The role of well‐being in consumer's responses to personalized advertising on social media

<jats:title>Abstract</jats:title><jats:p>In two studies, this paper examines how perceived personalization in advertisements on social media affects brand engagement and ad avoidance. Using a preregistered between‐subjects cross‐sectional survey (<jats:italic>n</jats:italic> = 794), we tested four different moderated mediation models with perceived creepiness and perceived relevance as competing mediating variables, and hedonic and eudaimonic well‐being as moderating variables. Perceived relevance explains the positive effect of perceived personalization on brand engagement and the negative effect on ad avoidance. Moreover, perceived creepiness explains the negative effect of perceived personalization on ad avoidance. Contrary to our hypotheses, we find positive effects of perceived personalization via perceived creepiness on brand engagement and ad avoidance. Then, a qualitative think‐aloud survey (<jats:italic>n</jats:italic> = 36) shows that participants are accustomed to personalized advertisements and scroll to avoid them unless there is relevant or useful content. Independent of their well‐being, participants are not creeped out because of personalized advertising; however, it does raise their privacy concerns. Finally, the findings of our two studies indicate that advertisers and social media need to particularly consider consumers' negative affective well‐being to effectively deliver personalized advertisements due to the increase in creepiness and/or privacy concerns.</jats:p>