Thankful for Being ‘Reasonable’ With Data-Driven Marketing

Marketers were given an early Thanksgiving: a recognition by the Federal Trade Commission that “data” is indeed the fuel of the digital economy, and that most consumers are pragmatic toward how data, and data-driven marketing, finances the online content they rely upon and enjoy.

Marketers were given an early Thanksgiving: a recognition by the Federal Trade Commission that “data” is indeed the fuel of the digital economy, and that most consumers are pragmatic toward how data, and data-driven marketing, finances the online content they rely upon and enjoy.

Some might call such a view logical. Some factual. Some realistic. Let’s call it all of these and “reasonable,” as well.

On Nov. 9, the FTC, in comments to the U.S. Department of Commerce’s National Telecommunications and Information Administration regarding the Administration’s approach to consumer privacy said:

“The FTC supports a balanced approach to privacy that weighs the risks of data misuse with the benefits of data to innovation and competition. Striking this balance correctly is essential to protecting consumers and promoting competition and innovation, both within the U.S. and globally.”

The comments articulate how the FTC has pursued enforcement action in its existing privacy enforcement, a bright line of various consumer harms: financial injury, personal injury, reputational injury and unwanted intrusion, the latter incorporating the sanctity of their homes and intimate lives.

A Succinct Recognition of Responsible Data Usage

The comments call out the benefits of responsible data flows in our economy (note: footnotes are omitted in excerpts):

“In addition to considering the risks identified above, any approach to privacy must also consider how consumer data fuels innovation and competition. The digital economy has benefited consumers in many ways, saving individuals’ time and money, creating new opportunities, and conferring broad social and environmental benefits. For example, recent innovations have enabled:

  • Better predictions about and planning for severe weather events, including updated flood warnings, real-time evacuation routes, and improved emergency responses and measures, that can allow people to plan for and avoid dangerous conditions.
  • Improved consumer fraud detection in the financial and banking sector, as institutions can obtain insights into consumers’ purchasing and behavior patterns that will allow them to proactively identify and immediately stop fraudulent transactions when they are discovered.
  • Free or substantially discounted services, including free communications technologies (email, VoIP, etc.), inexpensive and widely available financial products, and low-cost entertainment.
  • Safer, more comfortable homes, as IoT [Internet of Things] devices detect flooding in basements, monitor energy use, identify maintenance issues, and remotely control devices, such as lights and ovens.
  • Better health and wellness, as a variety of diagnostics, screening apps and wearables enable richer health inputs, remote diagnosis by medical professionals, and virtual consultations.
  • More convenient shopping, as retail stores track both sales and inventory in real-time via shopping data to optimize product inventory in each store.
  • More relevant online experiences, as retailers provide customized offers and video services recommend new shows.
  • Easier-to-find parking, as cities deploy smart sensors to provide residents with real-time data about available parking spots.
  • Increased connectivity, as consumers can get immediate answers to questions by asking their digital voice assistants and can remotely operate devices, such as lights and door locks, with a voice command or single touch on a phone.

“Privacy standards that give short shrift to the benefits of data-driven practices may negatively affect innovation and competition. Moreover, regulation can unreasonably impede market entry or expansion by existing companies; the benefits of privacy regulation should be weighed against these potential costs to competition.”

While we may believe the FTC is stating the obvious here, such matter-of-factness about marketplace observations cannot be taken for granted. An entirely new Internet regulation and regimen emanating from Europe  with its own U.S. fan base among some academics and privacy fundamentalists would take direct aim at these social and economic outcomes through cumbersome, inflexible, rigid consent schemes. These must be resisted not because privacy protections are not worth pursuing (they are), and not because consent is important (it is) but because, as the FTC comments also show, effective privacy enforcement is already soundly in place in America. And where new regulations are enacted, they ought to be flexible, measured and a balanced approach. “Reasonable” is the concept in play here.

A Risk-Based Approach

Thankfully, “a risk-based approach is in the FTC’s institutional DNA,” the FTC reports. For example, in this important area of consumer control, the commission writes (again, footnotes omitted):

“The FTC has long encouraged a balanced approach to control. Giving consumers the ability to exercise meaningful control over the collection and use of data about them is beneficial in some cases. However, certain controls can be costly to implement and may have unintended consequences. For example, if consumers were opted out of online advertisements by default (with the choice of opting in), the likely result would include the loss of advertising-funded online content.”

