Is it worth it to be unethical? Consumers’ attitudes toward personalized commercial e-mails

Abstract

A current trend among companies worldwide is to invest in some kind of online advertising as a way to reach consumers. One of the most frequently used online ad formats is personalized e-mails that use the consumer's real name or online name (for example, ‘Hello Susan’ or ‘Hi, ShopGir501’) in the subject line. As personalized marketing and one-to-one marketing have recently gotten more attention than ever in the American media, many companies have come to believe that personalized ads will benefit the bottom line. However, some researchers warn that there may be negative effects of personalized e-mails because of consumers’ rising concern for their privacy. This study utilized a comprehensive online survey to examine the effects of personalized e-mails on the attitudes and buying patterns of consumers who receive them. The participants included 199 American consumers. The results showed that personalized e-mails tended to generate negative, rather than positive, effects on the participants overall. More specifically, female participants had more negative opinions about the e-mails than the male participants.

INTRODUCTION

Approximately 73 per cent of all adult Americans (about 147 million adults) and more than 21 million teenagers (87 per cent) use the Internet.¹ The size of the online population on a typical day grew from 52 million in March 2000 to 66 million in August 2003.² The number of possible different activities and the amount of time spent performing these activities have continually increased. Research has shown that Internet activities such as tagging, blogging, banking, action and dating have recently increased dramatically.³ Another recent report indicated that the average time spent online by American adults is three hours a day, almost double the amount of time spent watching television (1.7 hours).⁴

Since the Internet has become a significant part of our lives, more and more companies have tried to gather and use individual consumers’ information for their marketing activities.⁵ Using all possible channels, online and off-line, companies can develop databases of consumers’ personal information.⁶ By virtue of the development of database marketing, or relationship marketing, advertisers have begun to recognize the importance of one-to-one marketing.⁷ As a result of those marketing efforts, personalized advertising, which customizes messages for each individual, has garnered increasing attention from advertisers.⁸ Containing messages that are created based upon consumers’ data that the companies have acquired, advertising targeting only one particular person has become popular as a new advertising format.^{9, 10} Even though personalized advertising has been used across several media for a long time,^{11, 12} the development of online technology has contributed to an actual renaissance of personalized advertising over the past decade.¹³

Among several kinds of personalized advertising found online, the use of personalized commercial e-mails with consumers’ real names or online names in the titles (for example, ‘Hello Susan’ or ‘Hi, ShopGirl01’) has been the most popular type among most companies.^{14, 15} According to data from the Interactive Advertising Bureau,¹⁶ the use of commercial e-mails has been increasing dramatically since the debut of the Internet; about $158 million was spent in conducting personalized commercial e-mails by US companies during the first half of 2006.¹⁷ However, despite this dramatic growth in the use of personalized commercial e-mails by advertisers,¹⁸ the actual effects of these e-mails on consumer attitudes have been questioned by many recent studies.^{19, 20}

It is generally believed by those in the field of advertising that when a consumer receives a personalized e-mail that comes with an individual name in the title, the overall effect of the advertisement will increase¹⁹; when consumers feel that they are being individually cared for by an advertiser, they will have better attitudes toward the brand and company. However, as a result of rising concerns for consumers’ own privacy, this accepted belief has been questioned.^{21, 22} Recently, several studies have indicated that personalized e-mails may have negative effects on the company's marketing efforts because consumers may feel that the act of sending personalized e-mails without consent is unethical.^{15, 23, 24, 25} Once consumers feel that companies are unethical, they will exhibit negative attitudes toward the e-mails and other marketing efforts made by the advertisers.²⁶ According to Tsang et al's¹⁵ study, people's concern for their privacy and their ethical points of view toward personalized e-mails used as advertising may both be very influential on consumers’ brand attitude or intention to purchase the product in the future. Despite an increase in studies about this issue, researchers and practitioners are well aware of the need for more empirical studies examining the responses of consumers toward this personalized type of advertising.^{25, 27}

The present study examined participants’ real perceptions toward personalized commercial e-mails. As indicated above, the personalized e-mails in this study are e-mails with participants’ real names or online names in the titles; these particular ads are somewhat different from many other spam e-mails that do not include the participants’ personal information in the titles. The definition and differences from the general spam e-mails were clarified for the participants before they filled out the survey.

