March 23, 2015
Authors
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Julia Robinson
Former Manager, Communications, BSR
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Eva Dienel
Former Associate Director, Communications, BSR
On Black Friday last year—the biggest U.S. shopping day of the year—the outdoor clothing company Patagonia launched an ad campaign that ran counter to the message of nearly every other advertiser. Print ads depicting a vintage two-tone fleece and a battered goose down jacket invited readers to “take a break from the consumer madness” and bring their old Patagonia gear to swap for used counterparts in eight stores in major U.S. cities. “Better than new,” the tagline read.
The campaign wasn’t just talk: Through its 20 Million and Change venture fund, Patagonia also invested in Yerdle, an app that helps people give away or sell their belongings. These developments are part of Patagonia’s longtime commitment to address environmental and social issues—and engage consumers in these issues through honest disclosure in its Footprint Chronicles, which reports on the company’s sustainability impacts.
Rather than the typical strategy of urging consumers to buy more, Patagonia is pioneering a new approach to advertising. The company—and a few others, including Chipotle and Unilever—are at the forefront of an emerging trend in advertising: the adoption of aspects of corporate responsibility to advance business objectives.
In a paper launched today, BSR and Participant Media reveal advertising trends and insights from industry leaders that suggest a new era for advertising. Our paper focuses on one central question: Can the advertising industry use principles rooted in corporate responsibility to engage consumers, build trust, and secure long-term brand loyalty in today’s volatile media landscape?
Our conclusion is that there can be a powerful relationship between corporate responsibility and effective advertising. The paper outlines three opportunities for advertisers to embrace corporate responsibility by enhancing transparency, audience empowerment, and purpose.
Advertising: Everywhere and Everything
In September 2014, Bud Light paid US$500,000 to turn the ski town of Crested Butte, Colorado, into what The New York Times described as a “living advertisement,” with Bud-branded everything and unlimited drinks for all invited to the party in the invented town of “Whatever, U.S.A.”
At a time when the global spend on advertising tops US$505 billion, and when consumers possess the technology to block or skip over traditional ads, many advertisers are experimenting with ways to cut through the noise: building campaigns to reach people across multiple platforms, creating ads in new formats that look more like entertainment or content than commercials, and optimizing data to target consumers with ads that are more relevant to their desires.
These changes present both risks and opportunities. Beyond the risk that consumers will simply tune out or block this proliferation of ads, both consumers and regulators have expressed concerns that ads that appear as content are misleading, and that advertisers’ collection and use of personal data may be violating people’s privacy.
Some of these changes, however, present the industry with an opportunity to build long-term loyalty by changing the face of advertising. The advertisers that are honest about the messages they are creating, and up front about how they market those messages to consumers, stand out from the rest. Likewise, advertisers that listen to consumers and offer opportunities for dialogue can build trust. And advertisers that appeal to consumers’ core values are more likely to engage people on a deeper level. Advertisers can even take a leadership role in sustainability progress by influencing consumer behavior on social, environmental, and cultural issues.
Our three-part framework represents a new model for advertising, where transparency is an expectation, and where advertisers taking the lead on audience empowerment and purpose are pushing the industry in a positive direction.
Transparency
Transparency in advertising has surfaced related to two recent debates—about native advertising, or the creation of advertising that mimics pure content or entertainment, and big data, or the use of data to narrowly target consumers with information or messages that are most likely to appeal to them.
A 2014 episode of HBO’s “Last Week Tonight with John Oliver” illustrated the tension in native advertising. Oliver summarized his 11-minute critique with one colorful comment: “Ads are baked into content like chocolate chips into a cookie, except it’s actually more like raisins into a cookie because no one f***ing wants them there.” The resulting media storm surrounding Oliver’s rant highlighted one of the advertising industry’s biggest debates about transparency: Is native advertising misleading or engaging consumers?
In spite of the debate, the field of native advertising—which is now worth between US$26 and US$44 billion—is growing substantially. Most major news outlets now offer native content, with varying levels of separation between “church” and “state.” The issue has captured enough attention that the U.S. Federal Trade Commission plans to roll out guidance on the format sometime this year.
The second major issue related to transparency involves advertisers’ collection and use of data, a practice that is growing at pace with digital advertising, which is set to capture more than a third of global ad spending by 2016. While most people who sign a “terms and conditions” page have at least a tacit understanding that they are offering their personal information in exchange for a “free” service, our research revealed that consumers are concerned about sacrificing their right to privacy: In a survey conducted by The Participant Index (TPI) Impact Panel and Nielsen on behalf of BSR, 91 percent of those who participated said the collection, storage, and security of consumer information data is an important issue.
A recent White House paper also highlighted concerns about advertisers’ use of personal data. That paper describes numerous examples of how data is collected in real life (from consumers’ mobile phones as they walk through stores, for instance), online, and even from consumer products at home. The report describes a future scenario in which an individual’s “smart” home refrigerator might be able to read which brands a consumer frequently buys and that this information might be sold to an advertiser.
The debate about the commercial use of big data is split: Some believe big data presents privacy concerns, and others believe that big data, used smartly, can enhance the consumer experience by providing relevant advertising.