This is a pivotal moment. In effect, this is a recognition of two decades of responsible data collection and use at work in the Internet economy, and perhaps another 100 years of similar data use in the offline economy. In both cases, advertisers and marketers have implemented effective self-regulation conduct codes (disclosure, my professional relationships supports such codes), that are backed by enforcement and accountability that can refer companies to government agencies. The FTC actually used the NTIA comments to call out enforcement cases where private firms purportedly failed to follow self-regulatory codes of conduct.

As we debate public policy for privacy and security in the next Congress, and state legislatures, too and among ourselves as citizens and industry participants it’s wise to understand and appreciate what responsible data collection and use has brought forth in our economy, and how reasonable, risk-based approaches to policy making can best serve us all.

While I say “thank you” to the FTC for recognizing this I’m also thankful for an industry of practitioners who recognize and understand how and why data stewardship matters.

Equifax Data Breach: Has America Given Up on Privacy?

“If you have a credit report, there’s a good chance that you’re one of the 143 million American consumers whose sensitive personal information was exposed in a data breach at Equifax …” That’s how the FTC notification of the Equifax data breach begins, and it’s a remarkable statement.

Equifax Logo“If you have a credit report, there’s a good chance that you’re one of the 143 million American consumers whose sensitive personal information was exposed in a data breach at Equifax …”

That’s how the FTC notification of the Equifax data breach begins. And it’s a remarkable statement. “If you have a credit report” — and who doesn’t? — your personal information was probably stolen by hackers.

I mean, 143 million people is about 44 percent of the U.S. population. This breach is huge, and it will impact just about everybody.

So what are Americans doing about it? Screaming for a government breakup? Marching on the Equifax headquarters with pitchforks? Abandoning credit checks?

Eh … folks gave Equifax CSR “Stevie” a hard time on Twitter.

https://twitter.com/Technicolordojo/status/906147301986639872?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fwww.cnbc.com%2F2017%2F09%2F08%2Fequifax-tweets-happy-friday-after-security-breach.html

And people are suing, of course. In fact, there’s a one-click lawsuit chatbot that’ll allow you to sue Equifax without a lawyer!

(That has to be some kind of landmark in chatbot empowerment. One day after the robots take over, chatbots will get an annual day off in the name of DoNotPay.)

But the most common reaction has been a shrug. The Atlantic summed it up with the title of its article, “The Banality of the Equifax Breach.”

Credit breaches have become so common that the FTC has a cartoon about it, and it starts off exactly as banally as you’d expect: “Yet another data breach is making headlines …”

And who can blame anyone for treating these data breaches as routine? According to Identity Force, this was the 24th major data breach this year. These aren’t exceptional, they’re routine.

If there’s any silver lining, it’s that breaches at important institutions like Equifax and FAFSA (an IRS tool) make retail breaches seem like small potatoes.

There’s been almost no significant response to these breaches from the U.S. government. Europe has been far more proactive, with General Data Protection Regulations about to go into effect that will require companies to have a chief data protection officer.

The best Americans can expect a week of is free credit protection from Equifax, so long they sign away their right to sue about he rest of the breech. (Correcton: Commenter Phillip Angerhofer brought to my attention that Equifax has adjusted its terms of service to make clear that consumers do not waive the right to sue by enrolling in the service. Thank you, Phillip!)

All of which begs the question at the top: Have Americans given up on privacy? Because, despite the amount of data breaches we’re seeing, American citizens don’t really seem all that fired up on the topic.

As ridiculous as the E.U policy may sound, are Americans doing enough to protect consumer data?

And if not, are U.S. brands ready to meet the more rigorous laws coming into play in the rest of the world?

How Does Native Advertising Survive in an Age of Transparency?

Native advertising goes by many names including: sponsored content, sponsored posts, paid posts, brand services, custom solutions, branded content and probably dozens of other titles. Regardless of the name, the product is essentially the same.

Native advertising goes by many names including: sponsored content, sponsored posts, paid posts, brand services, custom solutions, branded content and probably dozens of other titles. Regardless of the name, the product is essentially the same.

Native ads are pieces of paid content ranging across articles, videos, infographics or images delivered in the flow of editorial content and consistent with the editorial style and tone of the publication. Typically, they have a teeny, tiny stamp that marks them as advertising or sponsored content — if you know what to look for. However, not everyone does know what to look for and research suggests that most users don’t recognize it as advertising.