The information from this study will not only provide comprehensive empirical evidence about consumers’ attitudes toward personalized commercial e-mails in terms of an ethical perspective and how it relates to privacy issues, but the evidence will also provide insight for public policy regarding privacy and advertising.

LITERATURE REVIEW

Popularity of personalized advertising as a marketing tool

The Federal Trade Commission (FTC) already reported in 1998 that about 92 per cent of websites collect personal information for their future marketing. Currently, owing to the popularity of one-to-one marketing,²⁸ database marketing²⁹ and relationship marketing,³⁰ companies’ interest in personal information is stronger than ever. Efforts to get more personalized information have been conducted both online and off-line.⁶ Many retail stores have also introduced tactics for personal care for the consumer, based on information they get such as individuals’ loyalty schemes, store credit cards and collection of timely information about consumer choices and preferences.³¹ Basic database programs can be merged to provide an in-depth portrait of a consumer's individual purchase behavior.³² Companies use information about consumers, such as demographical characteristics, geographical information and psychographical information.¹⁰ The information is gathered not only by the companies themselves, but also by outsourcing companies that gather and sell the information to other companies.¹⁹

Using the information about individual consumers, companies have been able to conduct more and more personalized advertising.^{18, 13} There has been an increase in the amount of money that companies spend on personalized advertising at the same time as the types of personalized advertising have become more diverse.⁹ Even though the importance of personalized advertising is nothing new,¹¹ the diversity of types of advertising and the amount of advertising have dramatically increased mainly due to the development of online technology.¹³ In addition to personalized e-mails, the most popular technique, several types of technology-based personalized advertising have been invented and utilized by various companies, such as personalized web pages that use cookies with the history of an individual's web surfing; personalized interactive television advertising; smart banners; and mobile advertising.^{9, 13}

The popularity of personalized advertising has changed the long-held definition of advertising as well. According to the American Marketing Association, advertising is defined as ‘any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor’. As several environments around the definition change, there is room for rethinking the concept of ‘non-personal’. New technology to transform mass communication into personalized messages may eventually shift the focus of traditional mass advertising to more concentrated and focused audiences.¹⁹

Advertisers’ general perspectives toward the effect of personalized e-mails: Optimistic

There have been several indicators that point to the beneficial aspects of personalized advertising. Stewart and Ward¹¹ found that user involvement, a major benefit of personalized advertising, has been widely touted as a way to improve advertising effectiveness. McKeen et al ³³ also found that both participation and user involvement would improve consumers’ satisfaction and performance in the design of other information systems. In addition, a more accurate and complete assessment of user information requirements, which would be helpful to companies’ marketing, is provided to them through user interaction.³⁴

Many studies have argued that personalized advertising is effective because it gives consumers numerous opportunities to be more involved in both the advertising process and the brand advertised.^{19, 35} For example, consumers receive only relevant messages that are most likely to generate purchases or other desired responses.¹⁹ Not only is it convenient for consumers, but personalized advertising is also more beneficial to marketers. Using advertising messages created by individual preferences and characteristics, marketers can conduct a more efficient advertising campaign.¹⁰

Nowak et al ³⁶ also addressed the fact that personalization in online advertising increases the effectiveness of advertising. Using an empirical study, the researchers determined that personalized online advertising with individuals’ names increased the possibility of clicking behavior by consumers. In addition, they pointed out that interactivity is the most important benefit for consumers when using personalized advertising. Rodgers and Thornson³⁷ indicated that referring to users with particular interests by their individual names can produce more interactivity. They also found that personalization is one of the crucial benefits for consumers that traditional advertisements cannot provide. As Roehm and Haugtvedt³⁵ argue, people get more benefits from this personalized and interactive environment because they are more actively involved in the persuasion process. Furthermore, marketers can be more efficient by conducting personalized advertising based on individuals’ preferences.¹⁹ Pavlou and Stewart found that the degree to which advertising is perceived to be personalized and individually focused is an important measure for effective advertising.

