Marketing Morally in the 21st Century: An Inevitable Intervention

 

Marketing Morally in the 21st Century: An Inevitable Intervention

Max Satter
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Published by the PIT Journal: 

Abstract: 

Big data has revolutionized marketing, giving businesses access to huge amounts of information about consumers. This information can be used to create targeted advertising that helps advertisers achieve higher profits and provides consumers with relevant advertising. But targeted advertising can be too intrusive and sometimes infringes on citizens’ right to privacy. Without regulation, advertisers can use this data to learn private information about their customers, information like unplanned pregnancies. Furthermore, their data stores can be breached, among many other privacy concerns. Because of this, marketing needs to be reformed internally and externally. Marketers should institute better privacy polices, and lawmakers should create privacy laws tailored to the digital age. 

Article: 

In 2014, an estimated $537 billion was spent on ads. Of that $537 billion, $121 billion was spent on internet marketing to reach 3 billion internet users (Lunden). Unsurprisingly, of all the money spent on marketing, the $121 billion focused on the internet was deemed to have the greatest return in consumer spending (Lunden). The reason why: the integration of big data into marketing. Big data has been a disruptor in the marketing industry; its rising prevalence signifies a new era in direct marketing where personalized ad campaigns have replaced spam mail. Accompanying the sleek new efficacy, however, is a darker side of big data marketing. Marketers who employ big data often violate consumers’ privacy and even more often attempt to manipulate them into making purchases by using their own preferences against them (Ferguson). While marketing has an unarguable place in a consumption-based society like our own, the exploitation of consumers through big-data use has the industry headed down a path of self-destruction. Though short-term profits may be heightened, many marketing specialists hypothesize that long-term profitability under the current system is unsustainable, as customers will begin to grasp the exorbitant amount of personal information that is collected and used against them to coerce future purchases (Rown). Consequently, big-data marketing must be regulated, not only to protect and respect the consuming masses, but also so marketers can maintain high profitability levels. 

There are two obvious remedies to the currently unsustainable and immoral path of marketing: external intervention—most likely in the form of government mediation to redefine acceptable practices—and internal reformation. While internal reformation alone is ideal, it is also borderline utopian. Extensive government intervention, on the other hand, would be hard to successfully pass into legislation (Rown). Consequently, a combination of government regulation and internal reformation is necessary to put marketing on a straighter path.

Marketing, in its most rudimentary form, has existed since the advent of modern civilization. It is an inherent trait of negotiation, diplomacy, and complex economic transactions, all of which help to distinguish modern civilization from the dark ages (Bartels). Modern marketing’s inception, however, lies with its inclusion in undergraduate business curriculums at the onset of the 1900s (Bartels). In the following years, marketing evolved from an undervalued (albeit acknowledged) academic discipline into a lucrative and glamorized industry focused on creating customers out of the masses, often through deceitful practices. For example, tobacco companies hired actors to pose as doctors on TV and praise cigarettes as healthy (Elliott). After widespread outcry, these blatantly deceptive ads were stopped via government intervention. However, they set the stage for an industry that continuously straddles the line of morality/immorality in terms of privacy invasion and responsibility/irresponsibility.  

Until recently, this tightrope-walk was tolerable; marketing inevitably influenced the consuming masses’ decisions, but the marketers did not wield enough information on their target consumers to engage in outright manipulation (Rown). Because of the introduction of big data into the industry, this no longer holds true. Big data gives marketers an alarming wealth of information on potential customers that can be used to coerce purchases (Weinberg). Though opinions differ on establishing a boundary that should not be overstepped, ethicists from John Locke (in his “Second Treatise on Government,” Locke discussed the idea of private property) to Louis Brandeis (in “The right to Privacy,” Brandeis argues for increased legislation protecting the individual) have long agreed that simple privacy is a basic human right (Decew). Thanks to big data marketing, it is one people no longer possess.

Before understanding big data’s disrupting force in the marketing world, one must first grasp the concept of big data itself. Simply put, big data is the massive volumes of both structured and unstructured data collected by corporations and governments (Ferguson). It is petabytes and petabytes of seemingly indiscriminate and endless information: web browsing data, salary, birthdays, purchase history, demographics, familial relations, birth certificates, and customer loyalty data. Without analysis, these data points are rendered useless. They may be objective, unmarred by human processes, but they tell the marketer nothing about his audience of interest. Consequently, big data refers to more than just the gargantuan amounts of data collected—it also refers to the processes through which the raw data points are converted into valuable foundations for individualized marketing campaigns (Ferguson).

