CONSUMER ACCEPTANCE OF MOBILE ADVERTISING WITHIN A SOCIAL CONTRACT FRAMEWORK. A Thesis. Presented to the. Faculty of. San Diego State University

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1 CONSUMER ACCEPTANCE OF MOBILE ADVERTISING WITHIN A SOCIAL CONTRACT FRAMEWORK A Thesis Presented to the Faculty of San Diego State University In Partial Fulfillment of the Requirements for the Degree Master of Arts in Communication with a Concentration in Mass Communication and Media Studies by Kelly E. Campbell Summer 2011

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3 iii Copyright 2011 by Kelly E. Campbell All Rights Reserved

4 iv ABSTRACT OF THE THESIS Consumer Acceptance of Mobile Advertising within a Social Contract Framework by Kelly E. Campbell Master of Arts in Communication with a Concentration in Mass Communication and Media Studies San Diego State University, 2011 Despite the promise of mobile advertising as an emerging marketing channel, the media has yet to gain adoption as a mainstream advertising source in the United States. Most studies support a positive relationship between contextual, permission-based mobile advertisements and consumer acceptance. However, little research has examined drivers of consumer acceptance from a social contract perspective. This study presents a model based on previous research regarding social contract theory and identifies key factors that may affect the mobile advertising social contract. The researchers posit that there are four attributes consumers consider when determining acceptance of mobile advertising: permission, trust, relevance, and context. Using a 2 x 2 x 2 x 2 full factorial design, the main effects and interactions of permission (granted, not granted) trust (high, low), relevance (relevant content, not relevant content) and context (present, absent) are measured. Understanding drivers of consumer acceptance of mobile advertising have both practical and academic applications. Consumers will benefit from receiving mobile advertisements that are perceived as personally valuable instead of intrusive; while the proposed model offers mobile marketing researchers a framework for future study.

5 v TABLE OF CONTENTS PAGE ABSTRACT... iv LIST OF TABLES... vi LIST OF FIGURES... vii CHAPTER 1 INTRODUCTION AND LITERATURE REVIEW...1 Adoption of Mobile Advertising...1 Acceptance of Mobile Advertising...3 Key Components of the Mobile Marketing Social Contract...4 Social Contract Framework METHODOLOGY...11 Research Design...11 Sample...15 Data Analysis Procedure RESULTS AND DISCUSSION...17 Presentation of the Findings...17 Discussion of the Findings SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS...26 REFERENCES...29 APPENDIX A B RANDOM ASSIGNMENT SURVEY SCENARIOS...31 FULL TABLE OF ANOVA RESULTS...37

6 vi LIST OF TABLES PAGE Table 1. Sixteen Experimental Cells Used in Advertising Scenarios...12 Table 2. Random Assignment Sample Size by Scenario...13 Table 3. Results from Factorial Analysis of Variance...18 Table 4. Estimated Marginal Means...19

7 vii LIST OF FIGURES PAGE Figure 1. Framework for consumer acceptance of mobile advertising...9

8 1 CHAPTER 1 INTRODUCTION AND LITERATURE REVIEW ADOPTION OF MOBILE ADVERTISING According to the International Association for the Wireless Telecommunications Industry, as of June 2010, 93% of the U.S. population owned a mobile phone and over 24% of U.S. households used mobile phones exclusively in place of a land-line. The pervasiveness of this technology and the ability to target advertising on an individual basis has led marketers to believe for many years now that mobile advertising is the next great frontier for interactive, one-to-one, target marketing. The ability to obtain detailed demographic and psychographic information about the mobile phone subscriber allows marketers to deliver personalized, relevant messages to the user. In addition, the fact that phones are GPS enabled and are with consumers at almost all times, allows marketers to deliver location-based, contextually relevant advertisements. Finally, as the technology evolves, more and more consumers are carrying data enabled devices that allow them to access the internet, view video, and download content. This allows marketers to serve richmedia advertising similar to that on the web. While marketers are in agreement as to the potential for this advertising, they also acknowledge substantial risk. Marketers fear alienating their customer with ads that may be perceived as an invasion of privacy. In her examination of privacy issues with mobile advertising, Cleff (2007, p. 229) stated it is important to consider that in the case of mobile telephones, the perception of intrusion and invasion in the private sphere is greater than in the case of other means of communication. Cleff (2007, p. 229) goes on to state that without

9 2 adequate privacy protection they have the potential to create an environment of profiles, blacklists, and constant surveillance. Wireless network providers have demographic, psychographic, and geographic information about their subscribers that can be shared with advertisers. This allows the advertiser to send the mobile user more relevant, targeted ads. However, this can also elicit feelings of privacy violation from the consumer who is not comfortable with their personal information being shared or with the idea that an advertiser knows where they are at any given time. Consumers may also be turned off to a brand that sends them an advertisement when they are in an atmosphere where they are not expecting an interruption. Consumers expect to see advertisements when they are watching TV or reading a newspaper, however they do not expect to see an ad when they are in a meeting at work. Finally, consumers may become irritated if they receive an ad from a brand they are not familiar with or did not give explicit permission to send advertisements. All of these concerns have kept mobile advertising from gaining mainstream adoption by marketers and consumers. The Mobile Marketing Association (2010) offers Consumer Best Practices guidelines but there is no formal policy or regulatory measure that dictates mobile advertising. This research examines the findings from previous research on consumer acceptance of mobile advertising. Then, combining the results of this examination within a social contract framework, explores the attributes which may have the greatest influence on consumer acceptance of mobile advertising while alleviating the perceived risk associated with it.