Other researchers also argue that personalized online advertising (that targets the individual, for example, personalized commercial e-mails) is more effective when compared with other traditional advertising (that targets a group of people). Howard and Kerin¹² determined that personalized online advertising causes a higher rate of response to the advertisement. For example, online ads containing personalized notes such as ‘Mr Smith, try this. It works!’ had higher response rates than ads with non-personalized advertising messages. On the based of general perceptions and empirical results, many researchers and practitioners believe that personalized online advertising messages are more effective than non-personalized online advertising messages.^{9, 38}

Opposite perspective: Negative effects of personalized e-mails and ethical issues

However, despite the increasing popularity of personalized e-mails and interactive advertising across media formats, several studies speculate about the effects of those types of advertising.^{24, 22} Tsang et al ¹⁵ used consumer survey research and found that consumers generally have negative attitudes toward personalized mobile advertising via cell phones unless they have specifically consented to it. In addition, the researchers confirmed that there is a direct relationship between unfavorable consumer attitudes and future consumer behavior. Finally, they suggested that sending personalized advertising messages to potential customers without prior permission may negatively affect the product being advertised. Sheehan and Hoy²⁵ also indicated the possible negative effects of personalized e-mails. In their study, many participants indicated that they did not provide responses to personalized e-mails, and some even said that they sent a request of removal from mailing lists to the Internet Service Providers. Moreover, participants reported that they were less likely to register for the companies’ websites if those websites requested their personal information.

Arguably, concerns about ethical issues and privacy on the part of the consumer both have a negative effect on how they respond to personalized e-mails.^{25, 23} According to the Pew Internet American Project, 75 per cent of American consumers are concerned about their privacy. It should be noted that the more people have become concerned about their privacy, the less personalized advertising has an effect on consumers.³¹

The dilemma of ‘personalization and privacy’ has been examined by several researchers.^{39, 40, 41} Especially as online users become more sophisticated and advertisers are able to deliver more targeted content, the demand for personalization continues to grow. The interest in personalization is not only from companies, but also from consumers themselves. Gurau et al ³¹ reported recently that many consumers want more individualized attention, one-to-one communication and personalized offers. On the other hand, the potential for abuse and portraying an unethical image have increased exponentially as the amount of personal data collected in a company's consumer marketing database grows.³⁹ Once the consumer feels that the company is unethical and his or her privacy has been violated, the effect of personalized ad messages tends to decrease.⁴² Therefore, several researchers have warned that it would be a dangerous idea to conduct personalized advertising without first considering any possible negative effects.

RESEARCH QUESTIONS

This study examines participants’ perceptions and attitudes toward personalized e-mails. Personalized e-mails are e-mails with the participants’ real names or online names in the titles and are somewhat different from many other spam e-mails that do not include the participants’ personal information in the titles. The information will be explored using a survey consisting of four sub-sections: (a) the participant's general attitude toward personalized e-mails; (b) the actual responses of the participant to personalized e-mails; (c) the participant's perceptions about ethical or privacy issues upon receiving personalized e-mails; and (d) the participant's attitude toward the brand and the advertiser and his or her buying intention.

As indicated above, there have been differing views within advertising research about the effects of personalized e-mails. One perspective supports the positive effects of personalized type advertising,^{35, 19} but another perspective is speculative about the effects because of ethical concerns and privacy issues.^{15, 23} Owing to this difference in opinion, this exploratory study developed research questions instead of hypotheses.

RQ1:

• What are the general perceptions of the participants regarding personalized e-mails?

RQ2:

• What behaviors do the participants exhibit following the receiving of personalized e-mails?

RQ3:

• What have been the participants’ perceptions about the companies’ ethics and their respect of consumers’ privacy when the participants receive personalized e-mails?

