When Disclosures Backfire: Aversive Source Effects for Personalization Disclosures on Less Trusted Platforms

Abstract

Recent studies indicate that transparency about data collection practices for personalized advertising in the form of disclosures increases advertising effectiveness. This work, however, demonstrates that for advertising platforms with an untrustworthy reputation, personalization disclosures may backfire because the motives of placing such disclosures are perceived as insincere. Study 1 shows that a personalization disclosure framed as a warning that is placed alongside an advertisement by the untrustworthy platform itself decreases advertising effectiveness compared to when the personalization disclosure is placed by a more trusted third party. Notably, these effects of disclosure source decrease when the disclosure is merely framed as notification. Study 2 replicates this backfire effect for a different disclosure source and examines the underlying process. When a disclosure is placed by the untrustworthy platform itself, the effect of the disclosure backfires because the motives of placing the disclosure are perceived to be insincere, which decreases advertising effectiveness. When the disclosure source is external, the backfire effect reverses, decreasing the perceived insincerity of motives and increasing advertising effectiveness. Study 3 manipulates a fictive platform's trustworthiness and replicates the backfire effect, confirming the notion that especially for untrustworthy platforms placement of personalization disclosures by a company source decreases advertising effectiveness.