What reduces the privacy concerns of the customers towards the use of location-based advertising? An empirical investigation

Abstract

Location-based advertising (LBA) allows marketers to send personalised communications to customers in real-time based on their real-time location. However, customers must divulge their personal information in order to enjoy the benefits of LBA. This raises serious privacy concerns on the part of customers. Very few research studies have looked into the factors that might alleviate customers’ concerns about their privacy when utilising LBA. Therefore, this research attempts to address this research gap and examines the factors that might reduce the privacy concerns of customers towards using LBA. The research model for the study is developed using privacy calculus theory to predict the behavioural intention of the customers towards using LBA. The data of 383 respondents who have experience using LBA was evaluated using Structural Equation Modelling (SEM). The findings indicate that advertising value has a favourable influence and privacy concerns have an unfavourable influence on customers’ intentions to use LBA where advertising value plays a much more important role. Privacy self-efficacy and brand trust play an influential role in reducing privacy concerns. By contrast, privacy policy stimulates even more privacy concerns, thereby impacting the intention of the customers towards using LBA.