Consumers, judging from the numbers, love social buying sites such as Groupon. Consumer also, judging from numerous surveys, hate online behavioral tracking and ad targeting. But now that Groupon has started doing exactly that, which instinct will win out?

Oh, the wildly popular social buying site is not calling its new service behavioral targeting. Rather, Groupon refers to it as deal personalization - a feature that allows the site to send consumers deals in which they would be most interested. It is a win for the site, its advertisers - that is, the companies whose deals are being promoted -  and the buyers.

Before Groupon could only offer one or two deals per city per day, putting advertisers on a long waiting list in certain markets. Now the site can send different deals to users based on their gender, buying history and interests (via Tech Crunch).

Local personalization is being introduced in Chicago, Los Angeles, New York City, San Francisco, San Jose, and Seattle with more to be added. This is how it will work, according to Tech Crunch: a user signs up and gives her zip code and gender. Then, Groupon will ask her to specific the deals in which she is most interested. "Deals will be distributed based on a personalization algorithm."

None of this would be eyebrow-raising weren’t it for the fact that local online group buying sites - a model that Groupon established but has since been copied by several other firms - have become defacto forms of local advertising.  And consumers' attitudes towards behavioral targeting and ad targeting - not to mention many in Congress - are well known. Simply put, according to the Annenberg-Berkley survey "Americans Reject Tailored Advertising", they hate it.

Well, not exactly.

Other research suggests that consumers don't mind it if the trade-off is acceptable.

The Right Context

The right context is necessary, a recent study by PreferenceCentral finds. Consumers will likely opt for targeted advertising when asked to make real-world, value-for-value trade-offs, such as free access to internet content. The research also found that attitudes and preferences significantly shift when consumers educated about behavioral targeting or when they are offered ways to control their exposure to these ads. The findings differed from previous ones such as Annenberg-Berkley because those surveys asked single-option questions, PreferenceCentral said.