Building Better Ads: The Industry Should Empower Audience Empowerment and Transparency.

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Patagonia, an outdoor clothing company, launched an ad campaign on Black Friday last year. This was the biggest U.S. shopping day. These print ads featured a vintage two-tone fleece with a battered down jacket and invited readers to “take time from the consumer madness”, and bring their Patagonia gear to trade for new counterparts in eight major U.S. cities. The tagline was “Better than New.”

The campaign was not just about talk. Patagonia invested in Yerdle through its 20 million and Change venture funds. This app allows people to sell or give away their belongings. These developments are part Patagonia’s commitment to social and environmental issues. They also engage consumers by revealing their sustainability impacts in the Footprint Chronicles.

Patagonia is not content with the traditional strategy of encouraging consumers to buy more. Instead, they are pioneering a new way to advertise. Patagonia, along with a few other companies like Chipotle or Unilever, is at the forefront a new trend in advertising: corporate responsibility. This allows businesses to achieve their goals.

BSR and Participant media present advertising trends and insight from industry leaders in a paper that was launched today. Our paper is focused on one question: How can the advertising industry use principles that are rooted in corporate accountability to engage consumers and build trust in order to secure long-term brand loyalty in today’s volatile media landscape?

We conclude that effective advertising and corporate responsibility can have a strong relationship. This paper highlights three ways that advertisers can embrace corporate responsibility: transparency, audience empowerment and purpose.

Advertising: All Over the Place and Everywhere

Bud Light spent US$500,000 in September 2014 to transform Crested Butte’s ski resort, Colorado, into The New York Times called a “living advertisement,” and offered unlimited Bud-branded drinks and everything for everyone who came to the party in “Whatever, U.S.A.”

Advertising is at an all-time high. With consumers able to skip or block traditional ads and the global spend on advertising exceeding US$505billion, advertisers are exploring new ways to get through the noise. They are creating campaigns that reach people across multiple platforms, designing ads in new formats that look more like content or entertainment than ads and optimizing data to target customers with ads that are more relevant.

These changes have both opportunities and risks. Consumers may not simply opt out of these ads or block them from appearing. Regulators and consumers have raised concerns about misleading ads and the potential for privacy violations by advertisers.

These changes offer the industry an opportunity to increase long-term loyalty and change the advertising landscape. Advertisers that are open about the messages they create and transparent about how they market them to consumers will stand out. Trust can also be built by advertisers who listen to their customers and offer the possibility for dialogue. Advertisers that are sympathetic to core values of consumers are more likely to be engaged on a deeper level. Advertisers have the potential to influence consumer behavior regarding social, environmental and cultural issues.

The three-part framework is a new model in advertising. Transparency is an expectation and advertisers are leading the charge on audience empowerment.

Transparency

Two recent debates have raised transparency in advertising. They concern native advertising, which is the creation of ads that imitate pure content or entertainment. And big data, which is the use of data to target specific consumers with the information or messages most likely to be of interest to them.

An 2014 episode on HBO’s “Last Week Tonight With John Oliver” highlighted the tension in native advertising. Oliver summarized his 11-minute critique in one colorful comment: “Ads can be baked into content like chocolate chips into cookies, except that it’s more like raisins into cookies because no one f***ing want them there.” This was the start of a media storm around Oliver’s rant. It highlighted one of the biggest transparency issues facing the advertising industry: Is native advertising misleading consumers or engaging them?

Despite the controversy, native advertising is growing rapidly . It’s currently worth between US$26 billion and US$44 trillion. Many major news outlets now offer native content with different levels of separation between “church” and “state”. The U.S. Federal Trade Commission intends to issue guidance sometime in the year.

The second issue is transparency and the collection and use by advertisers of data. This practice is increasing at a rapid pace with digital advertising which is expected to capture more that a third global ad spend by 2016. Most people who sign “terms and condition” pages have some understanding that they are giving their personal data in return for a free service. However, our research found that 91% of respondents to a survey by Nielsen and The Participant Index Impact Panel said that privacy is an important issue.

Recent White House paper raised concerns about the use of personal information by advertisers. The paper outlines numerous examples of data being collected from real people (from mobile phones, online and consumer products at home), as well as how it is used in real life. This report describes a future scenario where a person’s smart refrigerator at home could be able to identify which brands they buy most often and this information might be sold on to an advertiser.

There are two sides to the big data debate: Some people believe it poses privacy concerns and others believe it can be used intelligently to enhance the consumer experience through relevant advertising.

The bottom line Native advertising and data-driven targeting are growth opportunities in the industry. However, transparency is important to maintain consumer trust. Clear labeling is essential for native advertising. It should be flexible enough to adapt to the medium’s format. This can also support truthfulness and accuracy and help consumers make better decisions.

Big data is a hot topic. Advertisers who are clear and accessible and provide regular updates on how data is collected and used will win more consumers’ and regulators’ favor.

Empowerment of the Audience

The smartest advertisers today are focused on how to empower their customers. This includes offering feedback and options for participation and enhancing user experience with targeted messaging. This is in line with corporate responsibility principles such as freedom of speech and choice.

Research has shown that consumers are more likely to remember ads and to have a positive impression about a brand when they can choose which ones they see.

These models allow for more targeted advertising dollars and, most importantly, consumers feel that they are part of the experience. Participant’s TPI conducted a survey of consumers to determine the importance of the ability to choose which ads or opt out of them. Hulu’s Ad Selector and YouTube’s TrueView are the leaders in this space.

Advertisers are also offering consumers real-time channels to express themselves. This approach has both the business benefit of meeting a consumer demand and the support of freedom of speech.

Facebook users have the option to opt out of certain ads. However, they can choose not to see any specific ads or ads from any particular brand. Users can give feedback on their decision to opt out of ads. This includes whether or not the ad made them feel irrelevant, if it contributed to oversaturation, if it was offensive or spam. The feedback can be further refined by a follow-up question, which asks whether the irrelevance is related to the topic, advertiser or audience profile.

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