was inaccurately targeted (b = .08, SE = .11, 95% CI, −.1003 to .3221). In short, greater purchase intentions were mediated by higher self-perceptions of outdoorsiness. Within the indoors positioning condition, the effect of targeting on willingness to purchase the solar charger was mediated by decreases in self-perceptions of outdoorsiness at moderate (b = −.15, SE = .07, 95% CI, −.2933 to −.0356) and high levels of accuracy (b = −.31, SE = .13, 95% CI, −.5902 to −.0953), but not when the ad was inaccurate (b = .02, SE = .06, 95% CI, −.1106 to .1414). That is, lower purchase intentions were mediated by lower self-perceptions of outdoorsiness.

Finally, we also sought to identify whether the effect of targeting on purchase likelihoods was driven by serial mediation through the labeling index and self-perceptions as in prior studies. We conducted a serial mediation analysis on purchase intentions for the hot chocolate using PROCESS Model 6, with the labeling index and self-perceptions entered as primary and secondary mediators, respectively. In support of our hypothesized process, this serial mediation was significant in the outdoors positioning condition (b = .07, SE = .03, 95% CI, .0256–.1498), in which there were differences in perceptions of labeling by targeting, but not the indoors positioning condition (b = −.0047, SE = .01, 95% CI, −.0476 to –.0095), in which there were no differences in perceptions of being labeled as outdoorsy, as expected. Further, the significant mediating effect in the outdoors condition was not present when reversing the order of the mediators (b = −0082, SE = .01, 95% CI, −.0484 to .0088). For purchase intentions for the portable solar charger, the serial mediation path was significant in the outdoors condition (b = .08, SE = .03, 95% CI, .0373–.1769) but not in the indoors condition (b = .01, SE = .02, 95% CI, −.0318 to .0610), and the significant mediating effect in the outdoors condition was not present when the order of the mediators was reversed (b = −.0083, SE = .01, 95% CI, −.0433 to .0029).

### Discussion

The results of study 4 demonstrate that the accuracy of a behaviorally targeted ad moderates the direct effect on self-perceptions and the mediated effect on behavior through self-perceptions. Specifically, we found that labels that are unconnected to prior behavior (i.e., inconsistent with consumers’ a priori interest in trait-related products) do not prompt adjustments to self-perceptions and affect behavior; low levels of accuracy yield no effect, whereas moderate to high levels of accuracy produce social labeling effects. The results further indicate that while consumers recognize even inaccurate behaviorally targeted ads as implied social labels, it is accuracy (i.e., the match between this prior behavior and the implied label) that determines whether this label is perceived to be relevant to the self, leading to adjustments in self-perceptions that play a mediating role in subsequent trait-related behavior.

## GENERAL DISCUSSION

Evidence from the field suggests that behavioral targeting enhances advertising response rates, with click-through rates increased by as much as 670% relative to online ads that are not behaviorally targeted ( Beales 2010 ; Yan et al. 2009 ). Given its effectiveness and the growing frequency with which it is used, it is important to understand how consumers’ psychological responses to behaviorally targeted ads may differ from responses to non-behaviorally targeted ads and to ads that use more traditional forms of targeting (e.g., demographics) and whether measures like click-through rates adequately capture the consequences of this growing form of advertising.

Across four studies, we demonstrate that behaviorally targeted ads can act as implied social labels, leading consumers to adjust their self-perceptions and draw on these adjusted self-perceptions to determine not only purchase intentions for the advertised product, but also their willingness to engage in other label-consistent behavior, as we show in studies 3 and 4. Importantly, however, we find that adjustments in consumer self-perceptions in response to behaviorally targeted advertisements depend on the plausibility of the connection between the label and past behavior. When their past behavior is not at all indicative of the label (i.e., the behavioral targeting is inaccurate), consumers do not treat the implied label as a valid source of self-information and do not alter their self-perceptions to be consistent with the label.

