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The Impact of Firms' Increased Information about Consumers on the Volume and Targeting of Direct Marketing

Shiman, Daniel R., "The Impact of Firms' Increased Information about Consumers on the Volume and Targeting of Direct Marketing" (August 1997). Available at SSRN:

Abstract:

    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.
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