The implicit agreement of the Web is that content is largely free and that ad exposures pay for the significant costs to create and deliver all that content to users. This keeps it simple — church and state, advertising and editorial — and maintains a mutually beneficial balance. Native advertising subverts that trade-off for the benefit of publishers/advertisers in much the same way that ad blockers tip the scales for consumers.

In fact, many assert that native advertising arose as a publisher solution to outsmart ad blocker software allowing growing numbers of consumers to remove ads from their online experience.

The rise of native advertising under its multitude of names has been impressive. Higher click and engagement rates compared to other forms of online advertising have driven brands on board with flexible formats across social and mobile platforms, in particular. Business Insider Intelligence predicts that spending on native ads will rise to $21 billion in 2018 from just $4.7 billion in 2013. Almost half of online advertisers have adopted native ads into their plans as of 2016, according to a recent survey.

But the widespread usage of this format is not without its costs. A recent Penn State study found there may be negative perceptions attached to publishers who blur the lines of advertising and editorial. Brands using the tactic apparently get more leeway since they are expected to promote themselves.

Still, publishers chasing much needed revenue have almost universally adopted this highly effective approach, including expected sources like Buzzfeed, Outbrain and Facebook plus other, more traditional and mainstream, publishers like USA Today, The New York Times, Conde Nast, The Atlantic and The Wall Street Journal.Forbes cover with native advertisingForbes actually devoted part of its cover to a native ad for Fidelity in its latest issue, prompting AdAge to proclaim “Another Taboo Broken.”

Smart algorithms drive the money machine that is native advertising even as popular criticisms emerge in voices as unexpected as John Oliver and South Park:

https://youtu.be/IVfslRsNXUc

The reproaches vary but tend to reflect the core concern that users may mistake paid content for unpaid content.

Well, yeah. Native advertising done well will blur the line between content and ads. That is the goal of the format — to keep readers in the stream of their content experience and not disrupt them with a blatant ad. But, if we don’t disclose the commercial intent in a visible and noticeable way, we are using trickery that runs counter to the transparency that users demand in their Web experience today.

How do advertisers capitalize on the opportunities presented by these new innovative ad vehicles without stepping over that thin line? The Federal Trade Commission published specific guidelines late in 2015 to help brands avoid deceptive practices, and the IAB has weighed in as well (opens as a PDF). Guidelines reduce to simply how visible and clear the disclosure needs to be.

Web users demand transparency and punish brands that aren’t truthful at the same time they reward brands that succeed in delivering honest ideas and communications. #Fails abound for hapless brand campaigns that ring false with their audiences.

But, marketers lured by the promise of improved results may minimize or rationalize their deception and probably don’t even consider the broader possible impact on the industry. Like most things, the danger is in the aggregate.

There may be increased backlash coming as more and more consumers come to recognize and resent the frequent sleight of hand integral to many native ad executions. And it won’t just damage the already challenged reputation of the advertising industry, but will also tarnish publishers and brands making it harder for even forthright ad executions to gain acceptance.

For the industry to continue innovating successfully, the public trust must be prioritized with both publishers and advertisers acting responsibly. For native ads, that means a minimum of clear naming and prominent labeling. It’s the law, it’s the right thing to do and it’s smart business.

‘Go Green, Go Paperless?’ FTC Issues Green Guides—and Lack of Substantiation Gets Targeted

Marketers who have been counting the days, months, even years, for the FTC to finalize its latest version of the “Green Guides” for making environmental marketing claims must wait no more. The revised guides are 36 pages slim and break new ground in six areas: 1) certifications and seals of approval, 2) carbon offsets, 3) “free-of” claims, 4) “non-toxic” claims, 5) “made with renewable energy” claims, and 6) “made with renewable materials” claims. The Guides also clarify previous guidance on terms such as “compostable.”

Marketers who have been counting the days, months, even years, for the Federal Trade Commission (FTC) to finalize its latest version of the “Green Guides” (formally, Guides for the Use of Environmental Marketing Claims) for making environmental marketing claims must wait no more. (The Guides were established in 1992, and they most recently were updated in 1998.)