10 3 ACCEPTANCE OF MOBILE ADVERTISING Consumer attitudes toward advertising have been studied extensively across all media and are often used to operationalize consumer acceptance toward advertisements. Within a mobile marketing context, acceptance is imperative to the adoption of mobile advertising as a mainstream marketing source. A positive attitude toward the medium leads to the behavioral intention to adopt and use mobile marketing services (Bauer, Reichardt, Barnes, & Neumann, 2005). This research operationalizes acceptance of mobile advertising as the consumer s overall positive attitude toward receiving advertisements on their mobile phone, including attitude toward the medium, attitude toward the advertisement, and willingness to receive mobile advertisements. Understanding what drives consumer acceptance of mobile advertising is the key to adoption of this medium as a mainstream advertising source (Sharma, Herzog, & Melfi, 2008) and the key to conceptual models that attempt to explain levels of acceptance. A large obstacle facing the adoption of mobile advertising is consumers fear of information privacy violations (Bauer et al., 2005). Technology that enables marketer s to send personalized, targeted ads based on consumer location, interests, and behaviors, may raise privacy concerns among consumers and thus increase their perceived risk associated with receiving, opening, or responding to mobile advertising (Okazaki, Li, & Hirose, 2009). This hypothesis was confirmed by Okazaki et al. (2009) when they found a positive relationship between information privacy concerns and perceived risk in mobile advertising. However, the research also found that trust in the advertiser actually decreases the consumer s perceived risk of mobile advertising. These findings suggest that information privacy concerns associated with mobile advertising can be mitigated by other factors. Research also suggests

11 4 that consumers are willing to accept a certain degree of privacy loss if the social or economic benefit of doing so outweighs the perceived cost (Milne & Gordon, 1993). An emarketer Research Report (2003) confirmed this finding within a mobile marketing context, suggesting that approximately 65% of U.S. consumers are willing to provide personal information about them in exchange for relevant mobile advertising. This research identifies four key attributes that are hypothesized to positively influence the implied social contract between those who send and receive mobile advertisements. KEY COMPONENTS OF THE MOBILE MARKETING SOCIAL CONTRACT Permission: Well defined policies surrounding permission and marketing are already in place, however, less concrete guidelines exist with respect to permission and mobile advertising. When an individual grants an advertiser explicit consent to send promotional messages to his or her mobile phone, the advertiser has gained the receiver s permission (Tsang, Ho, & Liang, 2004). Previous research supports the concept that permission is not only a key driver of consumer acceptance but also effectiveness of mobile advertising. Kavassalis, Spyropoulou, Drossos, Mitrokostas, Gikas, and Hatzistamatiou (2003) examined the emerging mobile market potential and proposed that a successful industry structure requires that marketers gain permission from consumers before sending an advertisement. An empirical study by Barwise and Strong (2002) found that advertisers who gained permission prior to sending an ad had much better response rates than those who sent unsolicited messages. In addition, in the absence of permission, ads were found to be ineffective and to have a negative impact on a consumer s attitude toward the brand. Another empirical study that examined consumer attitudes found that permission had a

12 5 positive influence on attitudes toward mobile advertising (Tsang et al., 2004). These findings were confirmed by Bamba and Barnes (2007) in their examination of permission specifically related to SMS mobile advertising. Their research indicated that 87.8 percent of respondents felt it was important that they give permission to an advertiser before receiving a text message advertisement. Trust: Any social contract between an advertiser and consumer requires a certain level of trust. From a brand perspective, trust is achieved when there is a perceived credibility toward the advertiser on the part of the consumer (Jevons & Gabbott, 2000). In relation to mobile marketing, trust has also been found to decrease a consumer s perceived risk of mobile advertising (Okazaki, Katsukura, & Nishiyama, 2007). In their research examining the role of trust in improving attitudes toward mobile advertising, Okazaki et al. (2007) found that attitude toward the brand was a mediating variable for attitude toward mobile advertising with regard to durable goods. In addition, a review of the literature regarding factors that affect the use of mobile advertising suggested that the advertiser s brand influences the credibility of the advertisement and the use of mobile advertising (Vatanparast & Asil, 2007, p. 27). Research examining consumer privacy concerns toward mobile advertising found that higher levels of advertiser trust can reduce the level of a mobile user s perceived risk (Okazaki et al., 2009). Relevance: The amount of personal data available regarding mobile users allows marketers to send highly targeted mobile advertisements. Personalized ads aimed at an individual s interests and behaviors as opposed to a broader target audience are considered highly relevant to the consumer (Kazienko & Adamski, 2007). Relevance is key to consumer adoption of mobile advertising not only because consumers expect mobile ads to be

