laura rogan individual assignment - what is ethical internet marketing

What is ethical internet marketing? Laura Rogan

Introduction

While the development of the internet as a marketing vehicle has expanded significantly since the

advent of the internet, there are many ethical issues that continue to develop without any clear

guidelines as to what is acceptable internet marketing behavior from an ethical perspective. As a result

of the advanced speed with which changes online occur; at a speed that is unprecedented in history, as

a society, we have had little time to absorb the significance of these changes for our lives (Palmer,

2005). Thus, online techniques are transforming the nature of the relationship between marketers and

consumers (Palmer, 2005). This paper contends to determine whether the concept of ‘ethical internet

marketing’ actually exists, whether online advertising practices can be clearly defined as ethical and

unethical or whether an expanding ‘grey’ area lies between ethical and unethical internet marketing

practices.

This will be done firstly by defining the concept of ethical marketing generally, as well as what is meant

by ‘online’ internet marketing, as well as ‘offline’ marketing. Secondly, it will compare and contrast

offline marketing ethical issues versus online marketing ethical issues to determine whether any new

ethical issues exist, or whether the degree of existing ethical issues with offline marketing has simply

increased or been magnified with online marketing. Finally, the paper will examine whether it is possible

to overcome any gap that exists in the current landscape or do changes need to be made: will the ethical

framework required for the internet evolve naturally with the fast paced environment of the internet,

are we waiting for the ethical framework to eventually ‘catch-up’ or are government intervention and

regulations required?

Theory

Ethics can be defined generally as a means of systemizing how individuals should live in a manner of

goodwill towards each other by conceptualizing what is right and what is wrong (Kraut, 2010).

Marketing or advertising ethics can be more specifically defined as “what is right or good in the conduct

of the advertising function. It is concerned with questions of what ought to be done, not with what

legally must be done” (Cunninghan, 1999). However, this is a definition of ethics in the context of

traditional advertising and marketing practices that was published over 10 years ago when the internet,

and its marketing potential and capabilities, were in their infancy. It can be argued that there is currently

a gap in the literature for a specific definition for advertising or marketing ethics in the context of the

internet, rather traditional definitions are currently being applied to the internet context, and whether

this is appropriate. Therefore, the terms ‘online’ and offline’ marketing will be explained in order to

distinguish between the different applications of this definition. For the purpose of this paper, ‘online’

marketing shall refer to all marketing and advertising practices conducted via the internet; be they

directly through company websites, blogs, viral marketing, email or pop-up advertisements or indirectly

through passive devices such as adware, cookies, spyware and web bugs. ‘Offline’ marketing shall be

defined as all marketing and advertising practices conducted by any other means apart from the

internet; whether they are traditional means (newspaper, radio or television advertising) or non-

traditional means (product placement, guerilla advertising, celebrity endorsement or direct marketing).


Discussion

Though the advent of new technology has enabled new media to explode (Drumwright and Murphy,

2009), this has been done through augmenting traditional mass media advertising approaches with non-

traditional approaches. While there have been many changes with the arrival of new technology in the

marketing world, there are many similarities that exist. While Huang (2009) argues that the internet

allows advertisers to disguise advertisements online as other forms of messages so that consumers are

not aware they are being advertised to; which is reiterated by Turow et al (2008) who state “consumers

are more vulnerable with respect to online marketing than they are traditional marketing channels”,

Milne et al (2009) explain that “the fact that marketers have found stealth ways to communicate with

consumers is not new, however, the online context creates new possibilities to interact with consumers

in a non-transparent manner”. This paper argues that both perspectives are correct to an extent;

however a distinction needs to be made between the marketing capabilities and techniques that the

online environment provides and the regulation (or lack thereof) that controls its content and practices.

Capabilities and techniques

It is evident that there are many marketing techniques that remain consistent across both the online

and offline marketing environments. As Drumwright and Murphy (2009) explain many of the concerns

and criticisms of advertising have persisted through many decades and into the twenty first century.