Big data is revolutionizing the marketing industry and the world on multiple fronts, and we are just at the tip of the iceberg. If harnessed correctly, it allows marketers to understand every person and organization of interest in real-time, enabling them to generate up-to-date, individually tailored advertising campaigns (Weinberg). This is a blessing for consumers because it eliminates superfluous noise by preventing a barrage of generic and oftentimes irrelevant pitches (Weinberg). Sixty-year-old Derrick will receive emails about retirement plans rather than college textbook discounts, and sixteen-year-old Diana will be sent test-prep links instead of finding her Gmail scattered with sales on baby strollers and diapers – unless, that is, big data has discovered she might need baby strollers, as a later example demonstrates. Naturally, this targeted marketing benefits the marketers as well. According to data from McKinsey on marketing and sales, “big data leaders have, on average, 6% higher profits” than other companies (Griswold). Return-on-investment rates are also higher among big data leaders. Investments backed by sophisticated algorithms now supplant “gut feel” decisions. Already, businesses harnessing big data are seeing a 5% higher return on investment (ROI) than their industry counterparts who do not use big data (Griswold). By 2020, it is predicted that big-data-using companies’ ROIs will be boosted by 20%, saving $200 billion in the industry yearly (Griswold). Big data’s disruption in the marketing industry extends past the aforementioned fields, however. When processed properly, big data can serve as a crystal ball that effectively marries predictive analytics and marketing, and in doing so, changes forecasting from a blind game of darts into a reliable science. 

Big data is just as dangerous as it is revolutionary, though, especially in the hands of greedy, amoral marketers. Already, there have been dozens of exposed breaches, embarrassments, and malfeasances. For example, Uber tracked a whistleblower’s location and ride history, and JP Morgan Chase, Sony, Kmart, Home Depot all had their data stores breached. The NSA was caught “spying” on Americans, and Ted Kennedy was mistakenly placed on the No-Fly list as the data points collected on him created a false positive for potential terrorist acts (Hardekopf). Furthermore, who knows what breaches have not been publicized. In the world of marketing, Target was exposed to be inundating customers they suspected as pregnant with in-store promotions (Duhigg). Though not illegal, the data mining that went into these personalized advertisements is an invasion of personal information. The full story still remains unclear as Target prohibited its employees from speaking on the matter, but it seems that Target’s analytics team discovered that pregnant women and new mothers were impressionable shoppers that spend more than the average customer and are highly likely to become lifelong customers (Duhigg). Target was not alone in this discovery. New parents have long been flooded with offers from competing companies, thanks to public access to birth records. In order to avoid being forgotten among the countless brands vying for sales, Target decided to initiate overtures during the second trimester, months before any other brand reached out to the future mothers. This should have been an impossible task because women are often private about their pregnancies. But with the help of big data, the in-house analysts were able to identify with startling accuracy the identities of thousands of pregnant women and their due dates (Duhigg). In one documented case, Target was aware of a high schooler’s pregnancy before her own parents (Duhigg). Sales, unsurprisingly, skyrocketed among the pregnant population. As exemplified through the Target example, big data analysis does not just identify potential consumers and clients; it also creates them, disregarding all respect for privacy in the process.

The field of marketing is at a crossroads. Will it become a parasitic practice or a mutually beneficial process? The integration of big data into daily marketing operations renders both options equally feasible; in order to ensure that the latter takes place, intervention is necessary. I believe that internal reformation, if properly enacted, would be most effective. Others have reached this conclusion, too. In May of 2014, for example, the White House published a report on the current state of marketing stating that internal reformation would be the easiest solution to unethical marketing involving big data (Podesta et al.) Both red tape and litigation would be kept to a minimum, effectively speeding up the process. As it would be internal, the marketing agencies would have some control over their destiny.  Additionally, self-regulation, a voluntary act, could help to recover the public image of the marketing profession, though a well executed marketing campaign could accomplish that as well. Unfortunately, wholly effective self-regulation is more of a dream than a reality. It would cut into bottom line profits and limit the uses of the information goldmine to which marketers have become accustomed, returning some power to the consumer.