The revised guides are 36 pages slim: http://www.ftc.gov/os/2012/10/greenguides.pdf

Perhaps it was the 5,000 public comments—340 of them unique—that the FTC received. Perhaps it was the upcoming Election and the pressure building to put the claims guidance in the public domain, particularly since the public comment period closed nearly two years ago. Needless to say, the Guides are useful in that they provide both timely counsel and marketplace examples on many terms and claims, such as “recycled content,” “recyclable” and “degradable.”

The newest version of the Guides breaks new ground in six areas: 1) certifications and seals of approval, 2) carbon offsets, 3) “free-of” claims, 4) “non-toxic” claims, 5) “made with renewable energy” claims, and 6) “made with renewable materials” claims. The Guides also clarify previous guidance on terms such as “compostable,” “ozone,” “recyclable,” “recycled content,” and source reduction claims, as well as general environmental friendliness claims.

Two noteworthy items are:

  • Any unqualified claims of degradation must have it that the labeled product or packaging would degrade were it to be placed in a landfill in one year’s time—no more.
  • Any unqualified claims of environmentally friendliness or eco-friendliness are not encouraged—since very few products can meet consumer expectations in all aspects of their environmental impact. However, a qualified comment that focuses consumers on the specific advertised benefit is welcomed.

One can hope that the latter might serve to halt banks, utilities and others that make “go green, go paperless” claims that adorn so many monthly mailed statements, without any type of substantiation offered behind such questionable messaging. It would have been nice to see a clear example in the Guides regarding this specific area, given this claim’s wide use, and given the energy consumed by data centers, the growing problem of electronic waste, the rise of sustainable forestry and the predominance of responsible forest management practices in North America and Europe. Still, the FTC was clear in its direction regarding such general claims:

“Unqualified general environmental benefit claims are difficult to interpret and likely convey a wide range of meanings. In many cases, such claims likely convey that the product, package, or service has specific and far-reaching environmental benefits and may convey that the item or service has no negative environmental impact. Because it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims, marketers should not make unqualified general environmental benefit claims.”

In the same light, I’m not making the claim that paper is preferable to digital. Let’s be honest: most marketers are multichannel today. Most direct mail is data-driven, and is also dependent on data centers. And a life cycle analysis of a direct mail piece and a comparable digital message has not yet been achieved, head to head, as far as I know. Not that that matters. What does matter is that marketers who make any environmental claims need to have substantiation of such claims available to consumers to inspect.

Marketers who want to read up on the new Green Guides in brief may do so here, in this handy summary the FTC has created: http://www.ftc.gov/os/2012/10/greenguidessummary.pdf

Previous commentary on “Go Green, Go Digital” from the Marketing Sustainability blog is offered here: http://targetmarketing.adweek.com/blog/making-green-claim-not-waiting-ftc-green-guides

Additionally, here’s reporting on of the revised Guides as they apply to the use of carbon offset claims: http://www.environmentalleader.com/2012/10/02/ftcs-revised-green-guides-target-carbon-offset-claims/

I welcome hearing about your observations from the newly revised Guides.

Making a Green Claim: (Not) Waiting for the FTC Green Guides

Direct marketers and mailers making environmental claims have a number of resources available to them to help make such statements meaningful to consumers. The most important of those to U.S. marketers are the Federal Trade Commission’s Green Guides—officially titled “Guide for the Use of Environmental Marketing Claims”—which were enacted in 1992, and updated in 1996 and 1998. In 2007, the FTC initiated a new effort to update the Green Guides once again—and here we are in 2012 still waiting for this next edition.

Direct marketers and mailers making environmental claims have a number of resources available to them to help make such statements meaningful to consumers. The most important of those to U.S. marketers are the Federal Trade Commission’s Green Guides—officially titled “Guide for the Use of Environmental Marketing Claims”—which were enacted in 1992, and updated in 1996 and 1998. In 2007, the FTC initiated a new effort to update the Green Guides once again—and here we are in 2012 still waiting for this next edition.

The Green Guides, as currently written, give insight into use of such specific claims as biodegradable, compostable, recyclable, recycled content and ozone safe. While they are “guides,” they are enforceable. The FTC can and has brought forth cases where marketers’ claims did not measure up to the examples that pepper the Green Guides throughout.