Practices seen to be ethically questionable such as product placement, celebrity endorsement,

disguising advertisements as news stories, feeding the media info using PR, bribing journalists and

guerilla advertising techniques can be seen in different forms across both in both online and offline

contexts, supporting Drumwright and Murphy’s argument that many of these strategies are not more

ethical offline than they are online, however while these issues may remain consistent in kind,

Drumwright and Murphy claim that ‘new’ issues in business and advertising ethics differ in degree rather

than kind.

This can be illustrated when looking at the ethical issues of transparency and security. There are

numerous offline practices that can be considered ethically questionable in terms of transparency.

Covert marketing, which involves making efforts not directly linked to the marketer by the consumer

(Kaikati and Kaikati, 2004) is a tactic that originally began with product placements (Balasubramanian,

1994). Beginning in the 1930s, Proctor & Gamble broadcasted on the radio its "soap operas" featuring

its soap powders. Also, television and film were used by the tobacco companies to lend glamour and the

"right attitude" to smoking (Williams et al, 2011). Furthermore, celebrity endorsements in an offline

setting can be seen by consumers as marketers not being transparent. “When an advertisement does

not look like an advertisement, consumers can easily be misled” (Feinman, 2011). By the late 1930s,

celebrity endorsements were widespread among the stars of the screen, radio and stage, for example

General Mills used photos of athletes on Wheaties boxes to sell products (Feinman, 2011). When we

compare this to practices online, such as the “surreptitious” used by companies to gather consumer

information by posing as customers and users on online blogs, forums an chat rooms (Milne et al, 2009)

it may be argued that consumer trust has been broken equally in both settings: the message presented

is not that of the messenger, when the consumer is lead to believe that it is. “The internet is more


affordable than any other medium and makes it difficult for audiences to verify the real identities

behind the messages” (Grazioli and Jarvenpaa, 2003 as cited in Huang, 2009). This was illustrated by

Wal-Mart (Gillin, 2006 as cited in Huang, 2009), one of the biggest merchandising companies in the

United States, that was making use of the virtual environment and persuading bloggers to write positive

articles about the company whilst on a road trip by paying for the flights, the RV, gas, and the blog

entries, without that information being disclosed on the blog itself. The same ethical issue is present in

both the online and offline contexts, however it can be argued the degree to which the online

environment in unethical is greater due to the fact it is reaching a larger audience and information is

disseminated more quickly, but mainly due to the increased level of anonymity that the internet brings,

as well as the lack of disclosure it requires. When we compare this to other online techniques, such as

covert cookie collection (Miyazaki, 2008), it can be argued that lack of transparency in this setting has

more far reaching consequences due to the type of information that can be obtained. While marketers

may contend that “advertisers argue profiling [users] results in greater efficiency, because consumers

are only sent ads that interest them” (Stead and Gilbert, 2001), many would consider the trust that has

been broken in this setting to be far worse as individuals would not be comfortable with certain

confidential information being collected and compromised without their permission, particularly as

“currently, there are no legal limits on how cookies are used” (Stead and Gilbert, 2001). As Palmer

(2005) states “what we are finding is that businesses now have fundamentally new ways of interacting

with consumers that raise serious and largely new questions for our understanding of…[marketing]

ethics”. With matters of information and security it is evident that the degree of the effect and

therefore the degree to which the technique moves towards being unethical is far greater, as a result of

“the temptations [being] greater, and the risks and rewards are higher” (Drumwright and Murphy,

2009).

Regulation

While there are both similarities and differences in terms of content and technique across online and

offline contexts, there are distinct differences between the level of regulation in online and offline

contexts, with technologically driven new media characterized as a context in which the regulations,

guidelines, and controls of traditional media are absent (Drumwright and Murphy, 2009). However, we

can still see that “recent regulatory and legal activity are testament to the fact that ethical problems can

and do persist in traditional media…Constant vigilance in traditional media is warranted” (Drumwright

and Murphy, 2009). Therefore where does that gap lie between offline media and online media, if both

mediums present questionably ethical behavior? Why do some authors view the online setting as more

