Delivering Privacy-Friendly Location-Based Advertising Over Smartwatches: Effect of Virtual User Interface

The expansion of smartwatches and positioning technologies have offered marketers the opportunity to provide consumers with contextually relevant advertising messages. However, perceived privacy risk and a lack of privacy control are preventing consumers from using location-based advertising (LBA). This study explores how variation in the design of the user interfaces of smartwatches (regular user interface vs. virtual user interface) affects the perceived ease of privacy control, perceived privacy risk, and ultimately the intention of consumers to use LBA. A simple mediation analysis is conducted on the data collected from a between-subjects experiment (N = 335). The obtained results extend the growing literature on the topic of LBA and privacy concerns related to it. The results indicate that a smart-watch augmented with a virtual user interface increases perceived ease of privacy control. Also, this has a direct positive effect on perceived privacy risk and the intention to use LBA. However, perceived privacy risk does not mediate the relationship between perceived ease of privacy control and the intention to use LBA. The findings of this study have important implications for various commercial players.