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JEL Classification System

M31, M37, K24, L86

Abstract

The intensification of data-driven advertising has heightened public scrutiny of digital privacy and exposed persistent contradictions in consumer behavior. This structured integrative narrative review critically synthesizes contemporary research on the privacy paradox in digital advertising, with emphasis on consumer privacy concerns, stakeholder tensions, trust formation, transparency, perceived control, and privacy-reconfiguring advertising ecosystems. Drawing on interdisciplinary evidence from marketing, information systems, and digital policy research, the review maps five key domains: the evolution of privacy concerns; multi-theoretic perspectives explaining privacy-related behaviors; stakeholder tensions among consumers, advertisers, and regulators; the effect of privacy perceptions on trust and engagement; and the role of transparency and perceived control. Findings demonstrate that privacy attitudes are shaped by contextual, psychological, and technological influences and that trust and perceived agency significantly mediate responses to targeted advertising. Although regulatory advances and privacy-enhancing mechanisms have emerged, power asymmetries and opaque data practices continue to undermine consumer confidence. The review proposes a holistic framework integrating privacy calculus, persuasion knowledge, and regulatory focus to advance understanding of privacy-decision dynamics. Implications emphasize ethical personalization, transparent data governance, and privacy-by-design as strategic imperatives for sustaining trust and value in digital advertising ecosystems.

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