News Analysis: Regulation, relevance and respect - marketing’s new 3 Rs
Ask most marketers whether they follow the responsible marketing mantra of "legal, decent, honest and truthful" and you are unlikely to hear a single voice of dissent. Whether consumers are quite so convinced is another matter - after all, there is seemingly no shortage of complaints to the likes of the UK Advertising Standards Authority, the Information Commissioner's Office and the Fundraising Regulator over what many consumers perceive as decidedly "irresponsible" marketing.
Adding to this consumer pressure on brands, the burgeoning use of data-driven technology - from online profiling and artificial intelligence, to machine learning and big data algorithms - is increasing fears that privacy is being exploited for commercial gain. It is an issue which has not gone unnoticed in the corridors of power - regulators in the UK, US and EU are all making demands for greater accountability and transparency.
In response, the DMA recently set up its own advisory group, the Responsible Marketing Committee, which is designed to set out the DMA’s policies on the responsibilities of marketers and define what constitutes responsible behaviour. The Committee will be the custodians of the DMA Code, which sets out the four key principles of responsible marketing and the value exchange between a business and its customers: respect privacy, be honest and fair, be diligent with data, and take responsibility. It will try to ensure that the Code remains fit for purpose to protect the long-term health of the marketing industry amid changing customer views and societal expectations around each of these four core principles.
More recently Fedma - which is affiliated to the DMA - has also called for marketers to act with responsibility to society, not just their own businesses, to ensure that consumers' privacy is not forgotten in the stampede for profits. Newly-elected Fedma co-chair Chris Combemale, who is also group CEO of the DMA, explains the rationale behind the move: “We live in an era of dramatic change as we enter the first phase of the fourth industrial revolution powered by data, powerful technology and AI. It’s a new world of possibility where big data analytics can be deployed to tackle society’s greatest challenges, but also one that throws up huge challenges for both business and consumers."
The technology at the disposal of marketers - and their customers, too - is more powerful than ever. But, with powerful technology comes greater responsibility and new ways of thinking and doing, Combemale insists.
He adds: "In this new world, marketers are not just responsible for their company’s short-term sales and long-term brand loyalty. In this new world, it is not enough just to be successful and responsible, marketers must now become ethical marketers, philosophers, with a responsibility to society, not just to their company, especially if they want to build brands that younger generations believe in and trust.”
"Marketers must now become ethical marketers, philosophers, with a responsibility to society, not just to their company"
For Dr Sachiko Scheuing, European privacy officer of Acxiom - who is also co-chair of Fedma, responsible marketing is all about the fundamentals. "Consumers expect their data to be kept safe from any kind of loss, hacking or other. Consumers expect us to have appropriate data and nothing more, so data on what hobbies you like would be good for an adventure clothing brand, but not perhaps your financial affairs. They expect us to follow the letter and spirit of the law. Consumers expect honesty and transparency, for organisations to be open about what they're doing, why, what data they have, and to stop holding it if they ask."
When it comes to how marketers can actually enrich consumers' experiences, Dr Scheuing believes the key is relevance. "Is the content or offer relevant to the person overall and, ideally, in the moment? Everyone needs to recognise that we, as an industry, cannot get this 100% right - as to do so would require us to have too much data. However, without data, we can only offer a world of randomness.”
"The reality is, consumers expect big brands and companies to get the hygiene factors right as 'table stakes’,” she adds. “When it comes to motivating factors, it's about being relevant, but, more than that, it's about being 'human' and this, in fact, links to one more hygiene factor. Just because we can, doesn't mean we should. Just because we have data and a campaign doesn't mean we should send it, even if the cost is marginal. If we met as people in a café, I wouldn't tell you everything I knew about you in one go, it's a conversation. Using data responsibly means being human in our marketing."
One company which has been an early adopter of this approach is Barclays. In January last year, it became the first bank to move away from product marketing to address growing consumer fears over online safety. The first campaign focused on fraudsters posing as bank staff, and warned consumers never to give away their passwords over the telephone, while a second initiative - launched last month - depicts common scams in a stark and disconcerting way to drive the message home.