13 6 personally relevant but also because there is the potential for negative consumer reactions towards advertisements that are not relevant (Barwise & Strong, 2002). An empirical study of consumer acceptance of SMS mobile advertising found that acceptance was high when ads were relevant, highly targeted, personalised and of value-added content (Maneesoonthorn & Fortin, 2006, p. 71). Similar research that examined acceptance of SMS ads also measured effectiveness and found that campaign relevance was strongly correlated with levels of acceptance and that consumers were significantly more likely to take action as a result of high campaign relevance (Rettie, Grandcolas, & Deakins, 2005). Context: The GPS functionality of most mobile phones allows marketers to send promotional messages and offers that are contextually relevant to an individual based on proximity to the respective marketer s products or services (Bruner, Gordon, & Kumar, 2007). The potential to reach consumers when they are in public and in a consumer-related state of mind (shopping, buying, etc ) is very appealing to marketers and research shows is perceived as useful by consumers (Banerjee & Dholakia, 2008). A focus group of consumers willingness to receive text message advertisements found that most participants liked the idea of location-based services and were willing to accept a certain feeling of intrusion because the ads were highly relevant to their time and place (Bamba & Barnes, 2007). An empirical study by Merisavo et al. (2007) supported the importance of contextual ads and found that utilization of contextual information was a strong positive driver of consumer acceptance toward mobile advertising. SOCIAL CONTRACT FRAMEWORK Social contract theory from a marketing perspective focuses on the concept of exchange between the organization and the consumer. An organization offers society a

14 7 benefit in exchange for the opportunity to make a profit (Donaldson, 1982). Milne and Gordon (1993) first conceptualized advertising specifically as an implied social contract in the direct marketing environment. They examined the relationship between the sender and receiver of direct marketing advertisements and posited that consumers are willing to provide information about themselves to direct marketers in exchange for social or economic benefits. However, for this social contract to be perceived positively by the consumer, the social or economic benefit must outweigh the risk associated with providing personal information. If the benefits do not outweigh the risks, consumers feel their rights have been violated. The difficult part of this social contract is that the relationship is not explicitly articulated; instead, the terms of the contract are implied, leaving both advertiser and consumer expectations somewhat subjective. In an effort to more clearly define the expectations of this relationship, Milne and Gordon (1993) developed a Direct Marketing Social Contract Framework. This Framework suggested there are four major attributes each party must positively evaluate for the contract to be enacted. In the direct marketing environment, these attributes were: targeting, volume, permission, and compensation. Milne and Gordon (1993) found that consumers consider all these attributes to varying degrees when determining satisfaction levels with the direct marketing social contract. There is an absence of theoretical and empirical work on the mobile advertising social contract. However, the work by Milne and Gordon (1993) provides a basis for pursing work in this area, given the similarities between direct marketing and mobile marketing. Similar to the direct marketing environment, mobile advertising is highly targeted and personalized to the receiver. However, because mobile phones are considered such personal devices there is even greater risk associated with sending and receiving mobile advertisements. Marketer s

15 8 are concerned that unsolicited advertisements on mobile phones will be perceived as SPAM and have a negative effect on consumer s attitudes toward both the advertiser and mobile advertising in general (Merisavo et al., 2007). The framework presented in this research is an adaption and extension of the Milne and Gordon (1993) framework. An original model is presented which (based on prior research) identifies key factors that may affect the mobile advertising social contract. The model is provided in Figure 1. The solid lines represent the exchange of mobile user information and advertisements on a mobile phone. The dashed lines represent the third party organizations that influence mobile advertising policy and information privacy. The bold lines indicate the four attributes that the thesis posits consumers consider when determining acceptance of mobile advertising: (a) permission, (b) trust, (c) relevance, and (d) context. The dotted line represents the level of consumer acceptance based on the attributes present in an advertising scenario. Perceived risk is an intervening variable that can affect consumer acceptance levels and is influenced by two of the attributes, permission and trust. The model shows that wireless network providers have information about mobile users that can be provided to mobile advertisers. They also control the advertising platform and can dictate when and how advertisements are served to mobile users. The government regulates policy and guidelines for consumer privacy and can stipulate what information wireless providers are allowed to disclose to advertisers. Consumers themselves can provide the advertiser with personal information in exchange for receiving advertisements on their mobile phones. This exchange is based on each party s evaluation of the attributes of the social contract. Two of the attributes, permission and trust, are given by the consumer to the advertiser. The other two attributes, relevance and context, are provided by the advertiser to

16 9 Figure 1. Framework for consumer acceptance of mobile advertising. the consumer. The model posits that a consumer s response to the four attributes in the framework will significantly affect the level of acceptance toward mobile advertising. Since there are privacy violation concerns associated with organizations obtaining personal information about a consumer s demographic, psychographic, and geographic information, perceived risk is considered an intervening variable affecting the consumer s acceptance level. If the consumer feels the social or economic benefits of receiving a mobile ad outweigh the risks associated with privacy loss, then the perceived risk is mitigated and acceptance is higher. In the case of this framework, when permission and trust are present, perceived risk is lower. Based on the framework presented, this study seeks to answer the following research questions: R1: What is the effect of permission on consumer acceptance of mobile advertising? R2: What is the effect of brand trust on consumer acceptance of mobile advertising? R3: What is the effect of personal relevance on consumer acceptance of mobile advertising?

