Editor’s note: Elizabeth Kalmbach is vice president and group media director at research firm Kelly Scott Madison, Chicago. Jon Christens is the firm’s director of communications. This article is an edited excerpt from Kelly Scott Madison’s spring 2015 issue of State of Media.

Discussing consumer privacy often brings some familiar headlines to mind. Large-scale data breaches saw a record high in 2014, with organizations like the Identity Theft Resource Center reporting numbers as high as 783 individual incidents. Whether it was Target, Home Depot, Neiman Marcus or others, the reaction was often the same: How can this continue to happen and what’s being done about it?

The simple answers were often that this type of cyber warfare is the new normal and IT departments across both tainted and non-affected companies were scrambling to fortify their systems. But as these storylines progressed, an even larger question remained for many in our industry: How does this affect the way consumers view marketers’ utilization of behavioral data? Along with the help of research firm ORC International, we set out to answer this question and more through the 2015 Media and Privacy Survey (MPS).

Trust and today’s consumer

In many instances, the issue of marketing trust can become muddled by the fact that many consumers remain uninformed about what is being shared. The 2015 MPS found that consumers express confusion over what type of data is collected by marketers across various formats and how that fits into their privacy picture as a whole.

While just 34 percent of consumers are “very” to “extremely” aware that advertisers conduct online behavioral messaging campaigns, 20 percent are more or less in the dark. Most importantly, 45 percent of respondents stated they are only “somewhat aware” of this activity. This issue becomes larger when noting that 52 percent of consumers stated they only somewhat agree when asked if cable companies are collecting set-top box (STB) data that could theoretically allow for tailored ads in the future. Just 23 percent of respondents were confidently aware of that activity. While the latter data point is more understandable due to its impending status, it still supports the notion that overall, the advertising industry prefers to bury the issue of data collection rather than work toward an honest exchange.

Depending on the study, advertising professionals are led to believe that a majority of the public either generally distrusts or is ambivalent about advertising. While the truth lies somewhere in the middle depending on the format, it is encouraging to see positive gains in sentiment like those from Nielsen’s 2013 Global Trust in Advertising survey. Compared to numbers logged in 2007, most advertising formats saw an increasing level of consumer trust, at an average gain of 9 percent.

Still, it’s safe to say that consumers have a hard time separating the negative impact of data breach issues in 2014 from the arguably less intrusive activities marketers take to help them better understand consumer behavior. This is evidenced by the alarming 87 percent of MPS respondents who feel somewhat to extremely concerned about how companies and brands police themselves over proper use of consumer data. Consumers are likely associating this question with sensitive financial or medical records rather than the behavioral profiles often used to effectively target select audiences through advertising. That being said, there are still sizeable chunks of respondents who have concerns about marketing data, like the 47 percent who are not confident that appropriate measures are being taken to protect non-financial data from security threats or hackers. Add this to the fact that just 48 percent actually trust companies to use marketing data appropriately and the industry has some well-defined areas to improve upon.

Industry leaders may sometimes agree about what good transparency means but study findings clearly show we have problems communicating our viewpoints to the general public. As targeting capabilities become increasingly sophisticated across all formats, having a more solid regulatory framework and proactive means of educating consumers will be critical to the continued nurturing of public trust.

We remain in a time where actions taken to actually block advertisements are somewhat low, regardless of overall concerns. While 47 percent of MPS respondents stated they utilize ad-blocking technology, just 29 percent say they restrict cookie-gathering on their browsers and 44 percent state they don’t place any browser cookie restrictions. Additionally, 76 percent do not plan to add a blocking technology within the next year, though of those who say they currently use one, 50 percent added it within the last year. These ad-blocking numbers are probably higher than marketers want to see. Outside sources are projecting even faster growth of this technology (though PageFair reported this past December that just 4.9 percent of the global Internet population subscribes to ad blockers). Keep in mind however that if left unaddressed by brands and marketers, the overall picture could look even worse.

