Stealth Marketing and Communication Ethics with

Stealth Marketing and Communication Ethics with CSR Movement

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7 CHAPTER

Stealth Marketing and Communication Ethics with CSR Movement Pradeep Kautish

ABSTRACT In today’s competitive world, marketing communication is indeed probably one of the business practice that receives most criticism in public debates in terms of the social responsibility and ethics of business. Being the most visible mouthpiece of companies due to its permanent contact with prospective and potential consumers as well as with other stakeholders, the list of issues addressing the corporate social responsibility and ethics of marketing communication seems almost endless. Marketers have been accused to contribute to the so-called pornographically orientation of society and to exploit particularly females by applying sexually explicit symbols in their advertising, to use subliminal methods in order to create needs consumers do not really have, to lie, betray and to present promises, products and companies cannot hold, and so forth. This paper seeks to probably exemplify this challenge by casting a closer look at marketing communication ethics prevailing, as it has been and is discussed among scholars and practitioners of marketing communication on plethora of forums and professional circles. Key Words: Stealth Marketing, Covert Trends, CSR, Communication, Ethics.

Introduction Consumers are bombarded on a daily basis with distinct and distinguish marketing communications in many different forms and agendas by the sides of marketers. While this situation is not new, circumstances in today’s market are unique in that consumers are more difficult to access and have the ability to exert more control over the flow of

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Corporate Social Responsibility: Conceptual Framework, Practices & Key Issues

communication through technology (Kaikati and Kaikati, 2004; Lammers, 2003). Consumers’ suspicion towards traditional marketing techniques, led marketers to try the virtual media communication form called disguise advertising as other forms of messages (Kautish, 2010; Lammers, 2003). Marketing communication is indeed probably the business practice that receives most criticism in public debates in terms of the social responsibility and ethics of business. Despite of the growing popularity and importance of the concept of Corporate Social Responsibility (CSR), there is still is a lack of consensus about how to define CSR and how CSR should be clearly distinguished from concepts like corporate governance, corporate citizenship, accountability, credibility, sustainability and corporate/business ethics in the context to marketing communication arena (Gundlach and Murphy, 1993; Hunt and Vitell, 1986, 1993). Unfortunately for consumers, firms are becoming more skilled at obscuring the lines associated with traditional marketing activities by melding marketing into nonmarketing situations (Milne et al., 2008). A recent example of covert marketing is a “flog”when firms develop a fake consumer blog about the consumption of some product or service without stating the company’s role in the communication campaign; it is very unfortunate to note that many leading firms have all been noted to use such marketing communication techniques by contradicting their CSR business process (Rotfeld, 2008). Covert marketing techniques exist in myriad forms and are sometimes referred to in the media as stealth marketing, viral marketing, buzz marketing, masked marketing, or wordof-mouth marketing (to name a few). Although most people find these and similar covert or stealth marketing practices / activities to be of poor taste, the question remains, what is the public policy, ethical, and consumer welfare issues that emerge from such covert or stealth marketing activities? (Rotfeld, 2008). This includes difficulties in distinguishing the concept of CSR from more traditional and more well-established discourses that have been developed in particular disciplines of business studies, such as HRM, PR or accounting practices all over the world (Milne et al., 2008). Hence, as the concept of CSR is applied more specifically and empirically to particular business practices, it has to compete with already existing discourses about business ethics in marketing communications, HRM, accounting, and the like. Since CSR addresses practices in such diverse fields as management, accounting, HR-policies, (organizational, corporate and marketing) communication, and production technologies (including environmental concerns), CSR apparently tries to embrace almost all facets of corporate business life. It can be seen as a kind of umbrella concept from a bird eye view perspective that seeks to discuss the relation between companies and society with different stakeholder groups from a holistic and strategic management point of view (Ferrel et al., 1989). Such an integrated business perspective is certainly meaningful due to the changing role and complexity of business in society, including awareness to the need for integrative and holistic approaches to, for instance, corporate culture, identity and brand image / reputation. One of the challenges for CSR-proponents is, however, whether they are able to integrate and to relate to more specific issues and empirical business practices that are of relevance for business ethics and for the relation between business and society as they have been discussed in specific sub-disciplines of business studies in conjunctions with marketing communications (Gundlach and Murphy, 1993; Hunt and Vitell, 1986, 1993). Given that covert or stealth marketing conceals the commercial sponsorship of marketing activities with special relevance to communication, there are likely legal and ethical dimensions associated with the use of such marketing techniques.