17 10 R4: What is the effect of location-based context on consumer acceptance of mobile advertising? R5: Does the presence of permission (opt-in) reduce the consumer s perceived risk associated with mobile advertising? R6: Does the presence of advertiser brand trust reduce the consumer s perceived risk associated with mobile advertising?

18 11 CHAPTER 2 METHODOLOGY RESEARCH DESIGN This study utilized an online survey to examine the influence of permission, trust, relevance, and context on consumer acceptance levels toward mobile advertising. Specifically, the research used a 2 x 2 x 2 x 2 full factorial design with main effects of permission (granted, not granted), trust (high, low), relevance (relevant content, not relevant content), and context (present, absent). Table 1 represents each of the 16 experimental cells. PsychData s services were used to deploy an online survey with random stimulus assignment so that each participant was assigned to one of the 16 cells. Sample size per cell ranged between 18 and 34 based on random assignment of all qualified respondents. A breakdown of the sample size for each scenario is presented in Table 2. Each scenario represented the specific conditions of its factorial cell. Scenarios were constructed out of a common set of elements representing each factor in the research design. For example, a scenario in the permission granted condition contained the sentence You gave the (name of advertiser) permission to send promotional advertisements to your mobile phone. While the scenario in the permission not granted condition contained the sentence You did not give the (name of advertiser) permission to send promotional advertisements to you. Appendix A includes a full list of each scenario presented to respondents. Key measures addressed attitudes toward the mobile advertisement and perceived risk. Attitude measures are widely used in forecasting acceptance and the most popular approach within the realm of marketing research utilizes direct self-report by asking survey

19 12 Table 1. Sixteen Experimental Cells Used in Advertising Scenarios Per mission rust T Re levance ontext C respondents a series of questions (Aaker & Day, 1983). Specifically, attitude measures for this research included attitude toward the advertisement, attitude toward the medium, and willingness to receive advertisements on a personal mobile device. Scales to measure each of these constructs were garnered from previous research. Attitude toward the advertisement was measured using a 3 item scale adapted from Xu, Oh, and Teo (2009). The index had a Cronbach alpha reliability coefficient of.938.

20 13 Table 2. Random Assignment Sample Size by Scenario Scenario Sample Size

21 14 7 point agree/disagree I would find this mobile advertisement useful I would find this mobile advertisement valuable I would find this mobile advertisement interesting Attitude toward the medium was measured using a 3 item scale adapted from Merisavo et al. (2007). The index had a Cronbach alpha reliability coefficient of point agree/disagree I feel positively about receiving mobile advertising I am willing to receive mobile advertising messages in the future I would read all the mobile advertising messages I receive in the future Intention to use or respond to the advertisement was measured using a 2 item scale adapted from Banerjee and Dholakia (2008). The index had a Cronbach alpha reliability coefficient of point likely/unlikely After receiving this advertisement I would consider responding to the ad After receiving this advertisement I would consider sharing it with a friend or family member The intervening variable of perceived risk was measured using a 4 item scale adapted from Merisavo et al. (2007). The index had a Cronbach alpha reliability coefficient of point agree/disagree I would feel a loss of control if I received this type of mobile advertisement I would feel a loss of privacy if I received this type of mobile advertisement I would feel annoyed if I received this type of mobile advertisement I would feel as if the distinction between home, work, and leisure had been blurred if I received this mobile advertisement

22 15 SAMPLE Recruitment of survey respondents was conducted through Facebook, LinkedIn, and . A brief description of the study along with a link to the online survey was ed to the researcher s co-workers, school colleagues, and personal network. In addition, the description and link were also posted on the researcher s Facebook and LinkedIn pages to recruit additional respondents. Selection for survey respondents included three main criteria: (a) respondents must own a mobile phone, (b) respondents must send and receive text messages at least once a week, and (c) respondents must be at least 18 years of age. These selection criteria were important because the study demonstrates a relationship between mobile advertising, attitudes, and acceptance. To obtain relevant data that demonstrates a correlation, respondents must already have a personal connection to their mobile device and be familiar with how to send and receive text messages. Also, certain questions are based on scenarios and require previous knowledge of the technology to answer them appropriately. Of the 457 respondents recruited, 392 met the eligibility requirements of the survey. The sample was comprised of approximately 31% male and 69% female respondents. Approximately 8% of respondents were between the ages of 18 and 25, 41% were 26 34, 27% were 35 45, 13% were 46 55, and 12% were over % of all respondents described themselves as non-hispanic white. DATAANALYSIS PROCEDURE SPSS was used to conduct statistical analysis on the data collected from an online survey. A 2 x 2 x 2 x 2 factorial analysis of variance was used to measure the effects of the

23 presence or absence of each attribute (permission, trust, relevance, and context) on attitudes toward mobile advertising and also mitigation of perceived risk. 16