 

Confusion also persists when analyzing questions surrounding consumer sentiment of behavioral advertising. While 61 percent of respondents approve of TV advertisers serving them with more relevant messages, only 21 percent feel that personalized advertisements across all formats are of benefit to them. What’s more, 46 percent neither agree nor disagree with the latter and 33 percent explicitly disagree (Figure 1). Once again, the issue here is likely a mix of confusion over what personalization actually means across different formats in terms of data sharing and the fact that consumers want more out of this experience.

Incentives and benefits

When it comes to the public wanting more value out of their marketing experience, it typically comes at a cost that’s larger than most brands and advertisers are willing or able to deliver. Results from the 2015 MPS were no different, though the findings do shed some light on available tactics that resonate well.

Eighty-four percent of the public are now aware that some level of psychographic data is being shared across third-party networks in order to direct advertising messages. However, the mixed emotions regarding perceived benefits to behavioral advertising – 46 percent who are undecided and 33 percent who feel there are none – are further compounded when noting that 52 percent of the same respondents later stated that personalized ads are effective at engaging them. This conflicting behavior may seem puzzling but it’s nothing new. Studies over the past 30 years from various psychologists have reinforced the notion that no matter how consumers feel about ads themselves, the subconscious plays a much larger role in the ultimate brand perceptions. Ads that play into people’s emotions and behaviors tend to do a better job of winning consumers over in the brand-sentiment war. More imperatively, these clashing factors also bolster the importance of previously-cited issues regarding consumer confusion and alert advertisers to a missed opportunity for educational outreach about behavioral ads. But before delving into that angle, let’s look at incentives.

 

All too often, the sense that consumers don’t understand the importance of advertising in the overall service model clouds the fact that there are some pro-advertising incentives the public values. While the MPS unsurprisingly found fewer ads as the No. 1 incentive for helping consumers feel more comfortable about marketers utilizing personal data, it also identified discounts on service costs and coupons/discounts for shopping as other top considerations. While fewer ads rang in at 56 percent, service discounts and coupons netted 52 percent and 45 percent, respectively (Figure 2). Respondents between the ages of 18 to 24 actually drove the highest level of desire for fewer ads, likely because they are more inclined to use free apps and online services with a higher percentage of ad-supported content. Respondents between the ages of 25 to 44 actually placed service discounts on par with fewer ads in terms of top incentives. This sends an unmistakable message that marketers should always be focused on rewarding consumers who engage with their advertisements through some form of service discount or coupon.

Consumer education is key

So far the issues highlighted here repeatedly deal with an important disconnect between consumers and the understanding of benefits that a more informed advertising ecosystem brings. In theory no consumer would ask for more ads. However, once an experience with messages tailored to their interests and habits is called out, it proves that a majority feel the ads are more effective and engaging than broad-reach ads.

So how can the industry as a whole capitalize on this opportunity to reinforce this value? It can start by better addressing the looming issues with public trust and personal data. Without a stronger level of trust, the access to data that drives these decisions could shrink in the future. A valiant attempt was made to provide transparency with the 2012 launch of Your AdChoices, a campaign to educate the public on behavioral advertising and their rights as consumers. It explained full disclosure ad guidelines to consumers while also giving them the power to opt-out of tracking on individual ads and from specific advertisers.

Unfortunately, the 2015 MPS found that a disappointing 74 percent of respondents weren’t familiar with the campaign and of the 26 percent who were only 35 percent knew what the logo represented. Fewer still clicked on the AdChoices icon or took any action after doing so. Consumers need to understand advertising capabilities so they aren’t fearful of the potential consequences and advertisers need to be transparent about how and when they are using customer data. Addressable TV – the ability for marketers to serve more targeted ads to television viewers through set-top box data gathering – is on the rise along with other more sophisticated cross-platform methods. Leaders in the industry would be wise to stay proactive about this issue instead of waiting for a crisis to arise.