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To date, however, no rigorous analysis of these issues has been undertaken. In one of the leading article “Covert Marketing Unmasked: A Legal and Regulatory Guide for Practices That Mask Marketing Messages,” Petty and Andrews (2008) provide the first detailed examination of covert (or “masked”) marketing communication activities. In addition to that in their essay “Commercializing Social Interaction: The Ethics of Stealth Marketing,” Martin and Smith (2008) offered an ethical analysis that complements Petty and Andrews’s legal analysis (Petty and Andrew, 2008). Martin and Smith examine three cases of covert / stealth marketing from Sony, Procter & Gamble, and Wal-Mart regarding the ethical dimensions of deception, intrusion, and exploitation (Martin and Smith, 2008). They concluded that covert / stealth marketing is unethical along multiple business dimensions and detailed about possible long term consequences of these techniques to firms and consumers. They also make recommendations to marketers considering the use of these marketing techniques with consciousness. Together, Petty and Andrews’s article and Martin and Smith’s essay provide a much needed analysis of the regulations and ethics surrounding covert / stealth marketing activities and suggest some directions for further research. The present paper seeks to exemplify this challenge by casting a closer look at marketing communication ethics, as it has been and is discussed among scholars and practitioners of marketing communication with CSR point of discussion. Hence, this paper re-formulates the question of whether and of how companies should engage in strategic CSR- marketing communication to the question; how companies should communicate in a socially responsible and ethical sound way at the same time profitably implementing marketing communication strategies for business growth. In response, marketing (communication) scholars and practitioners have for decades engaged in discussing communication ethics and the social responsibility of marketing both internally in their communities of practice and with external stakeholders (Ferrel and Gresham, 1985; Milne et al., 2008). The rise and growth of stealth / covert marketing has in recent years intensified these debates. By choosing the social responsibility and ethics of stealth/covert marketing as a case, this paper is an attempt to enumerate how research on CSR and business ethics should be empirically in touch with institutional pressures in business practice in order to avoid just remaining a discourse of just of good intentions and political correctness from a bird perspective. Although firms using these business tactics and marketing decisions do not always deliberately deceive consumers, concerns over these practices arise when consumers do not realize that the marketing activity is indeed that of a marketer (Nebenzahl and Jaffe, 1998). It is a widely debated issue whether and how companies and other organizations should engage in strategic CSR-communication with special reference to marketing communication. Dawkins (2004), for example, advocates a communication challenge according to which companies are recommended to develop a clear marketing communication strategy that takes into account which aspects of the corporate social responsibility programme fit with the corporate reputation and with stakeholders’ concerns not for short term only rather for long term as well (Kimmel and Smith, 2001). Moreover, companies should tailor the content, style and channel of communications to the different stakeholder audiences, while maintaining the overall coherence of the company’s message by coordinating and aligning the communication and by embedding corporate responsibility messages into mainstream marketing/promotional communications. Other studies (e.g. Peterson & Hermans, 2001; Nebenzahl and Jaffe, 1998) confirm an increase of the use of corporate social

