Targeted Marketing: Be a Helpful Friend not a Creepy Stranger

Stephen DeAngelis

July 10, 2014

“Big data this, big data that,” writes Fatemeh Khatibloo. “Hardly a day goes by when we’re not bombarded with messages about the big data platforms and technologies that will solve all our marketing problems.” [“Big Data’s Big Meaning For Marketing,” Forbes, 29 May 2014] By “marketing problems,” Khatibloo is referring to things like reaching the right consumer with the right message at the right time in order to convert a marketing message into a sale. That has been the goal of advertising since the first merchant shouted at customers in ancient city markets explaining why his goods were better than those in adjacent stalls. Khatibloo contends that all of the hype about big data has created “a lot of confusion and mistrust on the part of marketing leaders about what big data really is, what it can do, and how it should be incorporated into business strategy. And that’s holding a lot of firms back from maximizing the power of the data at their disposal.”

 

There is not only confusion about what big data can do for marketers there is also concern about unintended consequences of using it as a marketing tool. You might recall, for example, the angry father who confronted a manager at Target for sending his teenage daughter literature about baby clothes and accessories only to learn that his daughter was indeed pregnant. [“How Companies Learn Your Secrets,” by Charles Duhigg, New York Times Magazine, 16 February 2012] Or you might have heard about the father still grieving over the death of his daughter who had been killed in an automobile accident who received a letter from OfficeMax addressed “daughter killed in car crash.” [“Bereaved father gets Office Max marketing letter marked ‘daughter killed in car crash’ after his 17-year-old girl died in wreck,” Daily Mail, 18 January 2014] Such incidents are a public relations nightmare for marketers and push targeted marketing over the edge from being helpful to being creepy.

 

I’m a proponent of targeted marketing. For the most part, it provides a win-win situation in which companies get the most bang for their advertising buck and consumers receive offers that match their lifestyle preferences and tastes. I also believe that the best way to achieve good results and avoid bad ones is to utilize cognitive computing systems in the process. Unlike normal computational systems, cognitive computing systems can reason about the data they analyze and avoid situations like sending letters to dead people. There is a fine line between being helpful and being creepy. That’s because there is a lot of information being gathered. “Are you a financially strapped working mother who smokes,” asks Craig Timberg. “A Jewish retiree with a fondness for Caribbean cruises? Or a Spanish-speaking professional with allergies, a dog and a collection of Elvis memorabilia? All this information and much, much more is being quietly collected, analyzed and distributed by the nation’s burgeoning data-broker industry, which uses billions of individual data points to produce detailed portraits of virtually every American consumer.” [“Brokers use ‘billions’ of data points to profile Americans,” The Washington Post, 27 May 2014]

 

Timberg reports that the Federal Trade Commission is concerned that data brokers are currently not regulated and can misuse all of the data that is being collected. This comes on the heels of a report submitted to the President by a group of White House advisors on privacy issues associated with big data. In statement quoted by Timberg, FTC Chairman Edith Ramirez said, “The extent of consumer profiling today means that data brokers often know as much — or even more — about us than our family and friends. It’s time to bring transparency and accountability to bear on this industry on behalf of consumers, many of whom are unaware that data brokers even exist.” I have vigorously argued that the marketing industry needs to be scrupulous in its use of big data. Instead of seeing how close to the “creepy” line it can get, the industry should try to stay well clear of it. Kate Crawford, a principal researcher at Microsoft Research, asks, “Can data brokers be trusted to regulate themselves?” [“When Big Data Marketing Becomes Stalking,” Scientific American, 28 January 2014] She writes:

“Many of us now expect our online activities to be recorded and analyzed, but we assume the physical spaces we inhabit are different. The data broker industry doesn’t see it that way. To them, even the act of walking down the street is a legitimate data set to be captured, catalogued and exploited. This slippage between the digital and physical matters not only because of privacy concerns — it also raises serious questions about ethics and power.”

When companies cross the line, Elizabeth Palermo insists that they should be prepared for consumers to push back. She reports, “A new study suggests that brands can take this kind of targeted identity marketing too far and, in the process, isolate the very demographics they wish to woo.” [“When Consumers Rebel: How Targeted Marketing Can Backfire,” Fox Business, 22 April 2014] Palermo continues:

“The study — conducted by researchers at Dartmouth College, the Wharton School of the University of Pennsylvania and New York University — explores what happens when identity marketing misses the mark. The researchers concluded that, in certain scenarios, consumers feel that brands are too pushy in their marketing campaigns when they explicitly tell customers what to buy or how to behave. In these situations, consumers are actually less likely to want to buy the product being advertised, the study found. ‘While people may be drawn to brands that fit their identity, they are also more likely to desire a sense of ownership and freedom in how they express that identity,’ wrote Amit Bhattacharjee, Jonah Berger and Geeta Menon, co-authors of the study. ‘Identity marketing that explicitly links a person’s identity with a brand purchase may actually undermine that sense of freedom and backfire.'”

There is evidence that consumers want retailers and manufacturers to know something about them so that they aren’t flooded with offers that have no appeal to them. On the other hand, consumers can feel that their personal space has been violated if those offers are too individualized. Palermo reports, “The advertisements that explicitly linked a brand with a particular identity were found to be a big turnoff for consumers for whom that identity was important. In fact, some participants who associated strongly with one of the targeted identities reported that they were actually less likely to buy a company’s product after viewing identity-explicit advertisements.”

 

Industry associations believe that, as a whole, data brokers have acted responsibly and insist that self-regulation is working. Stuart P. Ingis, general counsel for the Direct Marketing ­Association, told Timberg that “the industry helps prevent consumer fraud and improves the effectiveness of online advertising — the main revenue source for free services, such as e-mail and social-networking sites. He said the FTC’s inability to find documented abuse of personal information suggests that data brokers should continue operating through self-regulation rather than new government intervention.” Ingis is joined in his opinion by the Software & Information Industry Association. Timberg reports that the Association “endorsed the FTC’s call for greater transparency but warned that new legislation would struggle to keep up with the pace of innovation online.”

 

Frankly, the Association is correct. Regulation has never been able to keep pace with technology. If, however, the industry abuses the technologies it relies on, it can expect an outcry from the public that will force politicians to pass legislation that will be to no one’s liking or benefit. The industry would do well to listen to consumer advocacy groups and adopt some of the recommendations they suggest. We all like friends but no one likes the creepy stranger who seems to be stalking them.