Privacy Considerations in Location-Based Advertising

The emergence of mobile communication and positioning technologies has presented advertisers and marketers with a new type of advertising approach: location-based advertising (LBA). Advertisers could deliver contextually appropriate advertising messages through wireless devices on a geographically targeted basis and could reach mobile consumers when they are most likely to make a purchase (Kölmel and Alexakis 2002). However, because LBA could also associate the lifestyle habits, behaviors, and movements with a consumer ’s personal identity, privacy concern is particularly salient for LBA. Drawing on the privacy literature and the exchange theory, we employ an experimental approach to develop and lest an adoption model by including risk-beneflt analysis as the major antecedent to behavioral intention. Two environmental variables—industry privacy self-regulation and privacy legislation—are included to further assess the role of industry self-regulator versus government legislator in bearing the responsibility of assuring consumer privacy. Our findings extend individual adoption research into the new L-Commerce context and offer several important implications for various players in the LBA industry: wireless advertising service/content providers, merchants, privacy advocates and government legislators.