Communication and permission in the market space (law, ethics, and privacy)

1. Communication and permission in the market space (law, ethics, and privacy) MBA 563 Week 3

2. Overview: • Establishing trust and confidence in the online world • Privacy • Gaining trust through “permission marketing” • The relationship marketing model Source: eMarketing eXcellence. 2008. Chaffey et al. BH

3. How concerned are people about online privacy? • Survey of Canadians on Privacy-Related Issues (Stats Can 2013) – scroll down for graphs • 66% are very concerned about privacy • Top privacy concerns relate to finances, online security and identity theft • Growing sense that protection of personal information is diminishing • Most not confident about knowledge of privacy implications of new technologies • Growing sense of increased importance of protecting privacy in future • Canadians reluctant to share personal information with organizations

4. 2013 survey data re privacy from Pew • Anonymity, Privacy, and Security Online – Pew Internet (September 2013) • Security concerns continue to rise • 86% of internet users have taken steps online to remove or mask their digital footprints • 55% of internet users have taken steps to avoid observation by specific people, organizations, or the government.

5. Other current concerns about privacy • There is a big tension between what marketers want to know about people, and how comfortable people are in providing that data • Marketers need to find the right balance • Some examples • Canadian Privacy Commission video on social networking • What Facebook is for (#funny) • The evolution of Facebook Privacy (2005 – 2010) • Facebook privacy – 6 years of controversy • Google Street View

6. What is the current legal framework in Canada with respect to online privacy?

7. Legal Protection of Internet Privacy • A major concern of Internet users is that their personal data is used only for the purpose it was provided • Legislation in Canada • PIPEDA (Personal Information Protection and Electronic Documents Act) • All businesses and other organizations had to comply by Jan 1, 2004 • Note this is federal legislation – there is also provincial-level privacy legislation

8. Privacy requirements • Information about an identifiable individual • Name, address, gender, age, ID numbers • Sensitive information (religion, union affiliations, sexual orientation, medical records etc) • Identify purpose for which info is being collected • Knowledge and consent of individual is required • Use only for the purpose for which it was collected • Keep it secure • Make public your policies and practices about how private information is deal with

9. Privacy Policies • Organizations carry out this legal requirement by providing information in privacy policies • Policy must address information collected automatically from log files and cookies, as well as personal information actively provided by the user • Example: FutureShop • Example: Microsoft Canada • Trust can also be increased by the use of “trustmarks” from 3rd party providers such as Truste

10. Privacy and cookies • Cookies are a boon to marketers – just a few of the uses (video explanation from Google): • Personalization • Advertising and ad networks • Shopping carts • Recognizing returning visitors • Tracking click-through from advertising to purchase • They also offer big advantages to web site users • However – they are also the cause of many privacy concerns Chaffey et al (2006) Internet Marketing

11. Types of cookies • There are several types of cookie • Persistent cookies • Single session cookies • First-party cookies • Third-party cookies – these are the ones that cause concern • No one-to-one correspondence between computer (cookie) and user • Issue for marketers • Must disclose how cookies are used in Privacy Policy • Creeping out the customers by “going too far” • Behavioural re-targeting (based on previous actions, not demographics) is being called “stalking” Chaffey et al (2006) Internet Marketing

12. New legal framework for Canada • “In order to build consumer trust and confidence in conducting e-business in Canada the Government of Canada is committed to establishing clear rules to protect the privacy of personal information in the new 'virtual' marketplace. This is being done through the implementation of Federal privacy legislation, and implementation of the new anti-spam legislation.” Industry Canada • Summary of the new anti-spam legislation (CASL) • Very strict consent framework is one of the most notable points • Applied to all “electronic communication” not just email • Best practices in marketing is now the law • We will look at the requirements in more detail when we look at email marketing

13. We can also build trust and confidence by using “permission marketing” techniques

14. Permission marketing • Term coined by Seth Godin (1999) • Underpins the notion of relationship marketing • The antithesis of “interruption marketing” and the answer to the problem of clutter • Permission marketing is….. anticipated, relevant and personal • Often begins with some sort of incentive that customers “opt-in” to

15. Permission as a basic principle on the web • Don’t ask for personal information too early in a process • Don’t ask for it until it is needed • Remember, once you have customer information, all contact should be “anticipated, relevant, and personal” (and used only for the purpose(s) that they explicitly gave consent for)

16. Relationship Marketing

17. Framework of relationship marketing • Aim is to build long-term relationship with individual customer – built on loyalty – one to one marketing • Measured by Return on Marketing Investment (ROMI) and Customer Lifetime Value (CLTV) metric rather than simply sales transactions • Rationale is that customer acquisition costs much more than customer maintenance • Strategy built using “sense and respond” communications • Both timely and relevant to the customer – based on previous interactions with the company • Amazon.com and “sense and respond” • Loyalty happens only with “permission” and by instilling trust

18. Focus on relationships, not transactions Chaffey et al (2006) pg. 259

19. Do we want relationships with all of our customers? • No - just the most profitable ones • otherwise investment in relationship-building tools such as e-mail newsletters, individualized advertising, customer support, and customer relationship managers will be wasted • Netflix “throttling” • How do we identify our most valuable customers • maintain a database of customer activity • apply mathematical models that work by means of assumptions about customer behaviour over time