Advertising Ethics

The Ethics of Behavioral Targeting

Recently, both the advertising industry and the government have turned their attentions toward online behavioral advertising, or behavioral targeting. Central to the Federal Trade Commission’s focus is consumer concerns that behavioral targeting compromises personal privacy. On the other hand, marketers are interested in using behavioral targeting to send relevant and cost-effective ads to online users.¹ But this issue isn’t merely a regulatory question; an ethical analysis by marketers as to the use of behavioral targeting will build consumer trust.

Behavioral targeting segments consumers according to the interests they express in online activities. eMarketer recently completed an analysis on the scope of this marketing process:

Behavioral targeting segments the audience based on observed and measured data—the pages or sites users visit, the content they view, the search queries they enter, the ads they click on, the information they share on social internet sites and the products they put in online shopping carts. This data is combined with the time, length and frequency of visits. Recency counts a lot too—data from two weeks ago is far less accurate at predicting interest than from two days ago.²

An ethical analysis centers on consumers’ feelings that behavioral targeting infringes on personal privacy. Recent consumer research shows that, “A six in ten majority (59 percent) are not comfortable when Web sites like Google, Yahoo! and Microsoft (MSN) use information about a person’s online activity to tailor advertisements or content based on a person’s hobbies or interests.” Consumer concern, according to the eMarketer findings, is one of the factors holding back the growth of behavioral targeting by marketers.

While there are privacy laws that protect consumers’ medical and financial information, there are not laws that currently prohibit online marketers from collecting and using personally identifiable information (PII) or other possibly sensitive information, including Internet protocol (IP) addresses. But this issue goes beyond legalities to the ethical question of what is the right and fair way for businesses to advertise to consumers, who bear the benefits and burdens of behavioral targeting.³

What is the right way for businesses to treat consumers? Is it right for marketers to give total control to consumers of the collection and sharing of their information? Or is it right for a business to be able to provide consumers with more relevant, targeted information about products and services?⁴

We start by analyzing the consequences of these two sides to the issue—the positive and negative impact upon consumers. This is the approach the government would follow in determining the costs and benefits of laws and regulations. Giving the consumer total control over sharing his interests and online activity with marketers would protect his privacy in an absolute sense, but at what cost? Opting in at every Web site or even disabling cookies could make online commerce and transactions burdensome for the consumer. And Web visitors routinely benefit from the product information that stems from online behavioral targeting. Pepsi recently launched its new low-calorie Aquafina Alive drink by advertising on sites that were visited by users who were interested in healthy lifestyles—a strategy made possible because of the assistance of behavioral targeting.

Next, we can determine if there is a universal rule that could guide our ethical analysis. To my knowledge there is no such rule in existence. It would be difficult to administer and enforce an absolute prohibition on the collection and sharing of all consumer information. A better rule would be for the consumer to receive specifics as to how his information will be shared and protected.⁵ The research conducted by the Harris Poll found that consumers’ level of confidence with behavioral targeting went up slightly after being exposed to information on how their information would be shared and protected.

In order to ensure that their marketing practices are ethical, businesses engaging in behavioral targeting should first review research on consumers’ attitudes and beliefs about the issue and then develop online advertising policies that demonstrate their commitment to protecting the privacy of their customers.

Advertising is at its best when it’s helping consumers make informed decisions about their purchases. And behavioral targeting is one of the most effective ways for marketers to reach the right audience. But this practice is contingent on the protection of consumer privacy. Once advertisers commit to using behavioral advertising ethically, both marketers and consumers can benefit.

Footnotes:
¹ The AAF and other industry associations have filed comments with the Federal Trade Commission on behavioral targeting. This blog contains the personal views of the writer, which I believe are consistent with the associations’ comments.

² Behavioral Targeting: Marketing Trends, eMarketer, June 2008.

³ My definition of ethics includes fairness, in terms of both the nature of the product and the nature of the audience and the manner in which they’re treated.

⁴ My analysis is aided by an ethical process refined by author Rushworth Kidder in his book, How Good People Make Tough Choices.

⁵ The Federal Trade Commission has proposed for discussion behavioral advertising self-regulatory guidelines.

(Back to top.)

Green Claims: A Great Opportunity to Connect—or Not—With Consumers

Ever greater awareness of the threats to our environment has created opportunities for companies to serve both the public interest and to build their businesses. As always, they must have “something to sell,” and their advertising claims must be credible and ethical. Consumers are searching for “green” products because of greater awareness and belief in the need to reduce greenhouse gases, reduce materials in products that are hazardous to the environment and to conserve scarce natural resources. The need for efficient recycling of everything from computers to plastic bottles is garnering a lot of consumer attention. In response, more and more companies are entering the marketplace with products that claim to be environmentally friendly.

