Behavioral Advertising and Consumer Welfare: An Empirical Investigation

We investigate the impact of behavioral advertising on consumer welfare in a within-subjects online experiment. While the vast majority of empirical work on the impact of online advertising focuses on click and conversion rates of behaviorally targeted ads, we propose a counterfactual approach, in which online consumers are presented with alternative offers: products associated with targeted ads they were served online, competing products, and random products. Participants are asked to compare these alternatives along a variety of metrics. Thus, we assess consumer welfare implications of behavioral advertising comparatively, in an ongoing online experiment that captures differences in participants’ purchase intentions and other product characteristics which can affect consumer utility.