In a recent Direct Marketing Association Compliance Series Webinar (February 14), DMA’s Jerry Cerasale, senior vice president of government affairs, said there is no indication that the Green Guides‘ updates—promised some time ago—will be published shortly, or what might be holding them up. If there are differences of opinions among government scientists about certain claims or terminology, or if FTC staff have unresolved policy questions related to potentially new Green Guides content, the truth is we really just don’t know. However, the current iteration of the Green Guides certainly does give us good direction, which I’ll enumerate here.

First, as with any marketing claim—green or not—each claim must be “truthful,” “clear” and “substantiated.” Many of my colleagues know that “go green—go digital” claims many banks, utilities and financial service companies print on monthly statements are a pet peeve of mine. While I have no issue with persuading customers to switch to electronic statements, for those customers who want to, I do have a big problem with couching the digital migration as an environmental choice. Chances are the brand has made no effort to document the net environmental benefits of doing so. Just supposing that an e-statement “saves trees” is not substantiated, or, if there is an attempt to do so, it is largely based on spurious associations with deforestation, something that is not happening in North America. While I’m not a lawyer, I would be very wary about making such claims statements on a brand’s envelopes because of the FTC’s substantiation expectation.

Second, when making a marketing claim—on a mail piece, on packaging, on a product—it must be clear what the claim pertains to, as in the mail piece itself, the packaging itself or the product itself. For example, making a “recyclable” claim might be seen as deceptive if the packaging is recyclable, but the product it protects is not. Thus, be very clear with labels as to what the claim applies.

Next, we need to ensure claims are not overstated. For example, growing the amount of recycled content “by 50 percent” would be seen as deceptive if the content were to nudge from 2 percent to 3 percent. Similarly, making a “biodegradable” claim is highly suspect when an item destined to today’s air-tight and water-tight landfills largely stays there inert—it’s only biodegradable when it’s a piece of litter exposed to sunlight and the elements, hardly the intended end of life. Stating some item is “eco-safe” would be seen to be deceptive if there is no proof, or if it refers to one attribute of a product or item, as opposed to the product or item overall.

The term “recycled content” is important to consider because the FTC does not count material in the manufacturing process that is normally reused, and thus never first discarded as waste. Only if the material is recovered from the waste stream and reused may it be considered “recycled.” There are “pre-consumer,” “post-industrial” and “post-consumer” forms of recycled content, but in all cases, these types of labeled recycled content must be recovered from waste. Thus, it’s common to see recycled-content papers with labels such as “made with 100-percent recovered fiber, with 20-percent post-consumer content.”

Finally, though not part of the Green Guides, the FTC in a staff opinion gave the Direct Marketing Association and direct marketers the go-ahead to enable “recyclable” and “recycle please” messages on catalogs and direct mail pieces. That distinction in 2006 was important. Prior to the opinion, that type of label was not permissible, because even though mail or catalogs technically were recyclable, less than two-thirds of the nation’s households had local access to recycling collection programs for this material. Thus, it would be seen as deceptive if local facilities were non-existent. Even the qualified “recyclable where local facilities exist” would be seen as deceptive without having the two-thirds threshold in place first. Thankfully, we’ve met that threshold and now can implement consumer education programs such as DMA’s “Recycle Please” logo initiative (launched in 2007).

While we’ve seen a draft for public comment of the next Green Guides, the final draft is—as of this date—yet to come. Therefore, it’s probably not wise to guess as to what will be in the next version, or what will be left out. (To visit the October 2010 draft, go here: http://www.ftc.gov/bcp/edu/microsites/energy/about_guides.shtml )

As a communicator, I also have at least one other “green claims” resource—an organization called TerraChoice, now part of Underwriters Laboratory, which actually consults (or has consulted) with the FTC and the Canadian Standards Association, as well as many Fortune 500 brands. Its Web site, www.sinsofgreenwashing.org, documents seven “sins” of environmental marketing claims, sins such as hidden tradeoffs and no proof. In its most recent 2010 report, only 5 percent of consumer product claims were found to be “sin free,” which truth-be-told was an improvement over 2009!

Between the current edition of the FTC Green Guides, TerraChoice, and the DMA’s own Guidelines for Ethical Business Practice, direct marketers don’t have to wait around for the FTC to (finally) issue its next Green Guides rendition to make an honest, truthful environmental marketing claim. With Earth Day around the corner, just do some diligence to be sin-free and stop saying “Go Green, Go Digital”!

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