Regulation always trails innovation, and big data marketing is no exception. Barring the extreme, there will be an external attempt to intervene in the marketing industry surrounding big data. It is not a question of if, but rather of when and how successful? Fully stymying big data’s collection would prove both fruitless and small-minded. Realistically, at the present time that is not much of a possibility.  Passing extensive national legislation in the foreseeable future seems unlikely as bipartisanship is minimal and big-data lobbyists on behalf of behemoth companies like Google have greatly impacted congress’s opinion on the matter. In fact, the majority of Congress is not in favor of internet privacy laws (Weinberg).

In lieu of national regulation, states can and should pass legislation achieving similar ends. California, for one, has passed the “right to know act,” requiring companies to tell their users A) what personal information was collected and B) how that information was used (Kerr). Other states and localities should focus on similar legislation aimed on increasing the transparency of data-collecting methods, ensuring that said methods are not overly intrusive, and most importantly, that big data is not used against the consuming masses, but rather for them. There is a substantive base for this legislation, apart from California’s “right to know act.” The Fourth Amendment, for example, prevents unreasonable search and seizure (Kerr). While the amendment only limits the government’s powers, I propose that massive corporations should have to abide by a similar bill of rights tailored around the consumer’s protection (Kerr). Once again, ideally, this bill of rights would be a work created by the marketing companies as a pledge of sorts, yet as this is unlikely, the best chance of a “guide to moral marketing” would be one mandated and enforced by the government. Additionally, assigning massive media coverage to deter immoral marketing activity would hopefully discourage other corporations from following suit. 

If these practices are enacted in conjunction with even the slightest internal reformation (i.e. Big data using companies cease to exploit the loopholes in current legislation that allow them to be unforthcoming in data disclosure), then marketing will have a viable shot of developing into a mutually beneficial process. Big data is unstoppable. We should not try to fight it. Instead, we should try to corral it and allow it to lead us to a better future.  

 

Works Cited

Bartels, Robert. The History of Marketing Thought. Columbus, OH: Grid, 1976. Print.

Big Data Marketing with Dave Rown." Telephone interview. 16 Mar. 2015.

DeCew, Judith, "Privacy", The Stanford Encyclopedia of Philosophy (Spring 2015 Edition), Edward N. Zalta (ed).

Duhigg, Charles. "How Companies Learn Your Secrets." New York Times Magazine 16 Feb. 2012: n. pag. Web. 22 Jan. 2015.

Elliott, Stuart. "When Doctors, and Even Santa, Endorsed Tobacco.". The New York Times, 06 Oct. 2008. Web. 26 Mar. 2015.

Ferguson, Renee Boucher. "How Big Data Is Influencing Big Companies." MIT Sloan Management Review. MIT, 25 Nov. 2013. Web. 13 Mar. 2015.

Griswold, Alison. "Big Data Can Help Marketers Unlock Up To $200 Billion." Business Insider. Business Insider, Inc, 22 Nov. 2013. Web. 11 Mar. 2015.

Hardekopf, Bill. "The Big Data Breaches of 2014." Forbes. Forbes Magazine, 3 Jan. 2015. Web. 11 Mar. 2015.

Kerr, Orin S. "The Fourth Amendment and the Global Internet." Stanford Law Review (2014): 1-45. Stanford Law Review. Stanford, 23 Apr. 2014. Web. 11 Mar. 2015.

Lunden, Ingrid. "Internet Ad Spend To Reach $121B In 2014, 23% Of $537B Total Ad Spend, Ad Tech Boosts Display." TechCrunch. N.p., 7 Dec. 2014. Web. 20 Mar. 2015.

Podesta, John, Penny Pritzker, Ernest Moniz, John Holdren, and Jeffrey Zients. Big Data: Seizing Opportunities, Preserving Values. Rep. Whitehouse.gov, May 2014. Web. 15 Mar. 2015.

Weinberg, Bruce D., Lenita Davis, and Paul D. Berger. "Journal of Marketing Analytics." Palgrave Journals. Palgrave Macmillan, 6 Nov. 2012. Web. 26 Mar. 2015.


About the Author(s)
Max
Satter
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