The Benefits of Consumer Targeted Advertising

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Every year, companies collect more and more data about the consumers that buy their products. Lately, companies have been using this information to create targeted advertisements that select specific consumers, or groups of consumers, to advertise to from which they will get the most revenue. The job of analyzing data has become a much sought after position at many large corporations, including Target, Amazon, and Facebook. This new “data mining” is slowly becoming a requirement in every corporation. Companies do this by studying shopping habits and analyzing consumer traits, but this begs the question: at what point is consumer privacy breached?

Many studies have been done in the last few years concerning the idea of data mining, and even more about the level of consumer comfort that has come with these innovations. For instance, how do the people of the world feel about being constantly monitored and data-mined? In this essay, I seek to explore not only how the public feels about these subjects, but also the general idea of whether or not these advertisements are beneficial to the world. With the decrease in privacy that comes with targeted ads, are these ads as beneficial as they could be?

Exploring Opinions of Targeted Advertising            

When it comes to targeted advertising, one group would argue that they will be beneficial by introducing products directly from a producer who wants to sell to a consumer who wants to buy. This group would be known as the “proponents” of targeted advertising. Another group, the “opponents” of targeted ads, argues that this advertising breaches the privacy of consumers and the general public, and therefore should not be allowed. Finally, a third group, the “neutralists,” believe that advertising has always been centered around targeting specific consumers and that targeted ads, although a breach of privacy, will not change how advertisements work and are viewed in society. In his 2005 article “Benefits and harms of direct to consumer advertising: a systematic review,” Simon Gilbody of the Department of Health Sciences at the University of York examines both the “proponents” and “opponents” of targeted ads by looking at their effects on the healthcare industry. Looking at the “opponents,” he argues that if patients start demanding drugs that have been advertised to them, even if these drugs do not work, “doctors may feel under pressure to prescribe inappropriate and costly drugs even when they feel this is not appropriate to both the patient and the healthcare system as a whole.” The “opponents” of targeted advertising in Gilbody’s paper would argue that targeted advertising is manipulative of the consumer and does not give them a fair chance to explore other options. However, where this argument falls short is the idea that consumers don’t do any of their own research and only buy what is advertised to them. Even though a product may work for a consumer, they are likely to explore similar products that have the same effects to see which one works best for them before buying. Discussing the proponents of targeted ads, Gilbody argues, “the benefits of advertisements targeted directly at patients and the public include increased health awareness; improved patient-doctor communication; improved concordance and, ultimately, improved health outcomes.” In short, the proponents in Gilbody’s paper believe targeted ads give consumers more information than they would have had otherwise by showing them the products that are best for them.

Siding with the “proponents” targeted advertising, Professor of Law at Georgetown University, Julie Cohen, argues the want society has for privacy is “detrimental to the progress of knowledge” in her 2012 essay “What Privacy Is For.” “In literature and in the popular press, the idea of a surveillance society is habitually linked with totalitarian political systems,” she says. “‘[T]he surveillance society is better thought of as the outcome of modern organizational practices, businesses, government and the military than as a covert conspiracy. Surveillance may be viewed as progress towards efficient administration, in Max Weber’s view, a benefit for the development of Western capitalism and the modern nation-state.” While polls say most Americans see a lack of privacy as being detrimental, Cohen views this as a positive, exploring the possibilities of a society in which all data is available. If we had access to all of the data we sent out between “social media, mobile platforms, cloud computing and artificial intelligence driven data-mining,” we would discover all kinds of patterns that we never would have seen any other way.

An “opponent” of targeted advertising, futurist Alvin Toffler would argue the opposition to these new advertisements is only the product of a society faced by too much change in his 1970 book Future Shock. “By blindly stepping up the rate of change, the level of novelty, and the extent of choice, we are thoughtlessly tampering with these environmental preconditions of rationality,” he argues (188). Because of the rapid advancement of technology we have faced that has led us to be able to do such in depth research about individual customers, Toffler would see how society could be uncomfortable with the idea of companies using data about each customer to advertise to them. While Toffler may say our discomfort with privacy is actually just a reaction to the new advances in technology we have seen, I would say this is just a side effect of a paranoid society where we are trained that it’s “every man for himself” from a young age. In a society where people were brought up thinking every person was supposed to help everyone else, people would not be fearful of companies delving into the private lives of their consumers or changing their advertisements to better suit their consumers’ needs.