Consumers will reward those companies providing environmental solutions. The Wall Street Journal just found that consumers were willing to pay more for a product that been produced ethically and were even more adamant about paying less for products that are irresponsible, unethical or untrustworthy. (Read the article here.) Also witness Toyota’s success with the hybrid Prius and the other car manufacturers that are racing to bring out hybrids. And Dell Inc. has reaped extremely positive consumer response from its new computer recycling service. In fact, Michael Dell, whose company was roundly criticized in the past for its environmental practices, was recently celebrated at an environmental conference as “One of the most forward thinking CEOs in the country when it comes to the environment.” Clearly, consumers are willing to spend their economic resources on companies that make good on their green claims.

But consumers are turned off by claims that are false or unethical. A new pejorative term has been coined to label false and unethical environmental advertising as “greenwashing.” Companies are also taken to task for “masking” claims in situations where they may have a truthful environmental claim for one product, but the company has a negative environmental record.

With our new digital world consumers have greater opportunities to reward and punish those companies making green claims. Social networking sites and blogs present thousands of opportunities a day to praise and criticize. And now there is a new online interactive Web site for consumers to actually green claims. Developed and managed by Enviromedia, an Austin, Texas, advertising agency, the Greenwashing Index provides consumers with the opportunity to gauge green advertising claims. (See www.greenwashingindex.com.)

The purpose of the site is to “stimulate the market and demand for sustainable business products to reduce impact on the environment” and “hold businesses accountable to their environmental marketing claims.” Visitors to the site rate green claims on a scale of one (”Good Ad”) to five (”Total Greenwashing”). For the ratings consumers are given criteria, including “misleads with words…and graphics,” “exaggerates how green the product or company is” and “masks important information to divert attention.”

To date 97 ads have been submitted to the site by consumers to be rated. Two of them illustrate the “good” and the “bad.” A print ad for TXU Energy urging “Celebrate Earth day every day” with the tagline “Powering a Clean Environment” has received an overall rating of 4.65. Consumer comments include, “Wants you to forget they are the largest generator of filthy coal in Texas.” On the other hand, a TV consumer product ad for Sylvania Elogic light bulbs received an overall positive rating of 1.7. Advertising claims included “”50% more life” and the green claim of “less glass packaging waste.” Comments included, “Does not use green or natural images that give the impression the product is more environmentally friendly than it is.”

Companies who ethically make environmental claims about their products will earn the respect and financial support of consumers. But those companies making unethical claims will be found out, sooner or later, and may make the Greenwashing Index—on the wrong end of the scale.

DTC Advertising Can Rebuild Consumer Trust Through Third Party Self-Regulation

A recent consumer survey, reported in the January 28, 2008, edition of Advertising Age, concluded that 34 percent of adults aged 18 to 26 agree with the statement “I trust pharmaceutical companies less than I used to.” That indictment of a segment of business that is critical to the health of Americans, and to our industry, was not helped by the troubling allegation that ads for Vytorin continued for over a year after internal medical research showed one major claim lacked support.

As one who believes in the importance and value of prescription drug advertising directed to consumers and who has worked hard over the past 15 years to permit and protect it, I urge that the industry rebuild public trust through the highest ethical advertising. I am not talking about reactive public relations campaigns, but proactive interaction between client and agency so as to present truthful and highly ethical medical information to consumers who count on it.

This latest episode has strengthened the unwise and now standard call from some members of Congress to severely restrict DTC advertising through a two- or three-year moratorium on ads for new prescription products. This is not a medical solution, but a political strategy by critics who don’t want consumers to have access to drug advertising. We must remember—and continue to communicate—that people benefit from advertising, as long as it is truthful and trusted.

Consumer trust is inextricably linked with advertising ethics. A study conducted in 1996 by Bozell Worldwide showed that consumers ranked “ethics and values” as the number-one factor in assessing whether or not a company can be called a “corporate good citizen.”¹ The prescription drug industry has developed standards for directing their ads to consumers. Known as the PhRMA DTC Guiding Principles, these guidelines include a recommendation that “all DTC information should be accurate and not misleading, should make claims only when supported by substantial evidence, should reflect balance between risks and benefits, and should be consistent with FDA approved labeling.” I would personally propose that these principles be augmented to specify that full, internal discussions should take place between clients and agencies when developing appropriate advertising claims. And agencies should be aware of all of the scientific support—or lack thereof—that can be relied on for each claim. In order to effectively create ethical DTC advertising, clients and agencies must address these issues early in the process.

Best of all, these strengthened PhRMA guidelines would be overseen by a third-party group such as the National Advertising Division of the Council of Better Business Bureaus. This step will build trust and credibility for this important industry.

We know that consumers continue to benefit from truthful prescription drug ads and that doctors have benefited from better educated patients.² But the industry too will benefit from ethical DTC advertising and marketing by building consumer trust.

