Effective Marketing or Deception and Invasion of Privacy

The direct-marketing industry has taken its share of criticism from consumers and government agencies for a long time. Critics of direct marketing cite junk mail, telemarketing, and the selling of names contained in a database as just some of the reasons for their discontent. While it is a very effective medium for marketers, the mention of direct marketing conjures up negative connotations to many consumers. Now, it appears that the Internet may be taking a similar track.

Consider this: Estimates indicate that over 31 billion commercial e-mails were sent in 2002. Approximately one-third of these were automated mailings, including stock price alerts, newsletters, or sales/marketing messages. By the year 2006, the number of e-mails sent annually is expected to exceed 60 billion, with over 50 percent being commercial in nature. As noted by Mark Levitt, vice president of IDC Collaborative Computing Services and co-author of the estimates study, "Like water flowing out of a hose, e-mail has the potential to fill our inboxes and workdays, overwhelming our abilities to navigate through the growing currents of content." A study conducted by Ferris Research estimated that SPAM cost U.S. corporations $8.9 billion in lost worker productivity in 2002. Other studies have shown that 59 percent of consumers can differentiate between legitimate e-mail and SPAM and are becoming more and more annoyed with the latter. Click-through rates on e-mails are also dropping. Permission-based online marketers have already experienced the negative impact of increased e-mails and expect to see response rates continue to decline. Many are already exploring other options.

But e-mails are not the only problem. How many times have you visited a site only to be immediately confronted with an ad (pop-up) or exited a site and had to close one or more advertisements that you didn't want to see (pop-unders)? How many times have you been unable to close them, no matter how often you tried? How many times have you tried to "unsubscribe" to a site yet not been removed from its list? While these practices irritate consumers, many Internet marketers continue to conduct business in this manner, arguing that clicking off does not require a great deal of effort, or that consumers accept this as part of the Internet experience, or offering other unfounded excuses.

And now a new form of Internet deception has surfaced. The website of the New York Times recently refused to accept ads from Sony Electronics that the Times claims "blur the lines between advertising and editorial content." The ads—which appear in the form of journalistic articles—are written by freelance writers and are designed to appear as content on popular websites. The articles are accompanied by sidebars that link readers to SonyStyle.com for more information. The "advertorials" provide only a small subhead that reads "feature by Sony." Sony is spending $10 million on 60 stories to appear on 40 different content sites including People.com, InStyle.com, NationalGeo-graphic.com and others such as AOL and AOL Music. While Sony contends the articles are just a new means of presenting content, and sees nothing wrong with the practice, the Times refused to accept the argument, noting that "advertorial content must be clearly labeled to distinguish it from editorial content." Time, Inc., saw no problem with the content.

Like legitimate direct marketers, many marketers on the Internet are being hurt by the irritating and/or deceptive practices of others in their industry. But what can they do? A number of suggestions have been offered. First, the industry must police itself. The actions of the New York Times and of sites that refuse to accept pop-ups and pop-unders are one example. Second, trade organizations such as the Interactive Advertising Bureau (IAB) must take a more active role. Establishing and adhering to privacy guidelines is a good first step that individual companies can take on their own — for example, pursuing permission-based practices. The questionable practices discussed above—and numerous others not mentioned—are considered by many consumers to be, at best, an invasion of their privacy. A lack of action may lead to more drastic measures, as the direct-marketing industry can attest to—not the least of which is government action. It would be best for the Internet industry to regulate itself before it is too late.

Sources: Brian Morrissey, "SPAM Cost Corporate America $9B Last Year," www.internetnews.com, Jan.6,2003, pp. 1-2; Tobi Elkin,"New York Times Web Site Refuses Sony Ads," www.adage.com, July 22,

2002,pp. 1-3;_____,"Study: E-Mail to Double by 2006," www.inter

netnews.com, Sept. 27,2002, pp. 1-2;_____,"Sifting through Spam and E-Mail Marketing," eMarketer Daily, Sept. 24,2002, pp. 1-2.

Belch: Advertising and I V. Developing the I 15. The Internet and I I © The McGraw-Hill

Promotion, Sixth Edition Integrated Marketing Interactive Media Companies, 2003

Communications Program

Many marketers believe that the rapid adoption of iTV is just around the corner. Others feel that it is a very large corner, given that the promise of iTV has not been fulfilled, even though the technology has been around for quite some time. (A number of test markets have proved to be unsuccessful and have been abandoned.) While numbers vary (eMarketer estimates that 20 percent of households will have iTV in 2002 and 50 percent by 2005; others predict less), the fact remains that over 75 percent of consumers still need to be convinced that they should interact with their TV sets. A study indicated that 72 percent of U.S. viewers had no interest in interactive services.33 Another study, conducted in 2002 in Europe—where iTV has been more rapidly adopted than in the United States—found that 94 percent of interactive customers haven't purchased anything through their TVs, 35 percent are not interested in doing so, and 40 percent can't figure it out.34

Nevertheless, some companies have demonstrated successful interactive campaigns. Volvo sponsored a two-week interactive television campaign during the NCAA basketball tournament in March 2002 and another on the Bravo cable television network later in the year. The company stated that it was "surprised" at the number of inquiries the campaign generated, and it considered the campaign a big success.35 Another car dealer, Toyota, will run an integrated campaign using print, TV, and outdoor, as well as interactive and online ads, to introduce its new 4Runner. The campaign will be designed to drive viewers to a portal sight to gain more information, while providing Toyota with a database of interested parties.36

While interactive TV sounds like the future, so far the results have not been as encouraging as marketers had hoped for. Two of the test markets for the concept have proved to be failures, and the major content providers like General Electric (NBC) and Walt Disney Company (ABC) have expressed less interest in the concept than had been expected. Microsoft's WebTV (now MSN TV) has seen limited growth since 2000,37 and OpenTV—although it has grown—is still of relatively small size.38 It may just be that when viewers are watching TV, they just want to watch TV—we will wait to see.

Exhibit 15-14 Interactive television has been slow to catch on

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