How digital advertising potentially harms privacy of people?

2023-04-10 ZHAOPEIWEN XIANG Uncategorized 0

What is the digital advertising?

Digital advertising is a huge part of marketing strategy used by companies to promote its brand, product, or service online (Rockcontent, 2020). Digital ads span social media, websites, mobile apps and searching engines, including text, image, audio, and video (Amazon). There are some the most common types of digital advertising: search advertising, online video advertising, audio advertising and display advertising. But from an academic perspective, digital advertising can be divided into three general categories: search advertising, classified advertising, and display advertising (Goldfarb, 2014). Website and app owners sell ad spaces, while advertisers purchase these ad inventory directly or through agencies to show their ads (called ad impressions) (ACCC, 2021).

The difference between traditional advertisement and digital advertisement.

Traditional advertising has been used for so many years and is spread through video, newspaper, TV, print, radio and billboards. While digital advertising is presented through digital channels, such as social media platforms, websites, mobile apps, and email.

As for most traditional forms of advertising, they play pre-recorded official audio or video material through videos and TV programs. And traditional advertising can spread as wide as it can to reach people from all walks of life through newspapers, posts, TV and videos, which is ineffective and usually waste much.

When it comes to digital advertising, it utilizes high technology, algorithms and data analysis to deliver various types of advertising to targeting audiences. Digital advertising is much more precise (Amazon). It analyzes profiles, ages and preference of different consumers to match them and the result of this robust matching ability is that audiences can see more relevant ads (Amazon) so the input-output ratio is always high. What is more, users cannot completely prevent digital advertising: consumers see display ads nearly every time they are online, whether on a smartphone or tablet, a desktop or laptop computer, or other connected devices (ACCC, 2021). And there is a gamification tendency of digital advertising, adding more interactivity with consumers. Besides, the form of posting advertisements is also different. Brands can invite some Key Opinion Leaders to introduce their products and show how to use their products in their short videos or blogs, which attracts people to buy their products more quickly. For example, there is a new job called blogger of beauty, they do various cosmetics and skincare test, such as foundation, lipstick, eyeshadow, eyelashes, lotion with different effects, such as anti-aging, anti-inflammatory, acne. Bloggers teach audience how to use these products in the process of showing the them. Each commercial video is made to differentiate and have specific target groups, such as high school students, college students, working women, middle-aged and elderly people, etc.)

What are the benefits of digital advertising?

As for companies, it is easier for them to find target customer. Achieving effective targeting of digital advertisements not only boosts the success of their performance, but also prevents companies from squandering their advertising budget by displaying ads to audiences who lack interest in their offerings. (Amazon). By monitoring and creating a profile of individuals, it is possible to obtain an understanding of their overall interests and requirements. This information can be leveraged to display advertisements at the optimal time and place, leading to a more relevant exposure. With the advent of sophisticated big data technology, companies now have the capability to target specific customers with more relevant ads, communicate with them more effectively, and create the needed reactions (Simone A & Silvia B, 2021 ). Better targeting has the capacity to enable advertisers to achieve greater returns on their advertising expenditures, while also affording publishers the opportunity to generate more revenue from ad inventory sales (ACCC, 2021).

Furthermore, there are potential advantages for consumers as well. For instance, it may assist publishers in furnishing online content to consumers for free or at a lower price. Additionally, it could result in consumers being exposed to advertisements for products and services that are more aligned with their interests. And then improve their efficiency of purchasing because big data can suppose their special preference, such as styles, price, colors, so they don’t need to waste time to browse useless or unrelated products.

How targeted advertising collect people’s data?

In order to personalize and target advertisements, companies can utilize data collected from the online behavior of people. Before delivering digital ads, websites and apps use cookies and tracking pixel to collect and analyze consumer data, which enables ad targeting. Algorithms, AI, and Audiences will get a sense of what you want to do by drawing on the data: what is on your profile, what pages on their website you visit a lot, the links you click or how long you spend on their website (Hallinan & Striphas, 2016).

Social media platforms track users’ preference online, including their likes, collections, comments, followers and shares, to create targeted advertising campaigns.

Search engines such as Bing and Google usually collect users’ search queries, history and geographic location data.

Companies collect people’s purchase history, such as the products they have bought, the frequency of their purchases, the items their friends usually buy to analyze their preference

Chatting apps always monitor users’ phone calls and chats with their friends, and then send related things immediately. For example: you and your friends say you want to eat hot pot in WeChat, and when you open the Meituan app, the first thing it sends to you is the delicious hot pot around your current location. RED and TikTok do similar monitory as well.

What are the problems for digital advertising?

When people use internet, their personal information is collected wittingly or unwittingly. This information is then often shared with third-party (Sophie, 2021), mostly for marketing purposes. Research has shown that people feel out of control of their privacy with respect to the level of dissemination of their personal information for secondary uses by third-parties (Jai, Burns, & King, 2013), which will lead to them not likely to respond positively to the personalized digital marketing campaigns and avoid the website and digital ads.