### Theoretical and Managerial Implications

Our findings offer several important theoretical contributions. First, we provide an early inquiry into the effects of behaviorally targeted ads. We identify how behavioral targeting is distinct from traditional forms of targeting and empirically demonstrate the conditions under which these characteristics prompt unique psychological consequences for consumers. Whereas prior work has examined the inferences consumers make about firms (e.g., Aaker, Vohs, and Mogilner 2010 ; Morales 2005 ), we investigate the effects of consumer awareness of the inferences firms make about consumers. Specifically, by showing that consumers viewing a behaviorally targeted ad recognize an implied label from a marketer, we integrate the literatures on marketplace metacognition ( Brown and Krishna 2004 ; Hamilton and Srivastava 2008 ; Williams et al. 2004 ; Wright 2002 ) and consumer response to firms’ digital marketing efforts (e.g., Hoffman and Novak 2011 ; Lambrecht and Tucker 2013 ; Naylor, Lamberton, and West 2012 ; Schumann, von Wangenheim, and Groene 2014 ; Stephen and Galak 2012 ; Tucker 2014 ; Yadav and Pavlou 2014 ). We also add to the growing body of literature exploring how consumers’ online behavior can affect their self-concept ( Belk 2013 ; Wilcox and Stephen 2013 ).

In addition, our work contributes to the literature on social labeling ( Allen 1982 ; Kraut 1973 ; Miller et al. 1975 ; Tybout and Yalch 1980 ) by introducing a new type of implied social label. Specifically, we show that mere receipt of a behaviorally targeted ad can cause consumers to recognize that the marketer has labeled them as a particular type of consumer, even when the ad itself contains no descriptive information about the individual consumer. In doing so, we contribute to the literature by demonstrating that labels do not have to reference the consumer to have an effect (as has been shown in past research), but that consumers can be affected by implied labels supplied by external sources. We also contribute to the broader literature on self-learning ( Baumeister 1998 ; Wu et al. 2011 ) by demonstrating that implied social labels such as those from behaviorally targeted ads can be a source of self-learning and that such learning is contingent on the connection between this implied information and a person’s prior behavior.

This research also adds to the literature on identity marketing. Specifically, we complement past work on identity, which has explicitly defined identities as social category labels ( Oyserman 2009 ; Reed et al. 2012 ), by empirically demonstrating that behaviorally targeted ads provide consumers with information about themselves from an external source, which is different than reminding consumers about possessing a given trait through other forms of identity marketing. Further, while much research within the identity literature has investigated the effects of identity appeals that are embedded within the advertising context and are unconsciously processed ( Kirmani 2009 ; Oyserman 2009 ), the results of our studies show that a key driver of the effects of behaviorally targeted advertising is consumers’ conscious reflection about the marketers’ tactics in delivering the ad to them. Behavioral targeting may, therefore, be a way for marketers to circumvent consumers’ feelings of reactance to explicit identity referencing ( Bhattacharjee et al. 2014 ; Wu et al. 2011 ) in advertising because such labels are merely implied versus explicit.

Our findings also have implications for managers because we find that consumer responses to behaviorally targeted ads are sensitive to several variables under managerial control. First, although there is increasing pressure from consumer privacy advocates to disclose when an ad is behaviorally targeted, disclosure is not currently mandated by law ( Dave 2013 ). The results of our studies suggest that online advertisers should adopt the AdChoices icon to disclose when an ad has been behaviorally targeted and continue to educate consumers on its meaning. Given that behaviorally targeted ads act as implied labels only when consumers know that the ad was behaviorally targeted, the icon can prompt positive effects among consumers whose past behavior is plausibly connected to an implied label.

Third, our research suggests that behaviorally targeted ads are likely to be more lucrative for companies with a large share of a category associated with a personality attribute, such as Whole Foods (being “healthy”) or NorthFace (being “rugged” or “outdoorsy”). This is likely easier to accomplish for lifestyle brands ( Chernev, Hamilton, and Gal 2011 ) and brands with strong personalities ( Aaker 1997 ).

Finally, we suggest that the adjustments to self-perceptions produced by behaviorally targeted ads may not only improve sales of the featured product at the time of ad exposure, but also future sales of the product and, potentially, of the entire category. Specifically, when consumers accept the label they infer from a behaviorally targeted ad, the extent to which they use these self-perceptions as a basis for making a purchase decision increases. This suggests that sales of other related products and services may be expected to increase to the extent that they are consistent with the same label. Thus behaviorally targeted ads may be more beneficial for a company’s profits than previously believed, especially for category leaders, and analyzing click-through rates for behaviorally targeted ads (e.g., Yan et al. 2009 ) may provide a limited measure of their effectiveness.

