The Impact of Attitudes toward Online Retargeting Ads on Brand Perception among Gen Z: the Mediating Effect of Ad Fatigue & the Moderating Effect of Perceived Ethicality

Abstract

Advertising has evolved from traditional methods to digital platforms, leveraging behavioral targeting and dynamic retargeting to deliver personalized ads. This study examines the impact of attitudes toward online retargeting ads on brand perception among Generation Z in the Western Province of Sri Lanka, with ad fatigue as a mediator and perceived ethicality as a moderator. Given the high digital engagement of Generation Z, understanding their interaction with retargeting ads is crucial for marketers. While previous studies primarily focus on the direct relationship between advertising and purchase intention, research on brand perception especially within the Sri Lankan context remains limited. This study addresses this gap by positioning attitude toward online retargeting as the independent variable, brand perception as the dependent variable, and incorporating ad fatigue and perceived ethicality as mediating and moderating variables, respectively. A quantitative research approach was adopted, utilizing survey data from 390 valid responses. Findings reveal that attitudes toward online retargeting ads significantly influence brand perception among Gen Z in the Western Province, Sri Lanka. Additionally, ad fatigue significantly impacts brand perception, as repetitive and intrusive ads contribute to consumer frustration. Furthermore, ad fatigue mediates the relationship between attitude toward online retargeting ads and brand perception, emphasizing the importance of balancing personalization and frequency in retargeting campaigns. However, the study found that perceived ethicality does not moderate the relationship between attitude toward online retargeting and ad fatigue, likely due to limited awareness of data ethics and privacy laws among Sri Lankan Gen Z consumers. While these findings offer valuable insights for marketers, the study acknowledges limitations, including the lack of cultural and economic variations in perceptions of retargeting ads and potential constraints of the survey-based methodology in capturing real-world behavioral patterns. This research is particularly beneficial for Sri Lankan marketers seeking to navigate the unique expectations of Generation Z consumers, offering strategic implications for sustaining a positive brand image in the evolving digital landscape.