How Digital Nudges Influence Consumers – The Role of Social and Privacy Nudges in Retargeting

Retargeting is an innovative online marketing technique because it can provide consumer-specific advertising content based on consumers’ browsing behavior that meet consumers' prefer-ences and interests. Although this advertising form offers great opportunities of bringing back customers who have left an online store without to complete a purchase, retargeting is risky be-cause the necessary data collection leads to strong privacy concerns which in turn, trigger con-sumer reactance and decreasing trust. Digital nudges – small design modifications in digital choice environments which guide peoples’ behavior – present a promising concept to bypass these negative consequences of retargeting. In order to explore the positive effects of digital nudges in retargeting banners, we conducted a between-subject experiment with a subsequent survey which examines the impacts of social nudges (likes of friends) and privacy nudges (disclosure of privacy policy and purpose of retargeting banners). Whereas the social nudge led to a negative impact on consumers’ privacy concerns and a positive impact on consumers’ booking behavior, the privacy nudge did not have any significant impact. A combination of social nudge and privacy nudge showed that the privacy nudge negatively moderated the positive relationship between social nudge and consumers’ booking behavior. The derived implications provide a theory for under-standing nudges in digital environments and we offer design principles for practitioners that enable better retargeting outcomes.