Targeting, Confidence, and Trust

As I was paying personal bills last week I grabbed for my “forever” stamps and paused. Do I trust that the stamps will have value “forever” — or even in the short term, given the economic woes of the U.S. Postal Service and the nation in general? But it struck me as significant that one would even question their validity at all, and points to the general decimation of consumer trust in the last six months.

In eary February, consumer confidence fell to its lowest in three months as sentiment grew increasingly gloomy over an economic downturn that most expect to last up to five years, according to another survey, the Reuters-University of Michigan Surveys of Consumers.

Lack of confidence equals a lack of trust. How will an overall lack of trust play out in online marketing? Will it benefit behavioral marketing opportunities or threaten them?

I had an interesting e-mail exchange with Steven J. Cole, president and CEO of Council of Better Business Bureaus, as a result of my last column, “Marketers Ramp up Efforts to Self-Regulate,” about this very point.

Cole suggests that the 2009 environment goes beyond privacy and behavioral marketing. Trust levels are plummeting, and for understandable reasons. The Council of BBBs has conducted two BBB Trust in Business surveys, done by Gallup, and they show an incredible low level of trust not just with the prominent big guys, but with the businesses that consumers deal with every day.

It’s an interesting conundrum: Will the financial crisis cause such low trust of business and government that privacy concerns will be heightened or will consumers be so pre-occupied with survival, jobs, and health care that online privacy concerns will not be on their radar.

In the mid-1990s, people responding to surveys said they were very concerned about online privacy. Yet they still flocked to online shopping sites without regard to the fact that at that time many sites did little to inform consumers of how their information would be used. This dichotomy between what people say and what they do will likely continue in the more specialized area of behavioral marketing.

The good news is that, over time, with pressure from media, responsible companies, self-regulatory organizations like the BBB, and the government, the business community really modified its practices so it’s more transparent and provides much greater choice, by and large, than was the case back then.

Best practices spread virally. Will this happen on the behavioral advertising front? I think so if the business community is smart. That includes providing techniques that allow targeting to consumer preferences and desires, but not maintaining unnecessarily personally identifiable information. If business is transparent about what it does, consumers will end up okay. Consumers may not want to be personally tracked, but they do want more convenient experiences online.

Cole contends that consumers won’t slice and dice the trust issue. Diminished regard for business, if that occurs during the current crisis, will translate to a general erosion of trust — in advertising, in reliability and performance, in security of data, altogether. Companies distinguishing themselves as trustworthy will command a premium.

On another front, the Federal Trade Commission has issued a report that provides updated guidance on its online behavioral advertising principles, stating there’s no need at this time for new privacy laws to regulate behavioral targeting companies’ efforts to collect data about consumers. Still, the commission FTC commissioners condemned Internet companies for failing to clearly explain to their users what information they collect and how they use it for targeted advertising, adding that the industry has not done enough to protect consumers.

The ongoing challenge to the behavioral marketing companies will be to refine their products and services for better and more effective marketing and overall ROI (define), while not losing consumer trust.

In a NYTimes.com blog post, “What Ad Companies Won’t Say About Privacy,” reporter Saul Hansell points out FTC Commissioner Jon Leibowitz’s quote that the “Industry’s silence in response to F.T.C. staff’s request for information about the secondary uses of tracking data is deafening.”

As I’ve said before, behavioral marketing has strong potential to become even more effective and popular for media buyers in the future. In every media plan we are doing, we incorporate behavioral targeting of some kind wherever possible. Now more than ever, if you can’t find a pay-per-action opportunity, many targeting methodologies are going to increase ROI.

And it’s becoming more important every day for behavioral marketing suppliers to increase transparency about their methods to gain trust and confidence from the media planners and buyers and consumers.

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