¹ The study “Global Corporate Citizenship: Improving Perceptions in the 90’s.” was conducted by Bozell Worldwide, The Wall Street Journal International Edition and the Nihon Keizai Shimbun in 1996.

² Out of 3,000 patients in a Health Affairs study, 35 percent discussed an ad for a medication during their appointment, and of that population, 25 percent received a new diagnosis. Approximately 43 percent of the new diagnoses were for “high priority” conditions such as hypertension, diabetes, depression and high cholesterol.

Attention, But at What Cost?

Belvedere Vodka has introduced a new provocative print and television campaign to compete against Grey Goose in the luxury vodka market. “The brand is donning fishnets, getting spanked in public and otherwise behaving lewdly in an attempt to stand out in the increasingly crowded luxury vodka category.” AdAge.com, December 3, 2007. (View TV commercial.)

In my previous column, I defined ethical advertising to include Taste and Decency and counseled that the client and agency should proactively consider the ethical consequences of advertising that could be considered offensive by the brands customers.

Apparently in this case client and agency agreed on the shocking portrayal of women to attack competitor Grey Goose’s “uptown” image. Paul Ashworth, Moet’s senior VP – Belvedere, said of the new $20 million campaign, “We want to be sexy, and we want to be provocative.” Ewen Cameron, Berlin Cameron executive creative director, said the campaign is meant to make consumers take sides: “Brands need to say, ‘are you with us or with them?’”

But did they consider the ethical consequences of a campaign that may offend woman vodka drinkers? Women constitute 49 percent of the luxury vodka market¹. Clearly they were aware of the negative implications. From the same AdAge.com article: “According to Mr. Ashworth, several cable networks refused to run the original spot. Outtakes—including several shots using the bottle as an explicitly sexual prop—will be featured on a new Web site set to launch in early December.”

Perhaps the Spirits category is different from other brand marketing. Arthur Shapiro, a veteran spirits industry consultant, opines “One way to stand out at a crowded party is to put a lampshade on your head. It doesn’t necessarily make a good impression, but it does make one.”

This is an assumption that is often heard in the industry: “It’s good to get the customer’s attention even if it makes them mad.” But how can we conclude that a potential customer angered by advertising will purchase the brand? I believe that women searching for an upscale vodka would be more attracted to a brand connecting to them through ethical advertising. This seems to have been proven by Dove’s very successful Campaign for Real Beauty, which was still risky in its depiction of women but was also developed with them in mind.

¹http://www.sparklingnuvo.com/Press/courant_2007-06-10.pdf

Advertising Ethics: An Introduction

Advertising is the most competitive industry in America. It facilitates both performance and price competition among products and services. To do so it must compete for the consumers’ limited time and attention. It must be persuasive and credible, and as I believe and urge—ethical—to build brand loyalty and trust. In my view not enough attention is given to advertising ethics.

It is understandable that professionals and students of advertising stress the Four P’s of Marketing: Product, Price, Promotion and Place. Yet, how often are the positive and negative consequences of advertising ethics proactively taken into consideration? Not often enough. To the contrary, clients are forced to deal reactively with irate consumers who have taken offense from claims and depictions in their ads.

Take the print ad for Dolce & Gabbana that appeared in Esquire magazine: “A woman, fully clothed in a tight dress and spiked heels, lies on her back, hips raised as a bare-chested man holds her down and four other men look on. The menace in the situation is underscored by the fact the woman is blankly unsmiling and some of the men appear to have slight sneers on their faces.” Brandweek, February 20, 2007. Women and women’s organizations quickly took offense. The National Organization for Woman charged that the ad depicted “Stylized gang rape.”

It is difficult for me to see how this ad advanced Dolce & Gabbana, which markets upscale Italian fashions to women. Moreover, it certainly did not advance the image of the advertising industry.

This ad ran afoul of what I would call “taste and decency,” a most difficult area of advertising ethics. I want to make it clear that I do not believe in politically correct speech, and I would be the first to combat any attempt by government to regulate in this area. But we must be very sensitive to the ethical concerns of our consumers.

It is up to the company and its ad agency to internally articulate and practice advertising ethics for its brands. I believe this will enhance brand reputation and consumer loyalty. Take the time in advance to proactively discuss the ethical consequences of ad claims and depictions. I know the devil is in the details. I don’t want to suggest a burdensome process here. In future columns I will provide my guidelines, and I would appreciate your suggestions.

Advertising ethics in my view also includes truthfulness and fairness, which includes the nature of the audience and the nature of the product. Over the next few months I would like to open a dialogue on questions regarding children’s advertising, multicultural marketing and other challenges presented by taste and decency. Please join in the discussion by leaving comments below.