24 17 CHAPTER 3 RESULTS AND DISCUSSION PRESENTATION OF THE FINDINGS The model posited the effect of four variables on individuals reactions to mobile advertising. The first four research questions focused on these variables and their effects. Overall, it appears that the model correctly predicted the influence of each variable; however the range of influence varied across outcome measures. R1: What is the effect of permission on consumer acceptance of mobile advertising? Permission exerted the greatest influence. As shown in Table 3, there was a significant main effect for permission in relation to all three acceptance measures: (1) attitude toward the advertisement [F (1/379) = 24.90, p <.001], (2) attitude toward the medium [F (1/378) = 6.46, p =.011], and (3) intention to act on the ad [F (1/373) = 9.65, p =.002]. An examination of the mean scores (see Table 4) indicates that this effect was in a positive direction, that is, across all three outcome measures respondents were more positive toward mobile advertising and more likely to act when permission was present versus when it was absent. R2: What is the effect of brand trust on consumer acceptance levels of mobile advertising? Trust also exerted an important (but versus permission a more limited) influence on the outcome measures. As shown in Table 3, there was a significant main effect for trust in relation to two of the acceptance measures: (1) attitude toward the ad [F (1/379) = 24.49, p <.001], and (2) intention to act on the ad [F (1/373) = 6.24, p =.013]. An examination of the mean scores (see Table 3) indicates that this effect was in a positive

25 18 Table 3. Results from Factorial Analysis of Variance Permission Measure df Mean Square F Sig Attitude toward ad Attitude toward medium Intention to act on ad Perceived risk Trust Measure df Mean Square F Sig Attitude toward ad Intention to act on ad Perceived risk Relevance Measure df Mean Square F Sig Attitude toward ad Context Measure df Mean Square F Sig Attitude toward ad Intention to act on ad Trust and Context Measure df Mean Square F Sig Attitude toward medium

26 19 Table 4. Estimated Marginal Means Permission Present Absent Measure Mean Std. Error Mean Std. Error Attitude to ad Attitude to medium Intention to act on ad Percieved risk Trust Present Absent Measure Mean Std. Error Mean Std. Error Attitude to ad Intention to act on ad Percieved risk Relevance Present Absent Measure Mean Std. Error Mean Std. Error Attitude to ad Context Present Absent Measure Mean Std. Error Mean Std. Error Attitude to ad Intention to act on ad direction, that is, respondents were more positive toward the ad and showed greater intention to act when trust was present versus when it was absent. R3: What is the effect of personal relevance on consumer acceptance of mobile advertising? Versus permission and trust, personal relevance showed a more limited role in influencing the outcome measures. As shown in Table 3, there was one significant main effect for relevance [F (1/379) = 7.10, p =.008] in relation to the acceptance level for attitude

27 20 toward the ad. Similar to the other measures, an examination of the mean scores (see Table 4) indicates that this effect was in a positive direction, that is, respondents were more positive the ad when relevance was present versus when it was absent. R4: What is the effect of location-based context on consumer acceptance of mobile advertising? Similar to trust, location-based context showed an important role in influencing reactions to mobile advertising. As shown in Table 3, there was a significant main effect observed for context with two of the acceptance measures: (1) attitude toward the ad [F (1/379) = 17.01, p <.001] and (2) intention to act on the ad [F (1/373) = 15.07, p <.001]. An examination of the mean scores (see Table 4) indicates that this effect was in a positive direction, that is, respondents were more positive toward the ad and showed greater intention to act when location-based content was present versus when it was absent. Research questions 5 and 6 focused on the model s assumed relationship between permission, brand trust and perceived risk. R5: Does the presence of permission reduce the consumer s perceived risk associated with mobile advertising? Permission does influence perceived risk [F (1, 373) = , p <.001]. As shown in Table 3, perceived risk is lower when permission is present versus when it is absent. R6: Does the presence of brand trust reduce the consumer s perceived risk associated with mobile advertising? Brand trust also influences perceived risk [F (1, 373) = , p <.01]. As shown in Table 3, perceived risk is lower when permission is present versus when it is absent.

28 21 Finally there was one significant interaction effect observed between trust and context in relation to the acceptance measure attitude toward the medium [F (1/378) = 9.09, p =.003]. To allow for further exploration of the key attributes in the model, additional data was collected. Respondents were asked to rate their overall reaction to the ad they received in the scenario. Crosstabulation was used to uncover the relationship between positive reaction and attributes present. This crosstabulation reinforced the prior findings and demonstrated the effects of each of the four variables. The prior findings indicated that permission and trust exerted the greatest overall effect. Here, of those respondents who had trust, relevance, and context present but permission absent in their scenario, only 53.1% rated their reaction as positive or very positive. Of those respondents who had permission, relevance, and context present, but trust absent, only 50% rated their reaction as positive or very positive. The absence of the remaining two variables (as would be predicted by the prior findings) showed more limited effect. Of those respondents who had permission, trust, and context present, but relevance absent, fully 81.5% rated their reaction as positive or very positive. Finally, of those respondents who had permission, trust, and relevance present but context absent, fully 71.4% rated their reaction as positive or very positive. These outcomes are statistically significant. The Chi-Square statistic equals with 15 degree of freedom and a significance level of <.01 (x 2 = , d.f. = 15; p<.01). Please reference Appendix B to see a full table of the Anova results for those findings that were not statistically significant.

