Search engines, online retailers and data brokers continuously monitor consumers’ online searches and shopping habits. Then, they may sell the data to third party advertisers or use it themselves to tailor ads to consumers’ real-time wants and needs. But a recent study shows that this strategy often backfires, even among shoppers who have grown up using the Internet and who are accustomed to having their online behaviors data-mined.
A Closer Look at the “Creepiness” Factor
“‘Creepiness’ is defined by the feeling consumers get when they sense an ad is too personal because it uses data the consumer did not agree to give — such as online searches and browsing — and when they’re unclear how and where that information will be used.”
“Even these digital natives, these Millennials, were bothered by this. They know they’re being marketed to. And they don’t like that.”
— Assistant Professor Lisa Barnard, Ithaca College
Why Marketers Conduct “Online Creep”
Researchers monitor online activity to better understand consumer trends, needs and interests. A key reason: They’re trying to get a jumpstart on major changes in consumers’ lives, such as an impending pregnancy or a home purchase. If the company waits to find out when the information is recorded in the public records, it must compete with other vendors. By monitoring consumers’ search and shopping habits, proactive companies can reap a first-to-know advantage.
But targeted ads based on this information can also be a little disturbing and invasive — and based on incorrect assumptions.
For example, after purchasing a book of baby names and researching car seats at Target.com, a woman started receiving pregnancy-related ads on her Facebook page. She also used Facebook for work-related posts. In her company’s open-concept workspace, it didn’t take long for co-workers to spread the rumor that the woman was pregnant. Ironically, it turned out that the woman’s sister was pregnant — and the pop-up ads had been slightly off-point.
Study Challenges Effectiveness of Targeted Online Ads
Targeted online ads based on consumer online activity are nothing new. But the richness of the information that companies can track today is astounding. In the past, only broad demographic information — such as gender, age or hobby — was tracked by search engines, data brokers and online stores.
But today’s data-mining digs deeper. In some cases, the data compiled might even include health-related searches and medical supply purchases, because the Health Insurance Portability and Accountability Act (HIPAA) applies to only medical service providers, such as doctors, hospitals and insurance companies, not to other types of companies.
Before selling or using data compiled from online data analyses, managers should consider the question, “Just because we can track the data, should we always use it?” The answer is a resounding, “No!” according to a recent study by assistant professor of integrated marketing Lisa Barnard at Ithaca College in New York.
In her study, Barnard showed 280 undergraduate students fictitious shopping sites for USB drives and acne medication. Later the students viewed news feeds on Facebook with pop-up ads featuring the previously viewed products or completely new ads. Some ads offered promotions specifically to Ithaca College students and others offered generic promotions. Then students were asked to rate the feelings that the targeted and nontargeted ads invoked.
The study found an indirect, negative effect from targeted ads that resulted in a 5 percent reduction in the average consumer’s intent to purchase an advertised product based on the “creepiness factor.” In addition to lowering sales, Internet data-mining also gives rise to ethical and brand image issues. People value their privacy, and no company wants to be associated with creepy marketing tactics.
Engage in Smarter eMarketing Practices
The Ithaca College study did find a direct positive a direct, positive effect on a consumer’s intent to purchase a product after viewing an ad tailored to them. But the key to effective targeted ads is to minimize the creepiness factor. So, online retailers should be sensitive and transparent about using any personal data collected or purchased from a third party.
For example, people are likely to feel embarrassed if pop-up ads for acne medication, anti-aging cream or other sensitive, personal items appear when they log on to their Facebook account or search on Google. Marketers should consider the creepiness factor before engaging in targeted online ad campaigns.
However, many consumers do value real-time connections with their favorite brands, including promotions based on their latest needs and interests. To figure out which shoppers are most loyal to your brand, try to get customers to like, follow or pin your company on social media — then focus your ads on appealing to the interests of these specific buyers. Coupon offers and timely, genuine blogs are examples of ways to entice shoppers to connect with your brand.
On the opposite end of the spectrum, some retailers hope to reverse the effects of online creep by pledging to refrain from collecting personal information or data-mining consumer queries. Instead, they ask buyers to voluntarily sign up for promotional offers. These companies hope to engender goodwill by respecting people’s right to privacy — a novel concept in today’s transparent online marketplace.
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