RQ4:

• To what extent do personalized e-mails affect future brand choices of the participants who receive them?

An independent variable was applied in the fifth research question. The gender of each of the participants was considered when reporting findings from the prior four research questions. Gender can be a significant factor that may cause different levels of ethical perspectives and privacy concerns regarding exposure to personalized e-mails.^{8, 42, 43}

RQ5:

• How does gender difference influence the participants’ attitudes toward personalized e-mails and consumer behavior?

METHOD

Survey instrument

The instrument for the survey was categorized into four sub-topics by which the first four research questions were developed. As the topic of consumers’ ethical perspectives toward personalized e-mails is quite new in this field, the present research had to employ multiple sources instead of a single study as references to develop the measurement for the survey. After examining the related literature, it was found that the following four issues have been major sub-topics regarding the personalized advertising and one-to-one marketing: (a) consumers’ general perceptions of personalized e-mails¹⁹; (b) actual reactions of consumers when they get personalized e-mails²⁵; (c) privacy and ethical concerns regarding personalized e-mails they got²²; and (d) attitudes toward the brand after consumers get personalized e-mails.^{27, 44}

Five specific statements asking for participants’ opinions about the four sub-topics using an agree-disagree 5-point scale (1: Strongly disagree, 5: Strongly Agree) were developed for each category (Tables 1, 2, 3 and 4). In addition to the statements, three kinds of personal information were also asked: e-mail address (for compensation), gender and age.

Table 1 Mean of general perceptions of personalized e-mails

Table 2 Mean of actual response toward personalized e-mails

Table 3 Mean of privacy and ethical concerns regarding personalized e-mails

Table 4 Mean of brand attitude toward personalized e-mails

Participants and data

In this study, a total of 195 participants were recruited. As a convenience sample, the instructor of an introductory class at a journalism school at a state university in the southeastern part of the United States was contacted. With the authorization of the instructor, the author visited the class and briefly explained the process of the survey. Only the title and topic were known to the participants. As a survey method, an online survey was conducted using the SurveyMonkey (www.surveymonkey.com) website. In the instruction page on the website, the definition of the personalized e-mails and differences from the general spam e-mails were clarified once again for the participants before they started the survey (the e-mails with respondents’ real names or online names in the titles such as ‘Hello Susan,’ ‘Hi, ShopGir501’).

The author sent e-mails to 231 individuals providing the link to the survey. Among them, a total of 199 participants completed the survey. However, four participants were eliminated from the final data analysis because they did not answer more than 80 per cent of the questions. The other participants answered all the questions that they were asked, including personal information. The survey was conducted for five days, including the day of the author's visit to the class. In addition to the extra credit from the professor, the participants were entered into a drawing for a $50 gift card from the campus bookstore.

RESULTS

General perceptions regarding personalized e-mails

Overall, the participants had negative perceptions about receiving personalized e-mails (Table 1). Even though many of the participants answered that they do not take seriously personalized e-mails with their names or online names in the title, they felt uncomfortable because they considered that their e-mail addresses were known to marketers they do not know. Therefore, many of them answered negatively to the statement, ‘When I receive personalized e-mails, even though it is an unfamiliar advertiser, I will be interested if it is about a product I like’ (Mean 2.06).

In addition, the participants rarely felt that they were treated with special care by the advertiser (Mean 1.45) when they got personalized e-mails. Consequently, participants were not favorable to receiving personalized commercial messages by e-mails.

Participants’ actual responses to personalized e-mails

The typical response of participants when they receive a personalized e-mail was to immediately delete it (Mean 4.18). Most of the participants were not willing to open a personalized e-mail even though he or she may see his or her real name (or online name) in the title (Mean 1.95). However, the participants said that they very rarely e-mailed or telephoned the advertiser with a request that the advertiser stop sending personalized commercial e-mails (2.43).

Perceptions about privacy and ethical perspectives regarding personalized e-mails

All of the statements about privacy and ethical perspectives got more than a score of 3.0 in terms of personalized e-mails. Participants generally thought that their privacy was being violated by the advertisers, and they considered that other personal information might have been known to the advertisers (Mean 3.70). To the statement, ‘I think getting an e-mail address without any authorization is a type of crime’, participants agreed with an average score of 3.07 (Table 3).

