The Impact of Firms' Increased Information About Consumers on the Volume and Targeting of Direct Marketing
47 Pages Posted: 8 Jun 2004
Date Written: August 1997
Firms are acquiring greater personal information about consumers. This has allowed direct marketers to better target their advertising, although many believe it compromises consumers' informational privacy. The model developed in this paper predicts the impact of increased information on the volume and targeting of direct marketing, and on consumers' expected utility from this advertising, under various possible market structures. The historical evidence presented appears to confirm the model's predictions under the most likely scenarios, that as firms gain information about consumers the volume of direct advertising sent out should initially increase rapidly before eventually leveling off.
Keywords: direct marketing, targeting, information, direct mail, spam, informational privacy
JEL Classification: M31, M37, D89
Suggested Citation: Suggested Citation