The next stage of marketing will see those companies that treat their customers like grown-ups develop a competitive advantage based on trust and confidence.
That was the view of the Information Commissioner, Christopher Graham, when I interviewed him recently. He was speaking ahead of the end of the consultation period for a new code of practice on online privacy, due to be published this summer.
I asked him about the online advertising industry’s concerns that a requirement to make opt-ins and cookies more apparent would make the amount of data collected from potential customers plummet, reduce the accuracy of ad targeting and compromise the effectiveness of online marketing.
Graham’s response was unsurprisingly robust. He pointed out the increased penalties for not complying with the Data Protection Act and outlined the guidance available to help firms comply. But his main argument was that companies need to treat their customers with respect.
It’s easy to see how this attitude of respect works on the service delivery side. The Twitterstorms around any company that provides bad service to customers should offer ample evidence for any brand owner not already convinced that it’s impossible to hide poor product or service delivery in the age of social media.
It’s also easy to see how greater respect works within the context of e-commerce. One of Graham’s examples of poor behaviour towards customers was online travel companies that advertise a certain price. Then, just as you’re placing your booking, they hit you with additional charges for using a credit card, or booking online, or bringing a bag.
But at the point at which goods or services are being advertised, it feels like there’s a much greater leap of faith for brands to make. Despite the work being done by the IAB to educate internet users about the value of targeting, research still shows a big gap between the number of people who feel that the ads they see online are not relevant; those who would like to see more targeted ads; and the number who don’t trust the technology by which more targeted ads could be delivered.
In other words, an audience that long ago accepted the value exchange involved in offline advertising – attention for free or cheaper content – has yet to be persuaded that its online equivalent – data for more relevant advertising – is worthwhile.
Part of the problem is that the benefits of the exchange are not immediately apparent. Giving up some data doesn’t instantly open a door into a world of advertising so useful that it doesn’t look like advertising at all. Indeed, at last autumn’s IAB Engage event, various behavioural targeting experts admitted that the limitations of the technology means that it is impossible to achieve a consumer experience where each ad seen by a user is completely relevant to them.
What’s more, the perceived value of more targeted advertising is not great enough to make people engage with advertisers in the discussion of it. They simply aren’t interested enough in advertising to be educated about its evolution. As the famous US T-shirt slogan puts it/ “Your broken business model is not my problem”.
However, this may be an interesting side benefit to brands’ increasing use of social media. The initial attractions of Facebook are its sheer size and the low cost of using it as the centre of an ad campaign compared to building a microsite. But the entire culture of the site is based on opting in in a way that simply isn’t widely accepted elsewhere online.
Meanwhile, away from the main social networking sites, the use of bloggers, reviewers and twitterers to spread the word about a brand not only adds to the credibility of the message, it also allows the brand to communicate with and recruit an interested audience away from traditional channels. By setting your RSS reader to follow a particular blogger or website, you’re effectively opting in to their output, but with no data protection implications for the brand that has persuaded the blogger to write about it.
In fact, social media may turn out to be the route by which the debate over targeted advertising is advanced.
Social media expert Adriana Lukas once described social networking sites as “a training area for the internet”. Her view was that there was nothing you could do on Facebook et al that you couldn’t already do online; social networks just brought it all together in one place and made it easy.
So can Facebook, with its user base equivalent to the third largest country in the world, demonstrate the value of opting in and make it the cultural norm?
Michael Nutley is editor-in-chief of New Media Age and Reputation Online