If people learned to put more trust in corporations, maybe their concern about privacy would dissipate. In his essay The Singularity is Near, futurist and author Ray Kurzweil sides with the “neutralists” by arguing that, soon, targeted advertising will simply be a part of technology and therefore us, so privacy concerns and whether or not targeted advertising is effective will not be concerns. In his essay, Kurzweil states there is a rapidly approaching singularity, in which humans and technology will be so closely intertwined that there will be virtually no difference between them. In this future, in which “the intelligence of man would be left far behind,” so the systems of advertising and commercialism would simply become a part of our existence just as we use our brain to think now (22). Heading towards this future, Kurzweil would not be surprised to see more purchases in modern times being done with technology and more advertising directed toward consumers with this same technology. Kurzweil would say privacy doesn’t matter anyway because soon all machine and human life will be merged and there will be no such thing as privacy anyway. Even the most private thing we have, our own minds, will be irrelevant in a future ran by a unified intelligence. Because of his theories on mankind and technology merging, Kurzweil would likely say that targeted ads and depersonalization are just the side effects of the inevitable upcoming singularity.

Target’s method of consumer advertising is a practical one.  Since 2002, Target Corporation has been targeting specific consumers by sending advertisements directly to their houses using basic information collected in the store. As Target statistician Andrew Pole said in a 2012 interview with the New York Times, “if you use a credit card or a coupon, or fill out a survey, or mail in a refund, or call the customer help line, or open an e-mail we’ve sent you or visit our Web site, we’ll record it and link it to your Guest ID.” Using this system, Target now knows what advertisements interest each of its’ customers and how to specifically show each of them what he/she wants. And since they started doing this, revenues increased by $20 billion- a beneficial side effect of targeted ads. Examining Target and how they have changed their advertising based on what consumers want to see is an important study because it deals with so many issues ranging from the psychology of privacy to how advertisers can be more effective in modern times now that so much information exists about consumers. These factors, when mixed together, have the possibility to supply companies a solution that both satisfies the concerns of American consumers and provides a direct route with which companies can provide their products to the market.

A new study by Pew Research seems to suggest Americans are not as comfortable with the concept of direct advertising as advertisers would have thought. Of the group that responded they had experienced targeted advertising on the Internet, 68% responded they were not comfortable with the idea. This study, along with others such as a 2013 consumer privacy index poll taken by Truste, seem to suggest an overall discomfort with the idea of targeted advertising, even though other studies suggest people want to see advertisements for things they want. According to a Zogby Analytics Poll from 2012, 70% of responders stated they would prefer to see advertising online that “somewhat targets their interests,” suggesting a near double standard in what Americans want. Although these studies seem contradictory, unless attitudes about targeted advertising changed in one year, there may be another explanation for the discrepancy between the two studies. While one study asked users about their privacy online, suggesting knowledge of private lives, the other asked only about advertising noting correlations between data sent by the person directly. The first study seemed to suggest a breach of privacy, and the other suggested that the only information companies had was what had been sent by the person (whether that be through buying a product or clicking an advertisement) on the Internet. Because of this phrasing, people in the second study were much more likely to respond that they were comfortable with the targeted advertisements. Second study responders were not put in a position where they had to endorse companies investigating the “private lives” of consumers.

According to Target statistician Andrew Pole, “as long as Target camouflaged how much it knew, as long as the habit felt familiar, the new behavior took hold,” meaning that the company had to disguise what it knew about the consumer for its targeted advertising to have the greatest effect. If a consumer felt like they knew they were being tracked or spied on, they were much less likely to spend money. According to the 2013 Truste consumer privacy index, 89% of adults will not even do business with companies who the consumer does not believe protects their personal information, whether or not that is true. This seems to indicate that if a consumer found out how much information companies like Target knew about them, they would very likely not participate in their services any more. Because targeted advertising is so simple to accomplish and can be done at relatively low cost, advertisers have realized that, as long as they hide their efforts, these new forms can be widely effective and beneficial to consumers.

As for the advertisements themselves, companies like Target have recognized that, using targeted advertising, they could convert shoppers into becoming regular shoppers at their store, instead of getting them inside to buy one thing as they did previously. Analysts like UCLA Professor Alan Andreassen studied consumer patterns, noting, “consumers going through major life events often don’t notice, or care, that their shopping habits have shifted.” In his 1980 study, Andreassen saw that if marketers could provide advertising for the people going through the greatest life changes, they could get a customer to change their habits and shop somewhere they hadn’t before. Life changes like moving away from home, having children, and getting married are most noted as indicators of habit change. Even futurist Ray Kurzweil noted this in his essay, Future Shock: “Any major life change is major only because it forces us to make many little changes as well, and these in turn consist of still smaller and smaller changes… whatever the change, an enormous amount of physical machinery comes into play.” This new information changed the way advertisers portrayed their ads by specifically targeting those going through the most life changes. But, as the advertisers soon found out, people didn’t want to be targeted with such specific “personal” items. As indicated by the Truste Consumer Privacy Index, almost half (43%) of American adults do not trust any business with their personal information, while 89% of adults worry about their privacy when shopping online.