Attitude toward the brand, intention of purchase in the future

Participants showed a high agreement (Mean 3.52) to the statement asking whether they feel terrible about the advertiser after they got personalized e-mails. In addition, they answered that they did not trust the advertiser (Mean 3.42). They showed very low agreement to the question asking whether they purchased the product that was being advertised (Mean 1.71) after receiving personalized e-mails from an advertiser. Most participants not only had no experience buying a product from the advertiser, but also had no intention of buying the product advertised in the future (Mean 1.84).

Gender difference in people's attitudes toward personalized e-mails

A total of five statements out of 20 showed significant differences between females and males (Tables 1, 2, 3, 4). Generally, the female participants felt more uncomfortable receiving personalized e-mails than did the male participants (P<0.01). However, the female participants exhibited a slightly higher agreement to the question, ‘When I have received personalized e-mails, I feel I am being treated with special care’ than did male participants. Regarding the actual responses of the participants after they got personalized e-mails, the female participants indicated that they had sent an e-mail or placed a call requesting not to receive personalized e-mails in the future more than did the male participants (P<0.05). On the other hand, the male participants showed a higher degree of agreement than the female participants on having sent an e-mail (or placed a call) requesting more information about the product after they got personalized e-mails (P<0.01).

With regard to privacy and ethical concerns regarding personalized e-mails, the female participants were more concerned about the possibility that the advertiser might have other personal information because they have received personalized e-mails (P<0.05).

DISCUSSION

The dilemma of commercial e-mails: ‘Personalization or privacy’

In this study, it was found that personalized e-mails generated negative, rather than positive, effects on the participants overall. As mentioned in the previous section, many companies have invested huge amounts of money sending out personalized e-mails¹³ with the general belief that when consumers are personally approached the intended effect of the advertisement increases.^{19, 35} With the popularity of one-to-one marketing, database marketing and relationship marketing, the amount of and the technologies for personalized types of advertising have become more popular than ever.^{7, 13, 18}

However, the results of this study suggest that advertisers need to use caution when planning advertising campaigns that include personalized e-mails. The most typical response from the participants in this study was to delete a personalized e-mail without even opening it. Therefore, based on the results of this study, it was found that the advertising effect of personalized e-mails was extremely low or negative. Many companies are creating their own databases and regularly sending customized advertising messages to consumers.^{25, 28} The companies produce personalized messages based on the information they get from various channels, such as the buying history of each individual customer. From the perspective of a business, creating and sending customized messages through e-mails is one way of showing special attention to the consumer, but those personalized e-mails have the potential to be considered by consumers as just junk e-mails or, worse, unethical because they violate consumers’ privacy.

People's general avoidance of advertising messages online has been indicated by numerous studies. Cho and Cheon²⁰ suggested three important variables that cause ad avoidance in consumers: perceived goal impediment, perceived ad clutter and prior negative experience. Of those three variables, the researchers confirmed that perceived impediment is the most significant antecedent explaining ad avoidance online. Another critical variable is that those who received personalized e-mails may believe the practice to be unethical because their privacy is being violated by the company from which the e-mails originated.⁴²

As researchers have pointed out, companies are experiencing the dilemma of personalization and privacy,^{39, 40} which is a trade-off situation. The more detailed information companies have about their consumers, the more efficiently the companies can conduct customer care. However, the level of customers’ feeling that their privacy has been violated goes up. Needless to say, this unethical image that consumers have of the companies is not helpful for marketing.^{45, 46}

The question that this study raises, then, is how advertisers can convey personalized e-mails to consumers without creating a negative image. Owing to the invention of recent technologies, we now have numerous ways to develop databases that provide personalized consumer information.^{14, 15} In addition, the improvement of technologies has made possible many types of personalized advertising. However, despite those developments in terms of skill or technology for gathering personal information and sending messages, the discussion regarding the perspective of customers who are supposed to get personalized advertising messages has been ignored. The belief that if customers are given personal care they will respond positively needs to be reexamined. In addition, a more important discussion of how companies can ensure customers that the companies are ethical and sincere should be conducted. Possible future studies should address issues such as copy testing, creating less intimidating titles for personalized advertising and getting consent from the consumers. All the efforts for conducting personalized advertising including e-mails are potentially a waste of money unless the companies can determine a means to convey the message in a more consumer-friendly way.