29 22 DISCUSSION OF THE FINDINGS The conceptual framework presented in Figure 1 suggested that four attributes, permission, trust, relevance, and context, when present, increase consumer acceptance levels toward mobile advertising. In addition, permission and trust, when present, decrease the perceived risk associated with receiving mobile advertisements. The findings presented here support the framework and suggest that all attributes positively influence consumer acceptance levels of mobile advertising to a varying degree. Permission has the greatest overall influence on acceptance levels and positively influenced all three acceptance measures. When consumers provide the advertiser with explicit permission to send them mobile advertisements, their acceptance levels are higher. That is, they have a more positive attitude toward the ad and toward the medium as well as a greater intention to act on the ad. In addition, when permission is present in an advertising scenario, the perceived risk associated with receiving mobile advertising is also mitigated. This seems intuitive given societal norms and legislation already in place around opt-in and permission based advertising. Since consumers are already familiar with permission marketing in the medium, they consider it a ticket to play in the mobile marketing context as well. This confirms previous research surrounding permission-based advertising on mobile phones. The findings also suggest that if marketers only have one attribute present in their mobile advertising scenario, that attribute should be permission. It has the greatest overall positive effect on the consumer s acceptance of mobile advertising. Trust was also found to influence consumer acceptance levels of mobile advertising, although to a slightly lesser degree than permission. When consumers trust the brand they are receiving an ad from, their attitude toward the ad is more positive and their intention to act on

30 23 the ad is greater. In addition, when brand trust is present, the consumer s perceived risk associated with receiving mobile advertising is lowered, as the model posited. These findings are significant on two levels. First, from a social contract perspective, the research presented here suggests that consumers are willing to give up a certain level of privacy if they trust an advertiser, regardless of whether they gave the advertiser permission to send them ads. Second, from a practitioner perspective, this speaks to the importance of brand equity and the deep significance the consumer places on brand trust. If an advertiser is unable to gain permission to send mobile advertising, they should only target those customers who are loyal to the brand. Therefore, mobile advertising campaigns are better suited for customer retention versus customer acquisition. Context is the third most influential attribute in the model that positively influences consumer acceptance of mobile advertising. When ads are relevant to a consumer s time or place, they have a more positive attitude toward the ad and are more likely to act on the ad. This finding was supported by anecdotal feedback from respondents when asked what aspect of the scenario contributed to their positive response: Being near a Macy s when I received the text message. If I was at home or lunch or something I would be irritated. I was already shopping at the mall at the time I received the text and it was from a store I actually shop at. It boils down to the text s timing: if I received it at work or while busy doing something else I would have been irritated. The efficiency of receiving the message while shopping at a location near a Macy s. (Survey conducted by author, April 2011) These findings suggest that delivery of the ad in the right place is more important than the personalized content. That is, context has more influence than relevance. This may be because of the nature of the medium itself. Mobile phones offer instant gratification to the user and location-based advertising allows consumers to receive ads when they are most

31 24 timely. Respondents seemed less concerned with whether the ad was relevant to what they were shopping for and more concerned with whether the store they were receiving the discount for was close by. These findings are somewhat contrary to the old marketing adage that successful ads are a combination of the right offer, to the right person, at the right time. The unique combination of the mobile phone being such a personal device but also such a targeted advertising medium most likely contributes to this difference. Relevance was also found to positively influence consumer acceptance of mobile advertising. However, this attribute has the smallest effect out of the four attributes in the model. When consumers receive an advertisement on their mobile phone that is personally relevant, their attitude toward the ad is more positive. This finding is contrary to much of the previous research on acceptance of mobile advertising which suggests relevance is the main driver of consumer acceptance. Although it is a significant attribute, it is the least influential out of the four. One of the key attributes surrounding mobile advertising that make it so appealing to advertisers is the ability to serve ads that are highly relevant. Because advertisers are able to access demographic and psychographic infomation about mobile subscribers, they can serve them highly targeted ads. However, based on the findings presented here, the attribute that makes this medium so appealing to marketers is actually the least important to consumer acceptance of mobile advertising. Contrary to the researchers expectations, there was only one significant interaction effect among the attributes and it was between trust and context. When trust and context are present in a mobile advertising scenario, attitude toward the medium is more positive. This is significant for those advertisers who have not gained consumer permission to send mobile advertisements. The findings suggest that the benefits of the ad outweigh the risk of having

32 25 not given permission. This finding is significant from a social contract perspective as it appears that if the ad is timely for the consumer and the consumer has trust in the advertiser, the benefit of the ad outweighs the feeling of privacy loss experienced from having an advertiser know one s location.