Already dealing with mistrust by consumers, advertisers like Target had to find a way to communicate their message and target consumers without making them feel intruded upon; and the solution they came up with was to bury what they were trying to show among other products in directed advertising leaflets. After advertisers began using this method, consumers felt more comfortable with the advertising and the advertisements were much more effective. In their influential 1998 essay The Extended Mind, professors Andy Clark and David Chalmers argue that environmental supports like notebooks and computers are extensions of the mind. Clark and Chalmers delve into what constitutes a belief, which they decide is defined as something someone thinks is true, whether or not that thing is in their head. As it is said in their essay, “what makes some information count as a belief is the role it plays, and there is no reason why the relevant role can be played only from inside the body,” (14). Therefore, Clark and Chalmers would argue this new form of advertising, which is catered to each person individually, intends to make the person believe whatever claim the company is making. By personalizing these ads to show the consumer things they probably want to buy, Clark and Chalmers would say the ads slowly become a part of the person they are selling to, until they too are simply a part of their external mind. So, if a person incorporates the advertising or company into their belief system, advertisers would have a much easier time getting them to buy things.

A Long Shot – The Future of Targeted Advertising            

With consumers satisfied in not knowing how much companies know about them, advertisers are able to take complete advantage of the system where every consumer can be specifically targeted and analyzed by new computers and software. In all previous times, consumers have had a choice about what products to choose between/buy, but I believe we will reach a point where consumers will no longer have to choose specific items to buy because there will be systems in place to make sure they get what they want/need without them even having to do anything except confirm a purchase. This, along with increased revenue, the ability for companies to share the information they want with consumers, and the ability to know advertisements will be effective are some of the many benefits of targeted advertising. With more and more information being uncovered about consumers every day, it’s only a matter of time before all advertisers take advantage of all of the opportunities at hand- but there is still work to be done. If the general public knew they were being specifically targeted by companies like Target, maybe they would be okay revealing their personal information if they knew how it could help them by making it clear to advertisers what they want/need.

More research could also be done to specify what would be a good medium between what consumers want out of advertisements and what advertisers want consumers to see. In general, through proof of its success, academic support of its ideas, and the rise in advertising efficiency it has created, targeted advertising is not a concept that is going to go away any time soon. In fact, there is enough evidence to show it will be the future of most advertising in the world. As more technology becomes readily available that will link our bodies and faces to habits and link our habits to products, the world may change to one where it is impossible to get away from personalized ads. In such a world, privacy would not exist, as everything we do would be tracked and monitored for data correlation, and in a way, this technology would become as much a part of our lives as our smart phones and personal computers already have. With these advances, at what point do we ourselves become the advertisements that are targeting us? And even further, at what point does the technology that we have bought because of advertising become an advertisement for itself? It seems that with questions like these we can only try to stay smart and secure about our own shopping habits- at least until it’s too late to change them back.

Works Cited.

Bachmann, Katy. “Poll: Targeted Advertising Is Not the Bogeyman.” Adweek. N.p., 18 Apr. 2013. Web.

Clark, Andy and David Chalmers. “The Extended Mind.” Analysis 58.1 (1998): 7-19. Print.

Cohen, Julie E. “What Privacy Is For.” Social Science Research Network. Georgetown University Law Center, 5 Nov. 2012. Web.

Duhigg, Charles. “How Companies Learn Your Secrets.” The New York Times. N.p., 16 Feb. 2013. Web. <http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?pagewanted=1&_r=3&hp&>.

Gilbody, Simon. “Benefits and Harms of Direct to Consumer Advertising: A Systematic Review.” BMJ. BMJ Quality & Safety, 18 Apr. 2005. Web.

Harris Interactive. “2013 TRUSTe US Consumer Confidence Index.” 2013 TRUSTe US Consumer Confidence Index. TRUSTe, Jan. 2013. Web.

Kurzweil, Ray. [Chapter 1.] The Singularity Is Near: When Humans Transcend Biology. New York: Penguin Books. 2005. Print.

Purcell, Kristen, Joanna Brenner, and Lee Raine. “Search Engine Use 2012.” Targeted Advertising: 59% of Internet Users Have Noticed It, but Most Don’t like It. Pew Internet, 9 Mar. 2012. Web.

Toffler, Alvin. [Excerpts.] Future Shock. New York: Random House. 1970. Print.

Original Source:  “Respect the Tech,” Project from Cyborgs and Humanity class at Carnegie Mellon University