To professionals: Unethical image links to the sales negatively

All items in the third part of the questionnaire that asked participants’ opinions about privacy and ethical concerns got a score of more than 3.00 (Table 3). The results showed that the participants tend to automatically consider the companies or brands that sent personalized e-mails to be unethical because the participants feel that companies violated their privacy. Even though the companies sent the messages to the customers for the purpose of providing information about new products or to show special care for the customers, the participants in this study felt these personalized e-mails to be unethical. That perception of the consumers made the participants delete personalized e-mails without even opening them.

A more negative implication to advertisers was that consumers’ negative feelings could be linked to the fact that consumers did not like the brand and had no intention to purchase that brand advertised in the future.^{45, 46} In other words, sending personalized e-mails might negatively influence the company's sales. Therefore, the results of poorly structured personalized e-mails will not cause a zero effect, but rather a minus effect. In that case, companies are in fact spending their money to negatively influence their brands and sales. This is a complete waste of money and a potential disaster for the brand's image. Personalized e-mails are a very popular marketing tool for most companies because they are inexpensive and require little maintenance.¹⁶ Owing to those merits, many companies are using personalized e-mails thinking they have ‘nothing to lose’. However, there are a lot of things to lose, including future customers.

CONCLUSION AND SUGGESTION FOR FUTURE RESEARCH

This study is one of not many studies examining responses from consumers regarding personalized e-mails they have received. Consumers’ responses were analyzed across four sub-categories (general perceptions, actual behaviors, ethical and privacy issues, and brand attitude/purchase intention) about personalized e-mails. The overall opinions of the participants were negative rather than positive, as seen in the results section. Different from the expectations companies who count on personalized advertising to attract consumers, the participants in this study generally do not give any attention to personalized e-mails. Instead, this study found that most of the personalized e-mails have minimal or negative effects on the participants. The participants indicated that the major reason they felt uncomfortable in receiving personalized e-mails with their names or online names was due to ethical issues and privacy concerns. In conclusion, this study suggests that companies should come up with a better way to convey personalized advertising messages without making consumers feel that the companies are unethical because they violated the consumers’ privacy.

Regarding future studies, the author has two suggestions. First, the major issue this study brought up, how to develop personalized e-mails that do not convey the image that companies are unethical by violating consumers’ privacy, needs to be discussed. To that end, the author proposes an experimental study that uses different tactics in personalized e-mails. The proposed study would attempt to figure out a better way to communicate with consumers. Personalized e-mails for the experiment should vary in terms of characteristics of the title, message style or the way of providing an idea about how the advertisers got the personal information. Creating personalized e-mails without conveying an unethical image may not be easy; however, effort spent finding a better mode of personalized advertising will be very meaningful, and possibly profitable, for advertisers.

The other possible study is one utilizing a different sample. This study recruited 195 young adults (ages 19–26) and the results are limited in terms of diversity (for example, age and ethnicity). Therefore, an extended study using an older sample would provide a more general trend about attitudes toward personalized advertising. The results could yield further valuable insight for companies in setting up more specific advertising strategies for a more specific group of people. In addition to a more diverse sample in terms of age, other types of personalized advertising using several off-line advertising media, such as flyers or phone calls, can be applied in future research. In addition, there are several new types of personalized advertising in the market, which have not been explored in terms of the responses of customers such as mobile advertising using cell phones, TiVo advertising, or Internet television. As this study has confirmed, the development of technologies without considering customers’ feeling could result in a waste of money, which is not the hope of most companies.