### Avenues for Future Research

The results of our studies suggest several interesting avenues for future research. To people who look for them, the world is full of clues into others’ perceptions of them, and each of these implied social labels can affect self-perceptions and behavior. However, little is known about the many potential sources of these implied social labels or the personal or contextual factors that determine sensitivity to them. Future research could explore other sources for implied social labels in addition to behaviorally targeted ads. For example, word-of-mouth recommendations from friends and compliments from salespeople can both likely act as implied social labels (e.g., “You can really tell a quality product when you see one” could be interpreted as an implied label that one is particularly discerning). However, the compliment would have to clearly imply a trait label of some type in order to have similar effects to those observed in our studies; simple gratitude for the compliment or liking for the salesperson who issued it are unlikely to produce changes in self-perceptions.

Future research is also required to illuminate the intersection between marketplace metacognition, persuasion knowledge, and behaviorally targeted ads. As discussed, some level of marketplace metacognition is required for a behaviorally targeted ad to serve as a social label. However, if a consumer concludes that marketers are purposefully using behaviorally targeted ads as implied social labels to change their self-perceptions, the consumer could react against the attempt, minimizing its effectiveness ( Campbell and Kirmani 2000 ; Friestad and Wright 1994 ; Wei, Fischer, and Main 2008 ; Wu et al. 2011 ). Exploring whether implied social labels from marketers induce the same level of persuasion knowledge as explicit social labels from marketers ( Cornelissen et al. 2007 ) could be worthwhile.

Additionally, it would be useful to investigate the role of the importance (to the self) of the trait implied from the label ( Reed 2004 ). On one hand, consumers are more interested in information about where they stand on traits and identities that are important to them, which may make the effects of behaviorally targeted ads stronger for important traits ( Markus 1977 ). On the other hand, consumers’ self-perceptions on traits that are very important to them are arguably less malleable ( Aquino and Reed 2002 ; Sirgy 1982 ), which may mute these effects.

Future research is also required to explore the commonalities and distinctions between identity salience and changes in self-perceptions due to social labeling. Given that advertisements can precipitate both processes, it is worthwhile to consider when each process would have more impact on purchase behavior. If the consumer has neither engaged in any trait consistent behavior nor has incorporated the category label as part of her identity, then neither social labeling nor identity priming would likely have an influence. Social labeling only (and not identity salience) should have an effect when the consumer has engaged in trait-relevant and observable past behavior but has not yet incorporated the label as part of their identity (in this case the social label may instigate the identity process), and identity priming likely uniquely has an influence under the opposite circumstances. Research is required to determine which process has more impact when consumers have both engaged in trait-relevant past behavior and have incorporated the label as part of their identity. Our theoretical model suggests that social labels may be more impactful here because they carry additional, externally provided information. The valence of the trait or identity may play a moderating role, with previous research showing that negative social labels have minimal impact ( Allen 1982 ; Kraut 1973 ) while negative identities can actually be reinforced ( Swann 2012 ). Other potential moderators may also differentially impact the effects of implied social labels and identity salience. For example, source credibility should only moderate the effect of social labels.

Another potential boundary condition that could be fruitfully explored is the degree to which consumers exhibit impression management in their online actions. If consumers know in advance that their browsing or shopping choices are being monitored specifically for the delivery of an ad, they might strategically change their behaviors to receive different ads or might be unwilling to accept a label that has been generated from such inauthentic, impression-managed behaviors. A related possibility is that consumers may engage in behavior designed to be consistent with how others perceive them including changing their behavior to be consistent with targeted ads. This desire for consistency may have contributed to our results.

## DATA COLLECTION INFORMATION

All studies were designed, conducted, and analyzed by the first author under the guidance of the other authors. Studies 1 (October 2014), 2 (September 2015), and 3 (February 2015) were conducted in the Fisher Behavioral Lab at The Ohio State University. Study 4 (January 2015) was conducted with paid participants from Amazon’s Mechanical Turk.

### APPENDIX A

STUDY 1: ADVERTISEMENT AND GROUPON DEPENDENT VARIABLE FOR EATERY 21

### APPENDIX B

STUDY 2: INFORMATION ABOUT BEHAVIORAL TARGETING GIVEN TO PARTICIPANTS IN ALL CONDITIONS

### APPENDIX C

N ote .—Nontargeted ads did not include the AdChoices icon.