‘dangerous’ or ‘deceitful’ to consumers (Huang, 2009)? The question also remains as to whether or not

the internet can be regulated. “The internet differs from traditional information outlets. The barriers of

time and distance are minimized in terms of marketers’ ability to create databases and the consumers’

ability to selectively obtain information…These unique characteristics make the internet difficult to

regulate” (Cronin, 1994 as cited in Bush et al, 2000). Ogburn’s idea of “cultural lag” used to represent

the condition in which material culture advances more rapidly than non-material culture is applied by

Marshall and Swartwout (2006) to the internet to illustrate “the gap that exists between the new

technology and the development of ethics to guide its application, and thus the potential unethical, or at


least controversial, uses that may spread”. Therefore, we can conclude that while there is a gap

between what is considered ethical and unethical in the minds of consumers and advertisers in both an

online and offline context, the gap in an offline context is smaller due to established norms and

expectations, as well as government regulations and advertising standards boards. The gap in an online

setting appears to be wider, due to a “cultural lag”, with which technology has moved at such as pace

that an ethical framework, norms and expectations have not had a chance to catch up with technology.

Thus, will it be possible to overcome any gap that exists in the current landscape or do changes need to

be made? As Stead and Gilbert (2001) argue, “When [ethical issues] emerge, the internet spotlights

them immediately. So we may conclude that some ethical issues will get swiftly resolved because of

both the actual or perceived exposure and reaction from the public or market” (Stead and Gilbert,

2001). However, given the degree to which ethical issues may be exacerbated online, will leaving ethical

issues to the democracy of internet users be too late, particularly if secure or confidential information

has already been comprised? Furthermore, as the paper has highlighted, the online marketing

environment presents issues of anonymity and that messages online may not be that of the messenger.

Whilst the role of consumers has developed and increased in online marketing compared to that of

offline marketing through the possibility of user generated content (UGC), ultimately responsibility for

the ethics of internet marketing lies with marketers and marketing industry to effectively “control” or

“balance” these messages for the industry to remain self-regulated. If they do not, the integrity of

internet commerce and information generally on the internet, which is dependent on trust and

acceptance, will be compromised, and thus the effectiveness of online marketing will also be

compromised (Marshall and Swartwout, 2006). As noted by Cronin (1994, as cited in Bush et al, 2000)

above, given the nature of the internet, online marketing practices are difficult to regulate, and thus the

industry needs to impose appropriate self-regulation to reduce the gap between marketers and

consumers, finding a balance of what is considered ethical, in order to maintain the integrity and

therefore usefulness of online marketing practices.

This can be highlighted by through the case study of Spotify (Ju, 2010), whereby with changed consumer

expectations, companies can change and adapt to move into an ethical landscape rather than remaining

in the ethically questionable ‘grey’ area. P2P is a distributed network architecture which popularized by

file sharing. It changed the structure of human interaction and enable people to become both suppliers

and consumers of Internet resources. It is also changing the way of music distribution and enjoyment.

However, whether P2P technology breaks copyright law or brings benefits to the world has aroused

broad controversy. Previously applications such as Napster and Limewire drew criticism for breaching

copyright laws, however received praise from users for how it changed music distribution. “Spotify is the

initiator to legalize P2P technique. They have deals with all the major record labels to ensure that all

artists who have music on Spotify are properly paid. A cooperating pattern is built, which is allocating

profits reasonably between labels and artists”, as well as satisfying users expectations (Ju, 2010).


This scenario can be applied to online marketing. Instead of working within a grey or unethical

landscape, because the demands and expectations of consumers have changed, develop and adapt your

approach to move within an ethical landscape.

Conclusion

In conclusion, it can be found that while many ethical issues remain the same between “offline” and

“online” marketing, there are specific ethical issues that arise in relation to internet marketing alone.

Due to the fast-paced, developing industry of internet marketing, there is no consensus on what is

ethical behavior online, which subsequently widens the gap between marketers and society and creates

a larger “grey” area than that which exists in an offline setting. Marshall and Swartwout’s (2006) use of

Ogburn’s (1964, as cited in Marshall and Swartwout, 2006) “cultural lag” explains why this gap exists.