33 26 CHAPTER 4 SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS The mobile phone is still a relatively new medium that advertisers have yet to fully leverage. Unique properties of the medium make it especially appealing to marketers who wish to send personalized, relevant, and timely advertisements to their target audience. Wireless network providers have a wealth of demographic and psychographic data about their subscribers that can be used to send highly targeted ads. In addition, GPS capabilities allow advertisers to send location-based ads that are contextually relevant to the consumer. However, consumers consider their mobile phones to be very personal devices and marketers walk a fine line between providing value to the consumer and irritating or even offending the consumer. This research presented a framework that suggests four attributes, permission, trust, relevance, and context, when present in the mobile advertising scenario, increase consumer acceptance levels of mobile advertisements. The framework also posits that permission and trust, when present, mitigate the perceived risk that is inherent in the implied social contract between advertiser and consumer. Based on the findings from this research, it is clear that all four attributes positively influence consumers attitudes toward mobile advertisements to varying degrees. In addition, the presence of consumer permission or advertiser trust mitigates the perceived risk inherent in this new medium. These findings suggest that when developing a mobile advertising campaign, the most influential attribute is permission. The second most influential attribute is trust. Context is the third most

34 27 influential attribute and relevance is the least influential attribute. Marketers should strive to gain permission from their customer s before sending mobile advertisements. However, if permission is not possible, it is important for marketers to target those customers who are already loyal to their brand. Most importantly, the findings presented in this research confirm that those attributes most important in traditional advertising transcend mediums and are applicable in mobile advertising as well. While the findings from this research suggest the mobile phone is a viable new medium for advertisers, there are limitations to the study. The sample used in this research was a convenience sample, rather homogenous, and heavily female. Future studies should attempt to gain a more random and representative sample of the mobile phone subscriber population. The study also did not control for those respondents who may be comfortable sharing private information. In this age of social networks, many people are more at ease making private information public and may have less concern with privacy issues traditionally associated with mobile advertising. In addition, the scale used to measure intention to respond to the ad had a Cronbach alpha reliability coefficient of only.679. Future research should attempt to use measures that more accurately predict consumer intentions. The study also asked respondents to imagine themselves in a given scenario and then answer questions about their attitudes based on self-report. This may have been difficult for respondents since they were not actually in the situation and did not view a real advertisement. Future studies should use an experimental design instead of survey methodology to replicate this research in a real-world setting and serve ads to mobile phone users. In addition, future researchers may benefit from understanding how adoption rates of mobile phone use affect acceptance of mobile advertisements. There may be some

35 28 correlation between those who use their phone heavily for web browsing or apps and those who have higher acceptance levels of mobile advertisements. It may also be beneficial to understand if the content of the ad influences consumer acceptance levels. For example, if the ad offers a specific monetary discount or simply builds brand awareness. In addition, this research was limited to SMS text advertisements. However, there are many other ways to serve targeted mobile advertisements including on the mobile web, in mobile gaming, and through mobile apps. Researchers may benefit from understanding if there are differences in acceptance levels based on the mobile advertisement type. Future research may also consider the framework from the advertiser or wireless network point of view. Understanding drivers of consumer acceptance of mobile advertising is the key to leveraging this new medium as a powerful tool that is mutually beneficial to the advertiser and consumer.

36 29 REFERENCES Aaker, D. A., & Day, G. S. (1983). Marketing research (2nd ed.). New York, NY: Wiley. Bamba, F., & Barnes, S. J. (2007). SMS advertising, permission and the consumer: A study. Business Process Management Journal, 13(6), Banerjee S., & Dholakia, R. R. (2008). Mobile advertising: Does location-based advertising work? International Journal of Mobile Marketing, 3(2), 68. Barwise, P., & Strong, C. (2002). Permission-based mobile advertising. Journal of Interactive Marketing, 16(1), Bauer, H. H., Reichardt, T., Barnes, S. J., & Neumann, M. M. (2005). Driving consumer acceptance of mobile marketing: A theoretical framework and empirical study. Journal of Electronic Commerce Research, 6(3), Bruner II, Gordon C., & Kumar, A. (2007). Attitude toward location-based advertising. Journal of Interactive Advertising, 7(2), 1. Cleff, Evelyn B. (2007). Privacy issues in mobile advertising. International Review of Law Computers and Technology, 21(3), Donaldson, T. (1982). Corporations and morality. Englewood Cliffs, NJ: Prentice Hall. emarketer Research Report. (2003). SMS marketing yields strong results. United Kingdom: emarketer. International Association for the Wireless Telecommunications Industry. (n.d.). Wireless Quick Facts. Retrieved from Jevons, C., & Gabbott, M. (2000). Trust, brand equity and brand reality in internet business relationships: An interdisciplinary approach. Journal of Marketing Management, 16(6), Kavassalis, P., Spyropoulou, N., Drossos, D., Mitrokostas, E., Gikas, G., & Hatzistamatiou, A. (2003). Mobile permission marketing: Framing the market inquiry. International Journal of Electronic Commerce, 8(1), Kazienko, P., Adamski, M. (2007). AdROSA Adaptive personalization of web advertising. Information Sciences, 177(11), Maneesoonthorn, C., & Fortin, D. (2006). Texting behaviour and attitudes toward permission mobile advertising: An empirical study of mobile users' acceptance of sms for marketing purposes. International Journal of Mobile Marketing, 1(1), Merisavo, M., Kajalo, S., Karjaluoto, H., Virtanen, V., Salmenkivi, S., Raulas, M., & Leppäniemi., M. (2007). An empirical study of the drivers of consumer acceptance of mobile advertising. Journal of Interactive Advertising, 7(2), 1.

