ALGORITHMIC PERSONALIZATION AND CONSUMER TRUST: EXAMINING THE IMPACT OF AI-DRIVEN MARKETING ON PURCHASE INTENTIONS IN PAKISTAN’S DIGITAL ECONOMY

Abstract

The rapid integration of artificial intelligence (AI) into digital marketing has transformed how firms engage with consumers through algorithmic personalization. This study examines the impact of AI-driven marketing on consumer trust and purchase intentions in Pakistan’s digital economy, with a particular focus on the mediating role of consumer trust. A quantitative, explanatory research design was employed, and data were collected from 400 online consumers using a structured questionnaire. The results indicate that algorithmic personalization has a significant positive effect on both consumer trust and purchase intention. Furthermore, consumer trust significantly mediates the relationship between personalization and purchase behavior, highlighting its critical role in converting digital marketing stimuli into actual consumer decisions. The findings suggest that while AI-driven personalization enhances marketing effectiveness, its success largely depends on transparency, privacy assurance, and trust-building mechanisms. This study contributes to the literature on AI-enabled marketing by providing empirical evidence from an emerging economy and offers practical insights for marketers and policymakers aiming to enhance consumer engagement in digital platforms.