THE IMPACT OF AI-ASSISTED PERSONALIZED DIGITAL ADVERTISING ON CONSUMER BEHAVIOUR AND RETENTION: MODERATED BY ETHICAL CONCERNS

Abstract

The research examines the impact of personalised digital advertising with the help of artificial intelligence (AI) on consumer behaviour, especially regarding the choice of purchase, retention of customers, and ethical issues. It also addresses to harmonise the technological innovations in AI with ethical systems that are needed to have sustainable digital relationships in marketing. The quantitative survey-based design was used, with responses to 140 participants of various professions being collected. Statistical methods (regression analysis, chi-square analysis, and PROCESS Model (1 and 4) methods were used to test the effects of mediation and moderation in the proposed conceptual model. The results indicate that AI is an important tool to improve the efficacy of personalized advertising, which influences consumer purchasing behaviour. The mediation analysis shows that the association between AI assistance and consumer purchase decision is completely mediated by personalized advertisements. Though, ethical considerations are a balancing force, and they undermine the relationship in case of problems of trust and transparency. The research has some drawbacks that limit generalizability as it depends on convenience sampling and is within a small geographical area. Cross sectional design does not allow any inferences about cause-and-effect and therefore longitudinal and cross-cultural studies are important to extensively comprehend the variables interrelationship and to identify explicit variables holistically. The results are an invitation to marketers to add ethical protection, transparency protocols, and fairness to AI systems to establish trust among consumers and use personalization to enhance engagement and retention. By managing issues of privacy and algorithmic bias, companies can encourage responsible AI usage, which guarantees acceptance in the society and prevents consumer mistrust. The current study offers empirical data of how AI can be a dual role to digital advertising to improve effectiveness and create ethical issues and proposes a more complex framework, based on the Stimulus Organism Response model, to consider in future studies. Highly credible peer-reviewed journals were studied to establish the contents of the research article i.e Scopus, web of science-Indexed, Emerald Insight etc.