Consume This! Advertising and Consumer Data

 

In this month’s post, Melissa Aronczyk takes us into the world of commercial advertising to see how the digital era has reoriented “mad men.”  Most of us are attuned to the bargain we make as online consumers, but Aronczyk notes how we give up not only our personal data as consumers, but also information about ourselves as political actors, medical patients, workers, family members, and ultimately, as members of the public, the fate of which is being shaped by experts gleaning our data.  A great read in this post-Cambridge Analytica moment.  Share widely—but self-reflexively.

– Ashley Mears

 

Consume This! Advertising and Consumer Data

By Melissa Aronczyk

Last month, I had the chance to return to my “alma mater”: the world of commercial advertising. For two weeks in June I was a Visiting Professor in the Advertising Educational Foundation’s fellowship program. The first week was a maelstrom of visits to some storied agencies in New York City. The second week, I was “embedded” full-time at Ogilvy & Mather, an advertising and marketing firm on Manhattan’s west side.

I started my career in advertising. From 1998 to 2003, I was a copywriter at a Montreal ad agency, coming up with taglines and concepts for clients in industries like tourism, cosmetics, and sports clubs. Back then, many of our clients weren’t interested in the web. Some claimed the Internet was a passing fad, preferring instead to spend their ad budgets on magazines, billboards, and TV. We all know how that turned out.

Fifteen years later, one of my goals during this brief re-immersion in the ad industry was to learn just how much this business has changed in the digital era. How have our online habits been converted into advertising revenue? How do advertisers think about consumers now that we give them so much information about ourselves to work with?

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Dr. Aronczyk presenting her research on advertising to Ogilvy & Mather staff (June 2018)

At Rutgers, where I teach courses in promotional media literacy, my students tell me they’re resigned to being tracked and targeted online. They say they don’t mind giving up their privacy if it means getting ads for things they actually want.

Marketers bank on that resignation. A lot of advertisers say that a more personalized internet is a happier place, because we can filter out what doesn’t matter and only see what does.

To me, it’s more complicated than that.

For one thing, online advertising is massively dominated by two companies: Facebook and Google (though Amazon has recently emerged as a major competitor because of its point-of-purchase data and the popularity of its Prime memberships). Some sources claim that 25% of all online ad spending goes to Facebook and Google, and that these two companies account for more than 60% of global online ad revenues.

Of course, when we talk about “Google,” we are not just talking about its search functions but also its platforms for mapping, document storage/editing, Gmail, and so on. And as you probably already know, Google owns YouTube, and Facebook owns Instagram and WhatsApp, so when people talk about the dominance of Google and Facebook, they’re also referring to these platforms and their capabilities.

For advertising agencies, what this means is that their business is less and less about making creative, original ads that break through the clutter and captivate audiences. Increasingly, it’s about figuring out how to collect more and more information about consumer behavior and how to monetize this behavior.

If your mental image of advertising has Jon Hamm staring off into middle distance while having a flash of creative inspiration, you might want to update that now. Nearly every ad agency I visited told me that the skills they desperately want my students to develop aren’t good writing, creative abilities, or a strong work ethic. The skills they want are in data science. Agencies today rely on programmatic advertising (essentially, automated real-time auctions for online ad space), data analytics (the collection, storage and analysis of consumer behavior online), and the development of algorithmic formulas which learn how to target consumers based on their profiles and habits (artificial intelligence).

Aside from the networked properties of Facebook and Google, another way these algorithms are able to learn so much about us is due to what the brand strategist Barry Wacksman calls “functional integration.” This is a form of business expansion deemed superior to horizontal or vertical integration because of its ability to incorporate public communication and everyday habits into its value chain.

A classic example of functional integration is from back in 2006, when Nike partnered with Apple to introduce an iPod kit. It included a tiny transmitter that fit into a Nike running shoe, allowing runners to keep track of their time, distance, and pace. The data receiver was located in an Apple iPod Nano. When the iPod was connected to a computer, it transferred runners’ data to their profile on the Nike website. Runners’ related habits – listening to music, monitoring progress, connecting with other runners for motivation and community-building – were now mediated via an integrated series of Nike-branded products – an accelerometer, a GPS app, APIs on Facebook and Twitter – and those of its business partner, Apple. For Nike, this integrated system constituted “an ‘owned’ media channel for runners”, one that incentivized a shift for the company toward the development of digital services over sports products.

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The “audience dial” at Facebook’s NYC office (June 2018)

This phenomenon, since exploited by Amazon, Wal-Mart, and other corporate behemoths, is what business leaders like to call an “ecosystem.” Nike’s brand value is predicated on this ecosystem’s capacity for ongoing expansion and a concurrent inflexibility: the condition of a runner’s access to this community is the regular purchase of Nike products and the steady provision of personal data.

When companies bank on the commodification of public data alongside the production of goods, one consequence is the loss of advertising revenue for “traditional” media institutions. As Nike and its peers focus on data they reduce their advertising budgets for mass media outlets, since their publicity is ensured not through TV or magazine ads but by “building relationships with loyal groups of consumers who become participants and evangelists for the entire interconnected ecosystem of products and services.”

Another consequence is the bleed from our consumer lives to our personal, professional and political realms. Online, we are never only consumers. Our tendency to privilege convenience over privacy online means that we use the same platforms and interfaces to conduct our work, read political news, obtain medical information, and purchase household goods. But this convenience comes with some serious costs. Our online activities can be used to infer a shocking number of things about us, and this information serves other groups who want to influence what we think and how we act.

Scandals like Cambridge Analytica are only one facet of the problem. As researchers like the sociologist Zeynep Tufekci have explained, even the algorithms’ designers don’t understand how the algorithms learn how to target people and on what basis. Studies have shown that algorithms can detect problematic or even pathological behaviors and use this information to target people who may be susceptible to certain messages.

Perhaps the most problematic implication of these changes in advertising is the mounting perception that the personal data on which private media companies increasingly run constitutes the sum of who we are as public people; and that decisions about public policies should be decided on that basis. In our ongoing research on the uses of big data for action around climate change, for example, Maria Espinoza and I discovered that transnational organizations like the United Nations are appealing to private companies to “donate” their consumer data for the “public good.” This data is then used to make decisions about what kinds of precautions are and aren’t necessary to deal with environmental vulnerabilities.

We need to give some serious thought as to how our consumer habits are always available for use in other arenas, from politics to public welfare. And to whether the seeming benefits – convenience and personalization – are worth the tradeoffs.

 

Melissa Aronczyk is associate professor in the School of Communication & Information at Rutgers University. She is the author of Branding the Nation: The Global Business of National Identity. She’s currently working on a new book on public relations and the history of US environmentalism.

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