### APPENDIX D

STUDY 3: SHOPPING TASK PRODUCT CATEGORIES FOR GREEN AND NON-GREEN PRODUCTS

Category Brands Mean “green” rating in pretest (1 = Not at all, 7 = Very) Standard deviation in pretest
Light bulbs GE Tiffany Stained Glass 2.74 1.42
GE Reveal Halogen 3.47 1.35
GE Energy Smart 5.28 1.41
GE Energy Smart- Soft White 5.55 1.19
Laundry detergent Seventh Generation Natural 5.36 1.17
Tide Total Care 3.48 1.31
Arm & Hammer Sensitive Skin 3.26 1.12
Mrs. Meyer’s Clean Lavender 3.04 1.84
Digital camera Nikon COOLPIX S3500 2.74 1.48
Polaroid 300 Instant 2.48 1.22
Canon PowerShot Sx-500 2.85 1.62
PENTAX Optio WG-10 3.00 1.74
Mouthwash Act Fluoride Rinse 3.28 1.46
Colgate Phos-Flur Ortho Protect Rinse 2.89 1.35
Listerine Total Care 3.33 1.38
Tom’s of Maine 3.98 1.78
Notebook Moleskin Hard Cover 2.78 1.60
Lang Deluxe Journal 2.85 1.71
Greenroom Recycled Spiral 5.07 1.69
Blank Journal Markings 2.98 1.73
Air purifier Holmes Eco-Friendly 4.39 1.71
CleanAirBall 4.48 1.41
Honeywell True HEPA 4.13 1.47
Vornado AC300 Whole Room 3.96 1.58
Dish scrubber Scotch-Brite Natural Fiber 5.07 1.39
O-Cel-O No Scratch 3.07 1.44
KitchenAid Soap Dispensing Palm Brush 3.48 1.41
WayClean Mesh 3.39 1.37
Water bottle Rive Saboy 4.04 1.93
Ello Pure Fizz 4.17 1.77
Contigo Double Wall 4.07 1.82
Aladdin Recycle Travel 5.39 1.76
Category Brands Mean “green” rating in pretest (1 = Not at all, 7 = Very) Standard deviation in pretest
Light bulbs GE Tiffany Stained Glass 2.74 1.42
GE Reveal Halogen 3.47 1.35
GE Energy Smart 5.28 1.41
GE Energy Smart- Soft White 5.55 1.19
Laundry detergent Seventh Generation Natural 5.36 1.17
Tide Total Care 3.48 1.31
Arm & Hammer Sensitive Skin 3.26 1.12
Mrs. Meyer’s Clean Lavender 3.04 1.84
Digital camera Nikon COOLPIX S3500 2.74 1.48
Polaroid 300 Instant 2.48 1.22
Canon PowerShot Sx-500 2.85 1.62
PENTAX Optio WG-10 3.00 1.74
Mouthwash Act Fluoride Rinse 3.28 1.46
Colgate Phos-Flur Ortho Protect Rinse 2.89 1.35
Listerine Total Care 3.33 1.38
Tom’s of Maine 3.98 1.78
Notebook Moleskin Hard Cover 2.78 1.60
Lang Deluxe Journal 2.85 1.71
Greenroom Recycled Spiral 5.07 1.69
Blank Journal Markings 2.98 1.73
Air purifier Holmes Eco-Friendly 4.39 1.71
CleanAirBall 4.48 1.41
Honeywell True HEPA 4.13 1.47
Vornado AC300 Whole Room 3.96 1.58
Dish scrubber Scotch-Brite Natural Fiber 5.07 1.39
O-Cel-O No Scratch 3.07 1.44
KitchenAid Soap Dispensing Palm Brush 3.48 1.41
WayClean Mesh 3.39 1.37
Water bottle Rive Saboy 4.04 1.93
Ello Pure Fizz 4.17 1.77
Contigo Double Wall 4.07 1.82
Aladdin Recycle Travel 5.39 1.76

