Cookies Anyone?: A Peep into Privacy Issues Related to Behavioral Advertising

Online behavioral marketing involves tracking the online activities of consumers to allow businesses to deliver advertisements that are most in line with their interests. This is done by using cookies, which contain a small text file with a unique ID tag. The website saves a file with a matching ID tag. Cookies can be used to monitor visits to websites, track the number of times you visited the site, how long you did so for, your log-in information etc. For e.g., if you registered on a travel website for travel to say France and then visited a hotels website, the website may automatically display advertisements of hotels in France. Besides cookies, businesses are using web-bugs to check if a user has viewed a page or an e-mail. Direct marketing techniques like surveys asking the user if the account information could be used for future transactions are also not not uncommon. Signing up for internet services, e-mail, browsing, instant messaging, personal websites, blogs, financial accounts and bill payments are some of the ways in which consumers make themselves vulnerable and their personal information susceptible to being used by online customer information trackers.

With tracking technologies being used my most websites, it is rather difficult to regulate who can use what technologies and have access to what kind of information. While software like ParetoLogic Privacy Control can be used to erase all data related to internet activity, what is more important is consumer awareness. There are several precautionary measures that one can use to protect one's online privacy. These include:

• Not revealing personal information
• Turning on cookie notices in the Web Browser
• Using pseudonyms for e-mail
• Using a secure (encrypted) internet connection
• Examining privacy policies and seals
• Not replying to spammers
• Being cautious of websites that offer rewards in exchange for personal details

Companies like Google argue that the collection of highly focussed information helps them to deliver personalized advertising, but the Federal Trade Commission recently advocated a plan that would let consumers choose whether they want their internet browsing activities to be monitored. With several websites tracking users and selling their information without their knowledge, it is evident that self-regulation has not worked well. As discussed in the New York Times article titled 'F.T.C. Backs Plan to Honor Privacy of Online Users', the commission has proposed using a "do not track" mechanism that gives consumers control over whether or not they would want their browsing information to be tracked. In the pipeline for the next 2 months are decisions regarding whether or not the mechanism should allow consumers to control the type of advertisements they would like to see.

Several corporations like Time Warner Cable and GroupM Interaction have voiced their concerns against this stating that it will hinder job creation within the advertising industry and hinder the existence of websites that rely primarily on advertising revenues. On the other hand, the Consumer Federation of America advocates that it is justified to protect consumer privacy.

The proposals that have emerged from recent discussions by the FTC are yet to be put into action and only once they are in operation can one predict their success or failure. The implications for businesses of these legislations being implemented will certainly be critical and how the advertising industry survives or circumvents these will be interesting to observe.

Other sources: FTC report on Behavioral Advertising, Electronic Frontier Foundation - Ways to Protect Privacy, NY times

When Small Businesses Have a Face on Facebook

It is just another day when Lucy logs into her Facebook account for her usual daily social networking, which is as indispensible for her as her square meals. She 'likes' a few status updates of her friends, comments on a few photographs and then notices an invitation from Mark to a new Indian restaurant, 'Namaste', in her neighborhood. The invitation takes her to the 'fan page' of the restaurant, where she finds a link to the restaurant's website. She browses through the menu and is excited to try out their spicy snack - 'Raj Kachori' with the milk-based drink - 'Meethi Lassi'.

With almost 500 million active users, Facebook provides one of the most powerful platforms for small businesses to build an online presence. Linkedin, with 35 million users and Twitter, with 50 million users are other important tools to leverage social media. A marketing methodology that barely existed a decade back is now one of the most effective and inexpensive ways for small businesses to do online marketing.
The below video is an advertisement for the firm Constant Contact, that helps more than 400,000 small businesses to build successful, lasting customer relationships through e-mail marketing, online surveys and event marketing tools.



Today, social marketing is being used not just by small businesses, but also by larger ones like Dunkin' Donuts, which has found value in microblogging using Twitter, and Johnson and Johnson, which has established its digital footprint using Youtube, Facebook and blogging. Some of the direct benefits of social media are Search Engine Optimization (SEO), for higher ranks on search results, and access to a broader base of supporters. Tools like Google Analytics can help companies to accurately evaluate the success of their marketing efforts, through analysis of detailed statistics of visitors to their website. Considering the low cost and skill requirements, it definitely makes sense for businesses to utilize the available tools to encash on the benefits.

However, a company needs to strategize how to make the best use of the tools. For instance, a company needs to have answers to questions like:

• What are the goals we aim to achieve through the marketing effort?
• Who is our target audience?
• What 'image' or 'personality' would we want our company to have on the social media channels?
• What resources (e.g. man-hours) are we ready to dedicate to this?
• What tools should we use?
• Is there a particular medium that the target audience prefers over the others?
• How can we monitor and act upon the audiences' responses?