On the one hand, marketers see strong results from ad personalization and continue to invest in it (Evergage, 2019), and academic research shows that personalized ads can positively influence attention, attitudes, purchases, and click-through rates. Although personalized advertising can be effective, it may also make consumers feel discomfort (Tucker, 2012) as they become aware that their information has been gathered without their permission, which in turn affects the effectiveness of digital advertising. Research conducted in the form of an exploratory field study on Facebook, as well as secondary data regarding a personalized advertising campaign, has shown a notable decline in click-through rates when customers realize that their personal data has been collected without their consent (Elizabeth, 2015).

On the other hand, people are also concerned about the erosion of privacy, surveillance, abuse of personal data, discrimination, and loss of control (Acquisti, 2015). Online marketers possess the capability to obtain consumer information in a manner that consumers are unable to avoid or identify. This is accomplished through the use of cookies, spyware, adware, and online forms which can discreetly acquire a more comprehensive and valuable collection of data at a lower expense compared to traditional forms of customer surveillance such as point-of-sale information. A recent study revealed that 80% of respondents had some type of spyware on their computer and even though 95% of respondents stated that they did not authorize its installation (America Online and National Cyber Security Alliance, 2004).

Further more, targeting of alcohol or gambling ads can attract vulnerable consumers and cause harm (ACCC, 2021). Johnson (2011) also explores the role of targeting and demonstrates that while targeting can benefit firms, it can hurt consumers in the presence of advertising avoidance tools. 

Existing regulation and policy of digital advertising?

Government:

The updated 2015 European Union (EU) Data Protection Directive provides significantly broader consumer privacy protections. The EU Directive imposes a unified set of data protection regulations, requiring companies to be responsible for privacy-related actions under the authority of a single regulatory body. However, both U.S. regulators and companies continue to prefer industry self-regulation as the default approach for addressing consumer privacy concerns. There is limited evidence suggesting that cultural values may impact people’s perceptions of privacy, resulting in fewer privacy issues in countries with stricter privacy regulations (Dolnicar & Jordaan, 2007).

Company:

If people use Apple devices, App Tracking Transparency allows users to choose whether an app can track their activity across other companies’ apps and websites for the purposes of advertising or sharing with data brokers (Apple). One month after the implication of this privacy protection in May 2021, monitoring data showed that only about 10% of users allowed app developers to access the ad marker IDFA for tracking personal activity data, meaning that the vast majority (90%) of users refused to be tracked.

With the introduction of new regulations on users’ privacy protection, lots of industries are facing consolidation and new challenges. As for e-commerce marketing, numerous marketing techniques that were developed to retain customer loyalty by saving member contact details in e-commerce orders will no longer yield desired results. And the process of companies collecting and storing data assets through advertising channels will also be impacted. 

International tech giants are currently investigating new strategies that primarily focus on creating new technologies that rely less on personal informat and offer greater anonymity (Jun & Wanyi, 2021). For example, Google has abandoned third-party cookies in Chrome to avoid data tracking of individual users and replaced them with a new solution called FLoC, which does not track individual users’ online activity, but rather aggregates groups of users with similar interests for the purpose of pushing relevant ads. Facebook also enhanced its algorithms to enhance ad delivery, particularly its privacy-conscious algorithm technology, to mitigate the adverse effects of privacy regulations on ad revenue.

In addition, research has demonstrated that incorporating personal details such as name, age, transaction information, and location into a targeted advertisement, which is based on browsing history, can increase its intrusiveness (Van Doorn & Hoekstra, 2013) and make individuals feel more susceptible (Aguirre, 2015). Thus, advertisers should evaluate the extent of ad personalization, as ads that are perceived as excessively personal may be viewed as intrusive, resulting in reduced click intentions and purchases. 

Consumers:

We anticipate that individuals will be more inclined to protect their personal information, and their attitudes towards using such information for personalized advertising purposes will likely be more unfavorable compared to non-personalized information (Sophie, 2021). Users try to take actions to avoid seeing ads such as pop-up blockers (Anderson & Gans 2011). For example, there is a blocking software called AdBlock, which is designed to give users control over what they see in their web browser by blocking many of the tools that advertisers and technology companies use to track people when they are online and their focus is blocking annoying and intrusive ads (AdBlock). 

But according to Norberg’s research, despite claiming to value their privacy and being unwilling to share personal information, people often provide their data in exchange for minor benefits or for the sake of convenience. So we can conclude that the Internet and digital media have changed and individuals’ habits and the way they accept advertising information, revolutionizing the way companies invest and promote, but despite its negative effects, personalized and data-driven digital advertising seems to be the future of advertising.

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