Behavioural

Targeting:

Innovative

Marketing or

Privacy Invasion?

Allyson Phillips

What is

Behavioural

Targeting?

A type of targeted

advertising, it is“[a]

practice which includes

techniques used by

advertisers to capture

users’ online behavior

patterns that benefit them

to segment users based on

their behavior”

Although behavioural targeting can provide firms with a competitive advantage, there may be significant drawbacks in the privacy concerns held by consumers

Traditional mass advertising was used

because firms lacked information about

consumer habits and had no way to only

reach prospective consumers

Behavioural targeting allows businesses to differentiate their advertising between various groups of consumers since there are so many specialized media outlets through which to communicate

The key behind behavioural targeting is that the

advertisers can show ads only to users within a

demographic of high value

How Does it Work?

Websites create advertisements

based on your purchasing,

search history, and browsing

habits

Social networking websites may

place ads on the side of the

page based on what your

friends are doing (for example,

which pages they “like” on

Facebook)

By targeting customers who value the firm’s product or service, the firm can maximize not only its sales, but also the margin it makes on each sale, since customers can be charged prices closer to their maximum willingness-to-pay

“The business that’s made the effort to anticipate my question –and been generous enough with its expertise to try and answer it – will have the best chance of being found in search, and may well predispose me towards a sale too”

- Catherine Toole, “Brands as Publishers: Inside the Content Marketing Trend”

The Push for Digital Advertising

“Simultaneous to the “pull” of information by the consumer [via visiting retailer sites] is the digital “push” by marketers, who spent more than $43 billion on digital advertising in 2013”

- Gian M. Fulgoni, “Omni-Channel Retail Insights and the Consumer’s Path to

Purchase”

Good News for Firms

“If a firm can tell its own loyal customers apart from those of its competitor, it can set lower prices so as to target aggressively the rival’s customer base. As the other firm will act likewise, competition will increase”

- Paul Belleflamme, “What to think of targeted advertising?”

There are incentives for firms to share customer data that can be used for price discrimination, and studies show it can be a “profitable strategy for competing firms”

- Paul Belleflamme, “What to Think of Targeted Advertising?”

As targeted advertising becomes more

widely used, many consumers worry that

everything they do online is being tracked

The Growing Concern…

A Canadian Study on Behavioural Ads

Of 1500 Canadians polled in 2014, 73% said they feel they have less protection over their information than they did 10 years ago

58% of those surveyed reported having turned off location tracking on mobile devices because of privacy concerns, up from 38% in 2012

A Canadian Study on Behavioural Ads

“81% of participants said they would do

business with a company specifically

because of its reputation for privacy”

Facebook “Social Context” Advertising Scandal

“[Facebook] allowed advertisers to post

updates on users’ feeds to notify their

friends of their commercial activity

at participating retailers”

- Sidneyeve Matrix, Module 02 Lecture 01 “Advertising Strategies,”

FILM 240, 2017.

Some people had

their surprise

engagement plans

revealed by

Facebook

notifications sent to

their friends that

they had recently

made a large

purchase at a

jewelry store

Similarly, Facebook’s use of “sponsored stories” meant that if a user “liked” a page on Facebook, his or her friends were told about it in the form of an advertisement

Many users felt this was

an encroachment on their

privacy, and the result was

a $20M class action

lawsuit in 2014.

What is the Best Approach?

Behavioural targeting can be a very effective way for businesses to advertise to specific groups of people and ensure profit maximization

However, an important part of marketing for businesses is called Marketing Ethics, or promoting “honesty, fairness, and responsibility in advertising,” and it is often a complicated topic

Is Behavioural Targeting “Ethical”?

There is no agreed-upon answer, but there may be some

solutions to make it more welcomed by consumers

For many users, the solution may be as simple as having access to more information on how their data is used and collected

By being more transparent about their privacy

policies, firms can allow consumers to understand

what is being done with the data collected, allowing

them to be more comfortable in using their services

56% of Canadians surveyed said that they did

not feel they had sufficient knowledge to

properly protect their privacy

SourcesBelleflamme, Paul. "What To Think Of Targeted Advertising? | Ipdigit". Ipdigit.eu. N.p., 2013. Web. 17

Feb. 2017.

Ben Elhadj-Ben Brahim, Nada, Rim Lahmandi-Ayed, and Didier Laussel. "Is Targeted Advertising Always Beneficial?". International Journal of Industrial Organization 29.6 (2011): 678-689. Web.

Chauhan, Sonam and Shubhangini Rathore. "Ethics In Behavioural Targeting:". International Journal of Online Marketing 4.2 (2014): 45-61. Web.

"Ethical Marketing | What Is Ethical Marketing?". Marketing-schools.org. Web. 19 Feb. 2017.

Fishman, Andrea. "Privacy Vs. Security: What's Behind Ad-Targeting Concern?". Cmo.com. N.p., 2012. Web. 15 Feb. 2017.

Fulgoni, Gian M. "“Omni-Channel” Retail Insights And The Consumer's Path-To-Purchase". Journal of Advertising Research 54.4 (2014): 377-380. Web.

Hendricks, Drew. "Facebook To Drop Sponsored Stories: What Does This Mean For Advertisers?". Forbes.com. N.p., 2014. Web. 16 Feb. 2017.

Matrix, Sydneyeve. “Module 02: Promotional Media | Lecture 01 Part 01: Advertising Strategies,” FILM 240, Queen’s University, February 2017.

Phoenix Strategic Perspectives Inc.,. 2014 Survey Of Canadians On Privacy. Ottawa: N.p., 2014. Web. 15 Feb. 2017.

All photos have Creative Commons License CC0, sourced from Google and Pexels.com