Since businesses today have a number of options like online networking websites (Facebook, Linkedin), blogs (Wordpress, Blogger.com) and mobile social networks (Foursquare, Yelp), answers to the above questions will play a critical role in determining a company's success in its social media marketing efforts.

Other Sources: Small Business Marketing, BusinessWeek

Encashing on the Consumer's Subconscious: Neuromarketing

An MRI Machine in the right corner, with 6 people in a queue beside it, an eye tracker in the center of the room and a Computer Electroencephalograph (EEG) on the left with a group of 3 scientists busy analyzing neural activity graphs on the screen. The scene at a medical clinic, right? Wrong. Welcome to the 'Marketing Lab'. Those of us who still think of marketing as a function that solely involves a group of high-profile executives planning strategies for target customers in a board-room need to awaken to this rather recent trend of studying a consumer's sensorimotor, cognitive, and affective response to marketing stimuli, also termed as 'Neuromarketing'.

André Marquis, Senior Vice President , Sales and Marketing at Innerscope Research discusses in his talk “If It Feels Good Do It” : Using Neuromarketing to Go Beyond that we use less than 10% of our cognitive brain in normal decision-making. This implies that most our decisions, especially those like purchasing of products, are made at a subconscious level. Today, several large firms like Google, Disney, Frito-Lay and CBS, as well as political campaigners, are using neuroscience to study human behavior for effective marketing techniques. Advertisements are designed to have more emotional engagement, in order to increase the probability that consumers will remember the products after seeing them. Also, it has been found that the graphics of an advertisement or a packaging cover can play an important role in increasing its appeal. Something as trivial as a product logo can give one product a competitive advantage over the other.

Neuromarketing firms, like EmSense, Sands Research, MindLab International and NeuroSense use biometric measurements including eye tracking, heart rate, breathing, GSR and movement to understand consumer reactions to visual information. Dr. David Lewis, who has been called the ‘father of neuromarketing’ for this research in this field, is the Chairman and Director of Research for MindLab International Ltd. The company uses a comprehensive range of technologies for measuring brain activity, muscle activity, eye tracking and stress and emotional indicators.

That said, a major question that arises is whether or not neuromarketing can be a means to trick consumers into buying what they did not intend to, i.e., how ethical is it to use brain mapping for selling products in the market. Since neuromarketing operates at the subconsious level, obviously the consumers are not aware of its influence on their decisions. Protectionist organizations have voiced their concerns regarding the use of this technology. Commercial Alert, wrote letters to members of the U.S. Senate Committee on Commerce, Science and Transportation way back in 2004 requesting an investigation of neuromarketing.

In my opinion, now that the technology is already is use, banning it or abolishing its use altogether is rather impractical. More so, because it does not seem to have direct ill-effects on people in general. However, like other technologies that have brought up questions regarding the morality of their use, for instance radioactivity and nanotechnology, it is required that the government regulates the use of neuromarketing to clearly define the boundaries within which companies might operate. It is important to address privacy-related concerns at this time, when the technology is still in its initial phase of use. There lies tremendous scope in the scale of use of neuromarketing and it would be interesting to see the unfolding of its hype cycle.

Looking forward,
Latika

Sources: Dr. David Lewis, NY times, Google TechTalk

The BRICs

I think it would be fair to conclude that the BRICs (Brazil, Russia, India and China) serve more the purpose of balancing the political power of the developed countries in North America and Europe, rather than acting as a coherent group like the European Union.

They are the 4 largest economies outside the OECD with annual GDPs of over $1 trillion. They also account for 40% of the world's total foreign exchange reserves, with China alone at a staggering $2.4 trillion. However, they have come into the lime-light more because of the recessionary debate about rebalancing the world economy. They are looking at reducing the influence of the United States, and it is rather ironic that it was the developed countries in first place that included the BRICs when they formed the G-20.

The countries have some common objectives, like reforming the international financial system and enhancing their say in world issues. Together as a group, they are able to assert more power when confronted with the developed countries. However, their internal complications (like the aim of the rest to soften China's rise, India's strategic rivalry with China and increased competition for exports to poorer countries) put them in a race against each other as well, which makes the group devoid of the coherence of the European Union. Moreover, they lack legal, historical and geographical similarities and objectively speaking, there has been more talk than concrete action by them.

As of now, the BRICs are more of an ideological grouping and their actual impact on the world economy is yet to be seen.

Sources: 'The trillion-dollar club', The Economist - April 15, 2010, Class discussion