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responsibility in advertising, and highlight the advantages and benefits by doing so (e.g. Asher, 2001; Scott and Fischer, 1993). Here, social and cause related marketing are regarded as some of the tools that can be used by companies to take on social responsible projects and be profitable at the same time. Hence, the question is not so much any longer whether CSR should be communicated strategically or not; the growth of cause related marketing and sponsoring provides sufficient evidence that strategic CSR-communication is already taking place in practice. This article only discusses marketing communication, i.e. the promotional aspect of marketing. Marketing includes at least also product development, pricing, distribution channels (the traditional 4 P’s of Marketing the Marketing Mix), and people, process and physical evidence (the extended 7’Ps of the Marketing Mix). By addressing the communication part of marketing only, the author does not take account of other constituents of marketing. Hence, public perception of corporate social responsibility is often the result of and companies’ response to institutional pressures that need closer analysis. Institutional pressures become evident, when looking at particular fields of business practice such as marketing communications (Kimmel and Smith, 2001). Within this discipline, the issues of social responsibility and corporate ethics have been widely discussed due to a long history of social and cultural critique of advertising and PR. This critique peaked for the first time in the 1950’s (see Langer, 2002) for a broader description of the history of advertising and PR-critique), but has since then remained and consistently challenged marketing communication as a discipline. While the issue of social responsible marketing already has been discussed by scholars and practitioners since the 1930s, it was the concept of societal marketing (SMC) developed in the early 1970’s, that for the first time responded to such critique by integrating social responsibility into the very foundation of the marketing discipline. In contrast to the traditional model of marketing science derived from the Harvard University economic school of thought, SMC incorporated a moral dimension into marketing by demanding that marketing and its technologies should be tempered and should adopt a more explicit social orientation (Carne & Desmond, 2002; Kotler, 1972). At the same time the notion of social marketing, i.e. the marketing of social ideas and causes, was introduced (Kotler & Zaltman, 1971). A few years later, in 1984, the first example of cause related marketing came to light, when American Express promised to donate one cent for each cardholder transaction to the Statue of Liberty restoration project: $ 1.7 million was raised in three months and transaction activity raised 28 % (Higgins, 2002). Such marketing practices have been developed by Indian companies also in all most every industrial sector. Apart from this some leading corporations for profit as well as not for profit have made marketing communications with the help of celebrities in India. The concepts of societal, social and cause related marketing reflect responsiveness to social and cultural critique as they seek to integrate social and ethical concerns into the marketing discipline. Ever since the beginning of the 1970’s the quest that marketing should embrace a more social and ethical agenda has been repeated again and again (e.g. Robin & Reidenbach, 1987; Smith, 1990; Laczniak, 1993; Kilbourne & Beckmann, 1998; Nebenzahl and Jaffe, 1998): “There is thus ample evidence to show that social concerns have impacted on various aspects of marketing activity. Many firms have changed product formulation to improve environmental performance (Vandermerwe & Oliff, 1990; Shot & Fischer, 1993); others have attempted to develop communication campaigns stressing corporate social responsibility (Lill et al., 1986; Banerjee et.al., 1995); while others have attempted to incorporate charitable donations into


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their marketing campaigns (Varadarajan & Menon, 1988; Andreasen, 1996).” (Crane & Desmond, 2002) Despite of these intensions to develop “marketing with a conscience” (Higgins, 2002) - marketing (and marketing communication in particular) have still a dubious reputation among many stakeholders. This is due to the fact that the adoption of social responsibility and business ethics has also been somewhat limited (Crane & Desmond, 2002; Koslow, 2000; Robin & Reidenbach, 1987). Moreover, debates about ethics and social responsibility in marketing communications are constantly fuelled by the invention and application of new media, content formats, strategies and techniques (Kimmel and Smith, 2001). Many of these more recently developed strategies and techniques have been described as “stealth marketing”-techniques. Consumers are increasingly resistant to traditional and conventional promotion messages and techniques, thus diminishing the effectiveness of conventional mass media advertising. Growing media literacy contributes to increasing ad avoidance (e.g. TV-zapping). Attempts by the industry to respond to the ever growing fragmentation of target groups by creating smaller and smaller consumers segments and by introducing niche and micro marketing techniques have shown limited success. Increased legal regulation for the promotion of certain products (e.g. tobacco and alcohol) and information overload due to the growing number of media channels in the attention economy have diminished the efficiency of conventional advertising and marketing (Kimmel and Smith, 2001). Technological progress, including the invention of new media channels as well as personal and digital video recorders with ad-skipping-facilities, contributes further to this development. A recent study of new subtle marketing promotion in Denmark (Langer, 2002) identified three interconnected strategies for the renewal of advertising practice in response to the development sketched out above. These are: 1) the application of new channels and formats in promotion activities and the increasing use of non-traditional channels in marketing promotion like covert marketing, marketing-in-disguise, word-of-mouth and blog writing etc.; 2) the blurring of boundaries to other public discourses and social practices like social networking websites etc.; and 3) the production of new advertising contents on internet and at times intranet. Word-of-Mouth (WOM) is recognized as a powerful market force, its importance as a communication mechanism has widely explored and established in influencing marketplace choices in the consumer behavior domain long back in mid 60s as a marketing instrument (Dichter, 1966; Engel et al., 1969). WOM was recognized as an important determinant of consumer choice in marketing literature, its influence reported as greater than personal selling and advertising and findings show that more extravert consumers are more likely to be passionate consumers and engage in consumption evangelism (Buttle, 1998; Dichter, 1966; Engel et al., 1969). For decades, it has received extensive attention from both academicians and practitioners, who demonstrated that WOM communications could not only influence consumers’ choices and purchase decisions, but also shape consumers’ expectations, pre-usage attitudes, and even post-usage perceptions of a product or service (Engel et al., 1969). Researchers have documented the existence of certain types of consumers, opinion leaders and market mavens, who have a personal predisposition to disseminate WOM to fellow consumers in an influencing manner (Johnson et al., 1987). The application of new channels and formats in promotion activities includes the application of new digital media (e.g. text and other messages on cell phones, the Internet), but also the use of media programs that had usually not been used for commercial promotion before (e.g.