However, while ethically questionable practices can be allocated to this gap, how do we overcome the

gap between marketers and consumers’ expectations regarding ethical internet marketing in order to

reach a consensus between the two parties as to what constitutes ethical internet marketing,

withdrawing the gap and defining ethical boundaries?

If the gap continues to widen and companies and marketers do not respond to this issue, we may expect

“growing public distrust, dissension amount internet commerce practitioners, and the likelihood of

increasing government intrusion and regulation” (Marshall and Swartwout, 2006). Therefore, as Spotify

has dealt with ethical issues online in relation to the music industry, it is up to marketers and companies

to increase their level of self-regulation in line with consumers’ expectations in order to maintain their

trust online and thus their business.


References

Balasubramanian, S, (1994) ‘Beyond Advertising and Publicity: Hybrid Messages and Public Policy Issues’,

Journal of Advertising, vol. 23 (4), pp. 29-46.

Bush, V, Venable, B & Bush, A, (2000) ‘Ethics and Marketing on the Internet: Practitioners’ Perceptions of Societal, Industry and Company Concerns’, Journal of Business Ethics, Vol. 23, pp. 237-248. Cunningham, P, (1999) ‘Ethics of Advertising’, The Advertising Business, London: Sage, pp.499-513.

Drumwright, M & Murphy, E, (2009) ‘The Current State of Advertising Ethics’, Journal of Advertising, vol.

38 (1), pp. 83-107.

Feinman, L, (2011) ‘Celebrity Endorsements in Non-Traditional Advertising: How the FTC Regulations Fail

to Keep Up with the Kardashians’, Fordham Intellectual Property, Media & Entertainment Law Journal,

vol. 22 (1), <http://ssrn.com/abstract=1987222>

Huang, S, (2009) ‘Deception in Covert Marketing: From the Perspectives of Law and Consumer

Behaviour’, American Marketing Association, Winter, pp. 40-48.

Ju, X, (2010) ‘Legal P2P File Sharing is Possible: A Case Study of ‘Spotify’, 5PM Journal of Digital Research & Publishing, vol. 1, pp. 134-142. Kaikati, A & Kaikati, J, (2004) ‘Stealth Marketing: How to Reach Consumers’, California Management

Review, vol. 46 (4), pp. 6-22.

Marshall, K & Swartwout, N, (2006) ‘Marketing and Internet Professionals’ Fiduciary Responsibility: A Perspective of Spyware’, Journal of Internet Commerce, vol. 5 (3), pp. 109-126. Milne, G, Rohm, A & Bahl, S, (2009) ‘If it’s legal, is it acceptable?’, Journal of Advertising, vol. 38 (4), pp.

107-122.

Miyazaki, A, (2008) ‘Online Privacy and the Disclosure of Cookie Use: Effects on Consumer Trust and Anticipated Patronage’, Journal of Public Policy and Marketing, vol. 27 (1), pp.19-33. Palmer, D, (2005) ‘Pop-Ups, Cookies, and Spam: Toward a Deeper Analysis of the Ethical Significance of Internet Marketing Practices’, Journal of Business Ethics, vol. 58, pp. 271-280. Kraut, R, (2012) ‘Aristotle's Ethics’, The Stanford Encyclopedia of Philosophy, Spring,

<http://plato.stanford.edu/archives/spr2012/entries/aristotle-ethics/>.

Stead, B & Gilbert, J, (2001) ‘Ethical Issues in Electronic Commerce’, Journal of Business Ethics, vol. 34, pp. 75-85. Turow, J, Hennessy, M & Bleakley, A, (2008) ‘Consumers; Understanding of Privacy Rules in the Marketplace’, Rand Journal of Economics, vol. 17 (5), pp. 411-424.

http://ssrn.com/abstract=1987222


Williams, K, Petrosky, A, Hernandez, E & Page Jr, R, (2011) ‘Product Placement Effectiveness: Revisited and Renewed’, Journal of Management and Marketing Research, April, pp. 1-24, <http://www.aabri.com/manuscripts/10712.pdf>.