While it’s a good sign for the advertising community that consumer concern over marketers utilizing online browsing data falls lowest on a list (52 percent of respondents) that sees health information, government tracking, credit card theft and identity theft as bigger concerns, the former still represents a majority of respondents. Public sentiment can easily swing further in the wrong direction if a high-profile data breach or deceptive business practice explodes on the news. And let’s be clear: Credit card information is a vastly different animal from data detailing consumers’ favorite hobbies, restaurants and shopping habits. However, the lines between these issues are often blurred to the average consumer – something brands must realize if they want to maintain consumers’ valuable trust. It’s a trust that has recently been questioned by some, including authors Omri Ben-Shahar, Jacob Silverman and Bruce Schneier, who have all written on the lengthy and complex terms of service agreements that companies require users to sign. If negative views on these topics gain traction in the public sphere, then growing disillusionment could spell problems for brands and their customer data-gathering activities.

We strongly recommend that brands and the industry as a whole better prioritize communication that educates consumers on the benefits of more sophisticated marketing. This could include emphasizing a mixture of cost, transparency and preferable messaging advantages. Some more creative examples of this include OkCupid’s 2012 move to target users of its site who ran ad blockers by serving them messages asking for a $5 one-time donation to keep their experience ad-free. In a brief banner, it explained the advertising revenue model that OkCupid relies upon to run the site and asked ad-blockers to uphold a small margin of their responsibility for that lost revenue. Obviously tactics like this wouldn’t work for all but it excellently communicates the importance of advertising while also offering an out for site visitors who probably wouldn’t be engaged even if they saw ads.

While this is just one example of a more outlandish approach, it underscores the fact that marketers and providers alike can do a better job of advocating the cost benefits of advertising, along with the importance of transparency. Growing disillusionment with companies’ terms of service agreements is not likely to diminish anytime soon. The 2015 MPS proves that confusion still dominates the conversation when consumers look at behavioral targeting across all formats and ultimately they want more honesty out of brands and marketers. Now is the time for industry leaders to form stronger relationships with their key audiences and push for better regulatory frameworks before any serious public backlash, further adoption of anti-ad technology or government demands arise.

Key takeaways:

  • Transparency: There is a clear message to marketers that proactive transparency regarding the use of consumers’ personal data and an increased focus on the encrypted protection of that information is paramount to the general public.
  • Disconnect: Generally, consumers approve of more relevant ads, yet they are confused about the data collection required to serve those ads.
  • Top concerns: Consumers have somewhat mixed emotions with marketers’ online targeting activities in general but are understandably most concerned about the security of personal information that financial and health care institutions gather. Data collection by marketers falls lowest on the MPS’s list of privacy concerns for consumers.
  • AdChoices: Most online users have no idea that the advertising industry has taken steps to initiate targeting transparency and opt-out tracking options for consumers.
  • Data-sharing incentives: The top two incentives for people to feel more comfortable giving access to personal data are fewer ads (56 percent) and discounts on service cost (52 percent).
  • Cookie collection: Forty-four percent of respondents said they place no restrictions on cookie-gathering and just 27 percent actively control it.
  • Ad-blocking technology: Forty-seven percent say they utilize some form of ad-blocking technology, yet 50 percent who do just added this in the last year. Because the former number is much higher than global tallies (around 5 percent) it likely indicates some confusion about what consumers consider ad-blocking technology. Still, the recent perceived uptick in utilization could be signaling acceleration in consumer attentiveness toward online privacy as digital platforms continue to proliferate.

Methodology:

Online CARAVAN is conducted twice a week among a demographically representative U.S. sample of 1,000 adults 18 years of age and older. Completed interviews are weighted by five variables: age, sex, geographic region, race and education to ensure reliable and accurate representation of the total U.S. population, 18 years of age and older. The raw data are weighted by a program which automatically develops a weighting factor for each respondent. Each respondent is assigned a single weight derived from the relationship between the actual proportion of the population based on U.S. Census data with its specific combination of age, sex, geographic characteristics, race and education and the proportion in the sample. Respondents for this survey were selected from among those who have volunteered to participate in online surveys and polls. The data is weighted to reflect the demographic composition of the 18+ population. Because the sample is based on those who initially self-selected for participation, no estimates of sampling error can be calculated. All sample surveys and polls may be subject to multiple sources of error, including but not limited to: sampling error; coverage error; error associated with nonresponse; error associated with question wording and response options; and post-survey weighting and adjustments.