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music, games, literature, teaching materials in schools). One of the advantages of the latter is the opportunity to gain credibility form other public discourses (e.g. public health information, scientific discourses, journalism) and social practices (e.g. education) when promoting commercial products. Finally, by changing the content of promotional campaigns and choosing a soft and less pushy approach, where commercial promotion is rather seen as entertainment or education, advertising and PR professionals are trying to re-establish contact with consumers. In practice, recent years’ development in marketing communications resulted in an increased use of stealth marketing techniques (Beckmann & Bell, 2001). The term is often used synonymously with other terms, such as buzz marketing, undercover marketing or guerrilla marketing. It refers to “attempts to catch people at their most vulnerable by identifying the weak spot in their defensive shields. Consumers’ suspicion towards traditional marketing techniques, led marketers to try the virtual media communication form called disguise advertising as other forms of messages. The examples include making advertisements resemble news items (Aditya, 2001; Koslow, 2000), the infomercials in the ’90s that disguise advertising as TV programs, making celebrities use the products in their real lives or in films (Aditya 2001), feeding media information using public relations (PR) activities like bribing journalists with gifts and making TV stations use the footages from press releases. Because of the prevalence of virtual media, the marketing practices that conceal the real sources (marketers) with disguised sources have posed both ethical and policy concerns. Stealth Marketing is “anchored on the premise that word of mouth communication is the most effective form of promotion and that peer group recommendation is the ultimate marketing weapon”. Hence, stealth marketing is understood as a viable alternative to conventional advertising and PR-techniques that applies insights from research on word of mouth communication, network communication and diffusion research. Word of mouth marketing has enough components to confuse even regular practitioners in the field: not all forms of word of mouth marketing are also stealth marketing techniques. Buzz marketing, though often used synonymously for stealth marketing, seeks also to get people talking. But whereas buzz marketing still clearly indicates who is behind a campaign, stealth marketing uses undercover, covert means to create consumer awareness. Like other (but not all) forms of hybrid messages (cf. Balasubramanian, 1994), stealth marketing seeks to hide the visibility of the company behind and the transparency of promotional campaigns: “The main objective is to get the right people talking about the product or service without it appearing to be company-sponsored.” In other words, stealth marketing is any attempt to create promotional communication by use of word of mouth, where consumers are not aware of and don’t realize they are being marketed to. It creates exposure to promotional messages below consumers’ threshold potential and defensive shields to such messages. Some authors distinguish six stealth marketing techniques: viral marketing, the use of brand pushers, celebrity marketing, bait-and-tease marketing and marketing in video games, in pop and rap music (which can be seen as product placement forms and can be extended to other placements in e.g. literature or art, cf. Langer, 2002). One of the institutional pressures to apply stealth marketing techniques is basically that efficient promotion of products and services is a key parameter in marked competition. Hence, companies that apply stealth marketing might gain competitive advantages over companies that do not. However, the increased use of stealth marketing techniques has motivated and renewed public concerns and critiques with regard to ethics and social responsibility in marketing