Fedelma Good, director of information strategy and governance for propositions, analytics and customer engagement (PACE) at Barclays, says: "These are issues that affect our customers and society as a whole and our absolute belief is that we have a role to play in helping everyone with these.”
"Consumers want to be able to trust advertising and marketing campaigns and those which fail against these benchmarks are quite simply damaging to a brand and its reputation. That said, I do believe that some brands don’t know where to draw the line between the drive for profit and consumer expectations,” she adds.
Good cites her own experience over the last month, having received three text messages telling her she is due a refund for cancelled flights, two recorded messages about PPI and two emails to tell her that she is eligible for compensation for an accident. Good adds: "I am not sure that I would afford the title of ‘brand’ to those responsible for these unsolicited and non-privacy compliant communications, not least because they are typically anonymous, but the sad fact is that these behaviours reduce consumer trust in marketing as a whole."
But, with so much data and insight now available to brands, is there simply too much temptation to target customers too often? Good thinks not: "I actually think the reverse is true. With more data available, marketers can - and should - actually be able to achieve that Holy Grail of right message, right person and right time and make their targeting more effective to deliver true 1:1 marketing. Not only that, but they can now include other customer-centric overlays, like right channel."
Combemale is not quite so confident that brands can resist. He says: "This temptation is not new and has existed from the very start of marketing as a discipline. Getting the balance right is a question of training and planning. Many companies, historically, have set business rules around frequency of contact and most technology solutions provide tools to manage the business rules. If you set a limit of x number of contacts in a 30-day period, a week or a quarter, that will override selections that are made tactically at pace.”
He believes that brands and technology providers must work together to establish the ethical parameters that override machine learning decisions and protect the customer experience. The starting point is identifying the risks and establishing the business rules. Putting the customer first should be a philosophy that is deeply embedded in a company’s culture, he insists.
"Just asking the question when you are planning a marketing activity, 'how would I feel if I was the customer?' helps. Going further, the larger technology companies, such as Google, have spoken about creating ethical boards and I think that is an idea all companies should take seriously,” says Combemale.
But how can companies reassure consumers that their data is safe in their hands and that they will not bombard them? Trust is a critical factor in consumers’ willingness to share data, so brands will need to place short-term profit to one side, instead putting trust at the heart of their customer proposition, he says.
Combemale adds: "Lifetime value has long been the mantra of successful direct selling relationships, leading to increased sales and profitability over time. In the digital era, far too much focus has been placed on short-term micro metrics at the expense of long-term value. Successful brands approach data as an honest exchange of value between the business, looking to prosper, and the customer, looking to benefit.”
"Brands must put their customers first and prove they are good custodians of personal data"
Good goes one step further: "One key way is using the data positively for activities other than marketing that clearly benefit the customer." For instance, if Barclays holds an up-to-date mobile telephone number for a customer and spots something untoward on their account, it can quickly contact them via text to check the veracity of the transaction.
"The other activity we are increasingly undertaking is pro-active communications with our customers about issues that may have a direct impact on them. For example, we were able to contact customers affected by the recent Grenfell Tower tragedy by text and phone to offer help and assistance,” she says.
With GDPR looming large, in the future, brands will have to ensure their marketing is responsible or risk paying a high price. But how can they prove it? Again, it is down to transparency and trust, Good insists: "Achieving transparency by writing privacy and cookie notices in clear and straightforward language, making them easily accessible and using technology like web chat or social media to help address any queries or concerns that people might have can go a long way to engendering trust."
Most commentators believe that brands which focus on being just the right side of the rules will ultimately struggle for consumer trust in the future. In a world of “fake news”, simply telling the truth is no longer enough - brands must put their customers first and prove they are good custodians of personal data.
Combemale concludes: "Ultimately, the brands that are able to engage customers on the basis of transparency and trust, rather than simply abiding by the minimum requirements of legislation, will reap the rewards in the future. If they don’t, they will lose sales and market share, not to mention risking the potential of very large fines.”