Coupon or my privacy: How consumers choose to disclose their personal information and accept mobile location-based advertising (LBA) through privacy calculus

With their capacity to track geo-specific location information rapidly expanding, the practice of location-based advertising (LBA) is becoming increasingly prevalent. While LBA can provide relevant and financial benefits, concerns about data collection and privacy are also on the rise. In the following two experiments, based on the privacy calculus theory and parallel mediation analyses, an explanatory framework is presented to lay out how consumers choose to disclose their personal information and accept LBA depending on location congruent levels of a mobile ad message by assessing the benefits as well as costs of disclosing personal information. In Study 1 (N = 186), it was found that both perceived benefits and costs fully mediated the experimental effects of location congruence (congruent vs. incongruent) on intentions to disclose personal information as well as accept LBA practice. In Study 2 (N = 230), a 2 (location congruence: congruent vs. incongruent) × 2 (sales promotion: yes vs. no) factorial experiment was conducted. The results from moderated mediation analysis showed that privacy concerns due to location tracking disappeared when sales promotion was offered. These results indicate that consumers' information disclosure and LBA acceptance can be understood as a trade-off between incentives and privacy issues in which privacy concerns can be alleviated when financial benefits are offered.