### APPENDIX E

STUDY 3: ADVERTISEMENTS FOR HOUD SPEAKERSENVIRONMENTALLY FRIENDLY, NONTARGETED CONDITION

### APPENDIX F

STUDY 4: CHOICE BETWEEN OUTDOORS-RELATED PRODUCT AND NONOUTDOORS-RELATED PRODUCT

Category Brands Outdoor product choice Mean “outdoorsy” rating in pretest (1 = Not at all, 7 = Very) Standard deviation in pretest  Paired t test results in pretest
Boots Merrell Mountain Trekker Yes 6.67 .66 t (47) = 23.01, p < .0001
Louboutin Timeless Urban No 1.44 1.15
Blanket Pier 1 Faux Fur Blanket No 2.53 1.58 t (48) = −9.20, p < .0001
L.L. Bean Outdoor Blanket Yes 6.02 1.42
Hand wipes Wet Ones Antibacterial Wipes No 4.14 1.81 t (48) = −7.48, p < .0001
Grime Boss Adventure Wipes Yes 6.37 1.20
Folding chair L.L. Bean Adirondack Camp Chair Yes 6.45 .94 t (48) = 7.45, p < .0001
Odyssey Folding Chair No 4.08 1.97
Portable cooler KULLAR Cooler Bag No 4.16 1.72 t (48) = −9.47, p < .0001
Coleman All-Terrain Cooler Yes 6.55 .82
Book The Writer’s Guide to Good Style No 1.65 1.02 t (47) = −19.91, p < .0001
How to Survive Outdoors Yes 6.61 .95
Flashlight Coleman Nature Torch Flashlight Yes 6.65 .59 t (48) = 9.40, p < .0001
Trendsetter Aluminum Light No 4.27 1.77
Candle Yankee Candle: Vanilla Cake Scent No 2.21 1.56 t (47) = −11.85, p < .0001
Off! Mosquito Repellant Candle Yes 6.33 1.23
Electronics charger Coleman All-weather Charger Yes 6.45 .82 t (48) = 12.07, p < .0001
Samsung Wireless Charging Station No 2.88 1.79
Cookbook The Camping Cookbook Yes 6.37 1.15 t (48) = 17.29, p < .0001
Everyday Gourmet No 1.78 1.09
Category Brands Outdoor product choice Mean “outdoorsy” rating in pretest (1 = Not at all, 7 = Very) Standard deviation in pretest  Paired t test results in pretest
Boots Merrell Mountain Trekker Yes 6.67 .66 t (47) = 23.01, p < .0001
Louboutin Timeless Urban No 1.44 1.15
Blanket Pier 1 Faux Fur Blanket No 2.53 1.58 t (48) = −9.20, p < .0001
L.L. Bean Outdoor Blanket Yes 6.02 1.42
Hand wipes Wet Ones Antibacterial Wipes No 4.14 1.81 t (48) = −7.48, p < .0001
Grime Boss Adventure Wipes Yes 6.37 1.20
Folding chair L.L. Bean Adirondack Camp Chair Yes 6.45 .94 t (48) = 7.45, p < .0001
Odyssey Folding Chair No 4.08 1.97
Portable cooler KULLAR Cooler Bag No 4.16 1.72 t (48) = −9.47, p < .0001
Coleman All-Terrain Cooler Yes 6.55 .82
Book The Writer’s Guide to Good Style No 1.65 1.02 t (47) = −19.91, p < .0001
How to Survive Outdoors Yes 6.61 .95
Flashlight Coleman Nature Torch Flashlight Yes 6.65 .59 t (48) = 9.40, p < .0001
Trendsetter Aluminum Light No 4.27 1.77
Candle Yankee Candle: Vanilla Cake Scent No 2.21 1.56 t (47) = −11.85, p < .0001
Off! Mosquito Repellant Candle Yes 6.33 1.23
Electronics charger Coleman All-weather Charger Yes 6.45 .82 t (48) = 12.07, p < .0001
Samsung Wireless Charging Station No 2.88 1.79
Cookbook The Camping Cookbook Yes 6.37 1.15 t (48) = 17.29, p < .0001
Everyday Gourmet No 1.78 1.09

NOTE.—Participants also made choices in 10 additional nonfocal categories (e.g., between two brands of chocolate, between two board games, etc.) where neither choice was related to the outdoors. Order of presentation of choices was randomized.

### APPENDIX G

STUDY 4: BEHAVIORALLY TARGETED ADVERTISEMENTS FOR HOT CHOCOLATE IN INDOORS AND OUTDOORS PRODUCT POSITIONING CONDITIONS

N ote .—Nontargeted ads did not include the AdChoices icon.

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