37 Milne, G. R., & Gordon, M. (1993). Direct mail privacy-efficiency trade-offs within an implied social contract framework. Journal of Public Policy & Marketing, 12(2), Mobile Marketing Association. (2010, June). U.S. consumer best practices guidelines. Retrieved from Okazaki, S., Katsukura, A., & Nishiyama, M. (2007). How mobile advertising works: The role of trust in improving attitudes and recall. Journal of Advertising Research, 47(2), Okazaki, S., Li, H., & Hirose, M. (2009). Consumer privacy concerns and preference for degree of regulatory control: A study of mobile advertising in Japan. Journal of Advertising, 38(4), Rettie, R., Grandcolas, U., & Deakins, B. (2005). Text message advertising: Response rates and branding effects. Journal of Targeting, Measurement & Analysis for Marketing, 13(4), Sharma, C., Herzog, J., & Melfi, V. (2008). Mobile advertising: Supercharge your brand in the exploding wireless market. Hoboken, NJ: John Wiley & Sons. Tsang, M. M., Ho, S-.C., & Liang, T-.P. (2004). Consumer attitudes toward mobile advertising: An empirical study. International Journal of Electronic Commerce, 8(3), Vatanparast, R., & Asil, M. (2007). Factors affecting the use of mobile advertising. International Journal of Mobile Marketing, 2(2), 21. Xu, H., Oh, L.B., & Teo, H. H. (2009). Perceived effectiveness of text vs. multimedia location-based advertising messaging. International Journal of Mobile Communications, 7(2),

38 31 APPENDIX A RANDOM ASSIGNMENT SURVEY SCENARIOS

39 32 1. Imagine that you are at the mall shopping for a new shirt. While you are shopping, you receive a text message on your phone. The message is from Macy s department store and offers you a coupon for 20% off your next purchase. A couple weeks earlier, while on Macy s website, you gave the retailer permission to send you promotional advertisements to your cell phone. The timing couldn t be better because there happens to be a Macy s at the mall you are shopping at and they have a wide selection of shirts. You also trust Macy s as a retailer with fair prices, wide selection, and quality products. 2. Imagine that you are at the mall shopping for a new shirt. While you are shopping, you receive a text message on your phone. The message is from Macy s department store and offers you a coupon for 20% off your next purchase. You never gave Macy s permission to send promotional advertisements to your phone but the timing couldn t be better because there happens to be a Macy s at the mall you are shopping at and they have a wide selection of shirts. You also trust Macy s as a retailer with fair prices, wide selection, and quality products. 3. Imagine that you are at the mall shopping for a new shirt. While you are shopping, you receive a text message on your phone. The message is from Macy s department store and offers you a coupon for 20% off your next purchase. A couple weeks earlier, while on Macy s website, you gave the retailer permission to send you promotional advertisements to your cell phone. The timing couldn t be better because there happens to be a Macy s at the mall you are shopping at and they have a wide selection of shirts. However, because of a recent negative shopping experience at Macy s, they are no longer a retailer you trust for fair prices, wide selection, or quality products. 4. Imagine that you are at the mall shopping for a new computer. While you are shopping, you receive a text message on your phone. The message is from Macy s department store and offers you a coupon for 20% off your next purchase. A couple weeks earlier, while on Macy s website, you gave the retailer permission to send you promotional advertisements to your cell phone. The timing couldn t be better because there happens to be a Macy s at the mall you are shopping at. You also trust Macy s as a retailer with fair prices, wide selection,

40 33 and good quality products. However, you came to the mall to buy a new computer and Macy s does not sell computers. 5. Imagine that you are at the mall shopping for a new shirt. While you are shopping, you receive a text message on your phone. The message is from Macy s department store and offers you a coupon for 20% off your next purchase. A couple weeks earlier, while on Macy s website, you gave the retailer permission to send you promotional advertisements to your cell phone. The timing couldn t be better because Macy s has a wide selection of shirts and you trust Macy s as a retailer with fair prices, wide selection, and good quality products. However, there is not a Macy s at the mall you are currently shopping at. 6. Imagine that you are at the mall shopping for a new shirt. While you are shopping, you receive a text message on your phone. The message is from Macy s department store and offers you a coupon for 20% off your next purchase. You never gave Macy s permission to send promotional advertisements to your phone but the timing couldn t be better because there happens to be a Macy s at the mall you are shopping at and they have a wide selection of shirts. However, because of a recent negative shopping experience at Macy s, they are no longer a retailer you trust for fair prices, wide selection, or quality products. 7. Imagine that you are at the mall shopping for a new computer. While you are shopping, you receive a text message on your phone. The message is from Macy s department store and offers you a coupon for 20% off your next purchase. You never gave Macy s permission to send promotional advertisements to your phone but the timing couldn t be better because there happens to be a Macy s at the mall you are shopping at. You also trust Macy s as a retailer with fair prices, wide selection, and good quality products. However, you came to the mall to buy a new computer and Macy s does not sell computers. 8. Imagine that you are at the mall shopping for a new shirt. While you are shopping, you receive a text message on your phone. The message is from Macy s department store and offers you a coupon for 20% off your next purchase. You never gave Macy s permission to send promotional advertisements to your phone but the timing couldn t be better because