The bottom line: Native advertising and the use of data to improve ad targeting and the user experience represent growth opportunities for the industry, but transparent practices are important in both instances to retain consumer trust. When it comes to native advertising, clear labeling that is also flexible enough to fit the format for the medium is important. This approach also supports truth and accuracy, and can help consumers make more informed decisions.
When it comes to big data, advertisers who provide clear, accessible information and frequent updates about how data are collected and used are more likely to win the favor of consumers and regulators.
Audience Empowerment
Today’s savviest advertisers are focusing on how to empower consumers—by offering mechanisms for choice, feedback, and participation, and by enhancing the user experience through smart, targeted messaging. This approach is consistent with corporate responsibility principles like freedom of choice and freedom of expression.
Research shows that when consumers can select which ads they view, they are more likely to retain messages and have a better perception of a brand: According to a 2010 case study on interactive advertising, consumers preferred the ad-selection model to other types of interactive and customizable advertising experiences—and they were more able to recall an ad and indicated a positive impression of the brand and product.
These models also lead to a more targeted spend of ad dollars, and, most importantly, a feeling by consumers that they are participating in the experience. In the consumer survey that Participant’s TPI conducted for our research, 94 percent of respondents said the ability to opt out of advertising or select which ads to view was important to them. Leaders in this space include Hulu’s Ad Selector, YouTube’s TrueView, and AdChoices.
Additionally, many advertisers are offering real-time mechanisms for consumers to channel their views, an approach that has the business benefit of satisfying a consumer demand, while supporting the value of freedom of expression.
On Facebook, for instance, while users can’t opt out of ads entirely, people can indicate that they do not want to see a specific ad or any ads from a particular brand. If they opt out of certain ads, users can provide feedback about their decision, including whether they felt the ad was not relevant, whether the ad contributed to oversaturation, whether it was offensive, or whether it might be spam. A follow-up question further fine-tunes the feedback, such as whether the irrelevance relates to the topic, advertiser, or audience profile.
The bottom line: The digital age has given consumers a megaphone for feedback, whether positive or negative. Advertisers that embrace this reality and emphasize their commitment to the values of citizenship and freedom of choice and expression by offering consumers the opportunity to provide feedback and engage in a dialogue will find that consumers are more engaged, and, ultimately, that campaigns are more effective.
Purpose
In September 2013, the restaurant chain Chipotle launched a short film featuring the journey of “Scarecrow,” a dystopian hero who fights factory farming to “bring real food back to the people.” With an environmental message, animation by Academy Award-winning Moonbot Studios, and a soundtrack sung by Grammy-winning artist Fiona Apple, Chipotle’s video stood out as an example of how effective native advertising can be—and it won a Cyber/PR Grand Prix award at Cannes in 2014. Chipotle’s campaign also underlined how pro-social and pro-environmental messages can effectively capture consumer attention.
Advertisers are finding that when they create campaigns with a purpose—emphasizing messages that appeal to consumers’ core values and demonstrate brand authenticity—they are more likely to engage consumers on a deeper level and build long-term loyalty. At the same time, these advertisers are championing an emerging area of corporate responsibility: sustainable lifestyles, through which brands help consumers make better choices and adopt behaviors that lessen their social and environmental impact. Research indicates that consumers are craving this approach from advertisers. According to a 2013 Cone Communications/Echo Research study of more than 10,000 respondents in 10 countries, 91 percent of citizens are eager to hear about a company’s corporate social responsibility initiatives and progress.
Since there are risks that companies will be accused of “brand-washing” if their messages and stories are not authentic, credible, and relevant, brands should seek to define and advocate for a purpose that is deeply connected to their core brand values and history. It is for that reason that Chipotle chose to take on factory farming in its advertising campaigns. “We think that the [food] system is wrong and unsustainable, and we’d like to change that,” Chipotle CMO Mark Crumpacker told us. “The marketing is derivative of our behavior—the marketing is simply telling our story.”
The bottom line: Advertisers connected to companies that embrace sustainability as part of their core values have an opportunity to shift messages from a focus on “having” to a focus on “belonging.” In this way, advertisers can appeal to consumers’ own values and help them embrace more sustainable lifestyles, even as they build a deeper connection to the brand. Ultimately, if advertisers use their position as powerful forces in culture, this could benefit not just the brand, but society as well, by creating larger communities of people who demand sustainable products and processes.
The New Advertisers: Entertaining and Inspiring
Advertising is being disrupted by a number of forces, from the rise of digital, to the empowered consumer, to an increasing expectation that companies must not only do well for shareholders, but also for people and the planet.
In an interview for our research, Futerra Communications Cofounder Solitaire Townsend pointed out that as the zeitgeist shifts, so, too, can advertisers. Advertising “can be about path-finding to a new lifestyle, and creatively engaging consumers in ‘better’.” In the future, if advertisers focus on selling products, “there will be no ad industry,” she said, but if they focus on inspiring sustainable lifestyles, “they will have a major role to play in the new economy.”
The framework in our paper proposes a new advertising model that answers this call for change.
At its heart, the advertising industry is a creative and powerful force in culture, and we hope that advertisers will use this paper to debate these issues and experiment with new approaches that just might create positive change in the world.
Read our new report, "Transparency, Purpose, and the Empowered Consumer: A New Paradigm for Advertising."
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