Personalization is a powerful marketing tactic, often appreciated by customers. But it has some downsides worth knowing. While personalization and targeted advertising provide many advantages, the practice can also violate customers’ privacy rights to an unprecedented degree. This article will talk about targeted advertising ethics and how to ensure it within the company.
Personalization and targeted advertising ethics
Online personalization includes everything from adding customer names, using welcome phrases in emails to adjusting website content for every visitor with a little help from AI solutions. The main goal is to increase customer engagement and conversions through improved relevance.
While targeted advertising is truly beneficial, it is often poorly understood by most consumers. It’s non-transparent and deceptive, and in many cases, does not even provide a reasonable chance to opt-out. Technology will continue to provide marketing opportunities that do not only continue getting better and more popular but also inappropriate and unethical. Most marketers using these tools have never had to think about what is okay and what is not.
Customers don’t mind sharing their data if they get something in return –access to free valuable services. But they are also alert. As soon as they feel that the targeted ads are intrusive or inappropriate, they will not engage. Because of this, marketers need to balance between ads extremely adjusted to customers’ needs and ads that are not treated as a threat by the audience.
The next few years will show an increase in awareness about targeted advertising ethics. Laws, regulations, policies, as well as in-depth ethical analyses of the practice are just beginning to show up. However, there is a Federal Trade Commission (FTC) that is a notable exception. Since 2009, the agency has engaged in dialogues about the dangers of targeted advertising to consumers.
Ensuring targeted advertising ethics
While most consumers are not even aware that the provider often analyses their emails, this targeting technique is a lot more intrusive than contextual ads. This is an example of how difficult it is to regulate a fast-moving technology that constantly creates new realities. It becomes apparent that some guidelines might be a valuable tool to ensure targeted advertising ethics in the face of those difficulties. And here are a few tips that should be taken under consideration within the company.
Don’t mislead your customers
With regard to the targeted advertising ethics, the inherent moral duty of not being deceitful is often violated. As in the preceding cases of stealth browser-based and ISP-based targeting, some companies acted deceitfully when they purposefully hid their tracking devices and, ultimately, their intentions. Arguably, Expedia’s contextual advertisements and Bloomberg’s traditional browser-based tracking are not deceitful since they provide information about their practices.
However, truth-telling is more than avoiding outright deception. It also requires transparency. Customers should receive full disclosure about how their personal data are being collected and used. The moral duty of truth-telling is reflected in the American Marketing Association’s code of ethics. The AMA states six ethical values: honesty, responsibility, fairness, respect, transparency, and citizenship.
A lack of transparency might also lead to unfair competition. So far, most websites, which charge money but protect customers’ privacy, have not been very successful. In most cases, customers are in a position to locate a site that offers similar information for free. However, unrecognised to most customers, the “free” website might not charge money but will also collect information about them. Therefore, the website really is not for free since it requires the consumer to provide information in return for visiting the site. Consumers unaware that their information is being collected might base their preference of “free” websites over paysites on wrong assumptions. In other words, “free” sites, which do not adequately inform consumers about their targeting practices, might have an unfair competitive advantage over sites that charge money but don’t collect any information.
Be transparent in your actions
Active transparency requires companies to take reasonable action to ensure that customers understand the information provided.
As long as customers are properly informed that their data will be collected, they always have – at least theoretically – choosing not to use the website. However, since most websites use some information collection, customers would practically be cut out of the Internet altogether. Similarly, while most web browsers provide customers with the theoretical option to reject tracking cookies, once this option is exercised, the websites often cannot be visited anymore or are not fully functional. Interestingly, most initiatives to increase customer control do not come from online marketers but from third parties such as companies that produce browsers or software programs that allow anonymous surfing.
Control information flow
Customers should have the opportunity to take comprehensive control over their data. They should be able to determine which data are being collected and how the data are being used. To the very least, they should have a reasonable choice to opt-out.
While the call for total customer control over their data is utopian, establishing an open market for privacy would put them in a position to decide which of their information will be collected and how it will be used. Online marketers could buy customers’ private information and pay for it either with money or free access to websites. In essence, customers would be selling their data. While customer data have become a tradable commodity for a long time, this approach lets customers participate directly. That is, customers would be able to trade their personal information for money or other benefits directly. The advantage of this approach is that they would be more in control of their data being collected and how it is being used. Perhaps this approach is also more honest and ensures targeted advertising ethics since customers are aware that their private data are a tradable good. To the very minimum, honouring a person’s basic rights requires providing customers with a workable choice to opt out. Customers should be provided with a reasonable choice to keep their private data private.
Secure your company’s data
Online advertisers should meet reasonable precautions to prevent that sensitive data are being stolen or misused.
In the spirit of teleological approaches, the consequences of targeted advertising practices should be assessed with the ultimate goal of creating more good than harm. This requires assessing the implications of targeting for consumers, advertisers, and all other stakeholders. Clearly, the consideration of stakeholder interests can also be justified. For example, the golden rule “Do unto others as you would have them do unto you” indicates marketers should take into account the wants and needs of other stakeholders and not just themselves.
Treat each party fairly
Online advertisers should treat all parties that are affected by their actions fairly. The principle of fairness is expressed to balance the interests of customers, marketers, and society in general. While a classic utilitarian cost-benefit analysis is difficult to make, online advertisers could still try to assess the consequences of their targeting practices and balance the differing interests of all stakeholders involved.
If consumers were in a position to directly sell their private information or trade for benefits provided by the site they are visiting, cost-benefit analysis on the aggregate would no longer be as important. Instead, customers could make this analysis on an individual basis. Some might decide that the cost of providing personal information outweighs its benefits, while others might willingly sell their data. Based on that, a utilitarian cost-benefit analysis in conjunction with the moral guideline of fairness goes beyond the current practices. That is, while the Federal Trade Commission tries to protect consumers’ interests regarding targeted advertising, the agency does not enable customers to be in charge of trading their own privacy information. In other words, customers are not in a position to decide what information to sell and what to get in return.
Targeted advertising ethics from a customers’ point of view
Since there is no transparent market where consumers can trade their own information, they are left with the freehand. It is easy to see certain benefits for customers, such as receiving free services, information, entertainment, and more relevant advertisements. On the other hand, customers provide a vast of private data about their own personalities. Interestingly, when informed about targeting, most consumers do not like the practice.
Phelps and Bunker survey discovered that the respondents ] don’t think that marketers should use their public records. This is noteworthy since if customers don’t even want public information to be collected by marketers. They are not likely to endorse targeted advertising and its practice of analysing private information.
According to a study commissioned by New Media Age, 81% of customers in Britain would favour opting out from receiving online advertisements if they were to collect data about their online behaviour. Customers are less likely to purchase once they learn of online covert marketing practices. Similarly, they trusted a website less once they detected that it was using cookies.
TASIL follows ethical guidelines
Targeted advertising is a truly powerful tool. It can be good for businesses and good for consumers as well, but only when it’s done right. Marketers need to be aware of the impact that communication will have. They likely strive to win business for customers in the most cost-effective way possible. While they will continue to keep doing it, they also need to think if they are keeping up with the ethical obligation to society. The effects of campaigns received on the other side need to be considered. TASIL thinks about it quite a bit, taking geographic and interest-based ad targeting to the rescue.