With Great Power: Ethical Marketing in the Face of IoT

February 11, 2017 Jonathan Crowl

ethical marketing

Data drives marketing decisions, so the fact that more and more acquisition channels seem to be making themselves apparent every day should be a cause to celebrate.

But if you’ve been combing through access to everything from customer shopping histories to footfall heat maps, it’s very likely that the implications of this new power have given you pause. The truth is, the current data landscape brings marketers closer to a line that represents a breach of privacy.

These ethical marketing challenges are already a topic of conversation for any industry, but the internet of things is about to accelerate the frequency of this discussion and the stakes that come with it. So, what are the rules governing this use of data, and what ethical dilemmas should be on the minds of marketers working to leverage it?

Understanding the Ethical Use of Data (EUoD)

Fortunately, some of the groundwork for ethical marketing and data governance has already been established; federal data scientists are at work developing policies to better manage this ever-changing landscape. But this policy development often lags behind technological innovation.

According to 21st Century, an established data policy is crucial to protecting consumers, as well as preserving data integrity. Algorithmic segmentation is a simple example of how this works. Brands already use algorithms to interpret data and segment populations, thus narrowing the scope of their focus and, in many cases, seeking to identify the best candidates or customer prospects.

Brands do this so they can put their best resources toward the best opportunities, but it can backfire when the data used by these algorithms is corrupted or reflective of certain biases. Without knowing it, your company may be relying on algorithms that possess inherent race, class, gender, or other biases. If you’re a retail brand, this means you’re inadvertently prioritizing customers based on discriminatory information. If you’re an employer looking to fill a position, it could mean that your algorithm is filtering out disproportionate numbers of minorities, females, or other well-qualified candidates, based on innocuous data trends that just happen to fall in line with certain demographics. Other common problems faced by brands include the need for obtaining informed consent for certain types of data, anonymizing that data, and having an enterprise data policy in place to establish protocols for data management.

Some of these problems have simple fixes, and others have proven tougher to resolve. That level of complexity is only going to rise as the IoT brings in sweeping marketing transformation to every industry—and also saddles brands with new ethical concerns to address.

Open

The Internet of Things: It’s Complicated

The IoT is creating data acquisition channels that have been unchained from the ones we’ve grown accustomed to using. Smartphones, tablets, and desktops aren’t the only ways consumer data can be gathered: brands are leveraging mobile payments, smart dressing rooms, in-store kiosks, beacons, and other mobile-enabled marketing technology touchpoints to turn retail environments into complex IoT ecosystems.

As this marketing transformation has taken place, it has shifted much of the responsibility of ethical data management from consumers to brands. Thus far, consumers have had considerable control over how their data is gathered and used. They can choose to share location information through apps, give access to their contact list, and provide other information via their mobile technology.

But IoT solutions can gather this information all on their own. Are consumers being met with informed consent disclaimers before they walk into a store and have their footfall activity tracked? In many cases, the answer is no. According to Forbes, many consumers have embraced the “do-right rule,” which is an informal expectation that companies follow ethical standards when it comes to using their data. This is a very generous and optimistic position for consumers to take: they’re banking on for-profit companies handling their data responsibly and not crossing any ethical lines.

In fairness, most companies understand that there is serious risk if they do cross those lines. Consumers tend to be reactive, and most brands would stand to suffer significant revenue losses if it were discovered that they were unethically using consumer data. But this belief that companies will always do the right thing overlooks the fact that the IoT is creating new questions that don’t have obvious answers. The line between right andwrong is sometimes fuzzy, and it’s always in flux. Companies are learning, just as consumers and policy creators are, which means that every brand faces the risk of misusing consumer data.

And yet, as mentioned above, ethics policies aren’t necessarily up-to-speed with all the challenges IoT represents. To best protect themselves and their consumers, brands must take this oversight into their own hands.Square

Ask the Right Questions

In general, marketers can best protect themselves by employing a little critical thinking as they implement this marketing technology. The first question with any data source or data project is obvious: what is the purpose of this work? If the data doesn’t have an obvious application, it might not be worth gathering. Marketers should have a use-case for data acquisition channels so that they aren’t gathering information just for the sake of gathering information.

Brands also need to balance their customer expectations. Obtaining some form of informed consent is always wise when possible, and there should be a clear policy, made available to consumers upon request, that explains how the data is used and protected.

Meanwhile, data segmentation and projects based on data—including every data-driven campaign marketers develop—should have a well-defined protocol and a rationale for what data is collected, why it is valuable, and how it will be used. In cases where marketers do overstep ethical bounds, they can mitigate their personal and brand damage by having a strong defense for their decision-making. Consumers are savvy people, and they’ll be able to tell the difference between a genuine mistake and a reckless dismissal of privacy concerns. As this transformation takes place, your company’s data policy can serve as a living document that is continually updated as ethical questions arise and new challenges are faced.

It’s difficult to predict how the IoT will influence ethical marketing practices in the future, but marketers shouldn’t claim ignorance and wait for policymakers to give them a directive. The real judges are consumers, and they aren’t likely to go easy on your reputation.

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