Location-Based Advertising: The Role of App Design: An Abstract

Recently, with the widespread of mobile devices, mobile marketing, which can be conducted anytime and anywhere, has received increased attention and is strengthened by academics and practitioners. This ever-increasing popularity, besides the actual and potential marketing advantages, has led to optimistic forecasts regarding the adoption of location-based advertising (LBA) (Lin 2016). For example, in the US alone, it is projected that location-based mobile ad spending would grow from 17.1 billion USD in 2017 to 38.7 billion USD in 2022 (Statista 2019). Taking into account the vast potential market for LBA as a novel advertising medium, and also the currently limited literature about it, the aim of this research is to examine how consumers react toward the culture-laden design of mobile applications focusing on the role of application atmospherics in the context of location-based advertising (LBA) and ridesharing apps. Drawing from previous research on culture-laden website design, our experimental study with consumers from Canada confirms that LBA displayed on locally (vs. internationally) designed ridesharing apps elicits less perceived ad intrusiveness and higher intention to purchase. Regarding mobile app atmospherics, we find that consumers perceive a local (vs. international) app design as more informative, more entertaining, and more effective. Furthermore, higher levels of app atmospherics lead consumers to perceive LBA as less intrusive as well as enhance consumers’ purchase intentions, thereby emphasizing the important role of app atmospherics to predict and mobile consumer behavior. Our empirical results confirm that two atmospherics (entertainment and effectiveness, but not informativeness) mediate the effects of culture-laden app design on consumer reactions. We discuss the theoretical implications of our findings as well as managerial implications for mobile application design and LBA effectiveness. Future research could look into the role of destination congruency (spatial distance). Also, for cases where people use both desktops and touch screen devices (booking on Airbnb), the role of touch vs. regular devices is also worthy of research.