A large part of commerce now takes place online, and many people still have concerns about their privacy in this context. Few online retailers are fully transparent about how they handle personal data. This circumstance also has consequences for marketing efforts, as advertising content is often perceived as disruptive or inappropriate. Regardless of the legal framework, it could make sense for various organizations to obtain consumers’ consent in advance if they want to send personalized content to their target customers. The question thus arises as to whether the perception of marketing messages changes when consumers explicitly agree in advance to be contacted for advertising purposes. This post will look at why personalized marketing content can be problematic, how privacy concerns affect perceptions, and whether and to what extent organizations benefit from the process of obtaining consumer consent.
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Various online platforms offer organizations the opportunity to customize and individualize advertising content depending on the audience. Individuals who are unexpectedly contacted in this way may react negatively and exhibit privacy concerns. Many countries now have extensive legal frameworks in place to protect privacy. Before individuals voluntarily share their personal data with advertisers, there is usually a trade-off and data is shared selectively. Different organizations thus compete for consumers’ data and the possession of personal information can be seen as a competitive advantage. In most cases, organizations obtain the relevant information by asking consumers in advance for permission to be sent personalized advertising. Building this permission process is a significant success factor when it comes to whether individuals actually give their consent. Before a decision is made, there is usually a consideration of the resulting benefits and costs. It can be assumed that the person in question will only give his or her consent if the difference in the specific situation is positive. This does not necessarily involve purely economic values, as psychological factors also influence the decision. In this context, an elaborate registration process could be understood as a cost factor for the consumer, and organizations should always make a careful choice as to what information they actually need, as the volume could otherwise act as a deterrent. While the expectation of spam, high registration costs, and/or privacy concerns may cause consumers to withhold consent, individual benefit may serve as a motive for consent.¹ Hence, consumers may use their own privacy as a kind of medium of exchange. Tsai et al.’s (2011) findings also suggest that individuals consider privacy-related information when making purchase decisions. However, a key constraint here is that it must be understandable how the retailer handles personal data. In practice, however, it can be observed that privacy disclosures are often difficult to understand and are therefore frequently neglected by consumers. If the authors’ findings are indeed meaningful, organizations could potentially benefit from a higher willingness to pay on the part of their customers if they are transparent about how they handle customer data.²
Personal communication is an essential component of successful customer relationship management (CRM). If organizations succeed in obtaining the consent and data of consumers, this can lead to an increase in the efficiency of their own marketing activities. Data collection enables more effective segmentation and promotes the identification of specific customer wants and needs. Marketing activities can thus be designed to meet needs, benefiting both the organization and the customer alike. Initial permission could thus be described as the most important factor in the marketing process.³ By empowering marketers to contact them, consumers initiate communication. This represents a reversal of the traditional direction of communication, and in this case the consumers have the power of decision. It can be assumed that the decision is guided by individual interests and that the customer will only provide his information if he hopes to gain an advantage from it. A central problem of permission marketing, however, is that the consumer must contribute more to bringing about the interaction than is the case with other forms of marketing. Whether this is a barrier to action, and if so, to what extent, is in all likelihood dependent on the individual.⁴
There are obviously different degrees of consumer consent. Explicit permission to be contacted by telephone for advertising purposes is just as much a form of consent as the use of the subscription function in social networks. While the former requires that personal information is provided, in the second example a user simply expresses that he or she is interested in the general content that an organization publishes. The various platforms can also serve as a kind of link between consumers and advertisers, as they are able to evaluate users’ personal information in terms of interests and assign potentially interested users to organizations. In this case, consumers do not give their explicit consent, but they benefit in a similar way to permission marketing: merchants align themselves with consumers’ wants and needs. It is likely that advertising content that is aligned with consumer wants and needs will lead to higher satisfaction and better ratings. In addition, organizations can eliminate some of the uncertainty associated with entrepreneurial activity by having promotional content go only to individuals who, by virtue of their consent, have already expressed that they are fundamentally interested in the retailer’s products and/or services. It is also possible that this will result in less promotional material being sent and consumers receiving less spam. It is thus conceivable that permission marketing leads, on the one hand, to the advertising message not being lost in the sheer mass, but to the recipients actually noticing it and, on the other hand, to consumers evaluating it more positively, since they are not surprised but rather expect the communication.
The mass of promotional material that individuals are confronted with often leads to them being annoyed or reacting with rejection. In addition, privacy concerns complicate the work of marketers. Permission marketing is one possible approach to overcoming these challenges. Before any contact for advertising purposes takes place, consumers must give their explicit consent that they want to communicate with an organization. In this way, consumer self-determination is strengthened, and organizations can individualize and personalize advertising content by accessing the personal information of the recipients. Consumers benefit by allowing marketers to align with their actual wants and needs and to send less “spam,” and the advertiser benefits by eliminating some of the uncertainty regarding the success of their marketing. It can be assumed that advertising messages communicated as part of permission marketing will be perceived more frequently and more positively by consumers.
¹ Krafft, M., Arden, C. M., & Verhoef, P. C. (2017). Permission marketing and privacy concerns – Why do customers (not) grant permissions?. Journal of interactive marketing, 39, 39-54.
² Tsai, J. Y., Egelman, S., Cranor, L., & Acquisti, A. (2011). The effect of online privacy information on purchasing behavior: An experimental study. Information systems research, 22(2), 254-268.
³ Tezinde, T., Smith, B., & Murphy, J. (2002). Getting permission: Exploring factors affecting permission marketing. Journal of interactive marketing, 16(4), 28-36.
⁴ Krishnamurthy, S. (2001). A comprehensive analysis of permission marketing. Journal of Computer‐Mediated Communication, 6(2).