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communication. Such concerns and critiques raise for companies the question, whether the use of viral marketing, brand pushers or product placements is ethically sound and socially responsible? The next section try to address this question and presents possible answers. Although consumer technology has likely increased the prevalence of covert marketing activities in the marketplace (Kaikati and Kaikati 2004), technology also has been directly employed by marketers as a covert marketing tool to gather consumer information. In their essay “Toward a Framework for Assessing Covert Marketing Practices,” Milne, Bahl, and Rohm (2008) broadly consider covert marketing to include information gathering, as well as the more traditional approach of marketing communications. They develop an exchange-based framework of covert marketing and analyze the harms and benefits associated with such marketing tactics. When discussing whether a particular communication practice is socially responsible and/or ethical, we have to distinguish between corporate social responsibility and business ethics, as these two concepts have essentially different meanings: “Corporate social responsibility is related to the social contract between business and society in which it operates (...) Business ethics, in contrast requires that the organization or individual behave in accordance with the carefully thought-out rules of moral philosophy” (Robin & Reidenbach, 1987). While the outcome in many situations is the same, this is however not necessarily always the case, as Robin and Reidenbach (1987) emphasize: actions might be defined as responsible in a given society, but might at the same time be described as ethically neutral or even ethically unsound. And vice versa; ethical sound activities might be seen as socially unacceptable. As Hunt and Vitell (1986) have shown in their attempt to present a general theory of marketing ethics, such divergent situations are often related to differences between a deontological or utilitarian approach: In a deontological perspective, there exist eternal and universal rules and ideals for how to practice business (e.g. no child labour at all), including absolute rules for how to communicate in an ethical sound and social responsible way (e.g. no manipulation at all). By contrast, in a utilitarian perspective ethical decisions are based on cost/benefit-analyses in particular situations; and there is no totally accepted, absolute statement of what is ethical and what not. From this perspective child labour might be seen as both social responsible and ethical (e.g. because it increases living end educational standards in Third World countries); as well as deceptive or manipulative communication might be found both responsible and ethical (but not necessarily wise in the long run), if it serves a higher goal (e.g. fighting diseases, maintaining peace). Hence, from a utilitarian perspective ethical judgements are based on a discussion of the consequences and results of specific actions and practices in particular situations and contexts. Based on this distinction between a deontological and a utilitarian perspective, we now can discuss whether the application of stealth marketing techniques is ethically sound and whether it is socially responsible. The most common and widely shared perspective on advertising ethics among advertising practitioners and researchers is taking departure in a deontological approach. Article 12 in the International Code of Advertising from the International Chamber of Commerce (ICC) and The World Business Organization declares that advertising shall be clearly distinguishable from other media content and that it shall be easy to be identified and recognized as such: “Advertisements should be clearly distinguishable as such, whatever their form and whatever the medium used; when an advertisement appears in a medium which contains news or editorial matter, it should be so presented that it will be readily

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recognized as an advertisement.” Judging the ethics of stealth marketing based on this normative statement seems easy: as the purpose of stealth marketing is precisely to cover the character of promotion and/or the company behind, it must obviously be unethical marketing communication. The same ethical judgment must be made if we look at stealth marketing from a widely acknowledged deontological research model for communication ethics, namely Nebenzahl & Jaffe’s (1998) communication ethics matrix. This two-dimensional model is used in order to determine the ethics of communication in terms of disguise and obtrusiveness. Disguise refers to the degree of source concealment, i.e. the extent to which the sponsor is identified and/or to which extent the sponsor is able to cloud the fact that the message is part of a promotional campaign. Obtrusiveness determines the degree to which the promotional message is secondary to more salient communication such as a casual conversation with a personal friend or a scene in a movie. Hence, from a deontological perspective in both business practice and research, stealth or covert marketing should be deemed unsound. Moreover, it should also be judged as irresponsible and socially unacceptable communication, as it breaks a common sense contract in democratic societies about individual autonomy and privacy rights by influencing the autonomy of consumers’ decision making and entering into consumers’ private spheres. From a utilitarian perspective, however, judging the ethics and social responsibility of stealth marketing appears to be far more difficult. When looking at the results and consequences of stealth / covert marketing, we have to acknowledge several aspects and existing research indicating that stealth marketing is not a kind of “Wonder Weapon” that succeeds in seducing adult consumers’ minds “just like that”. Consequently, a gap between the intentions with and the effects of stealth marketing must be recognized, when referring to adult consumers (it is, however, a different case, when stealth marketing is targeted at children). Most adult consumers, at least in Western societies, are media and advertising savvy and base their consumption decisions on selective perception while ignoring the vast majority of ad clutter. The authors of the International Code of Advertising and the producers of the communication ethics matrix are aware of this. The preamble of the International Code of Advertising states: “Advertisements, therefore, should be judged by their likely impact on the consumer, bearing in mind the medium used.” And Nebenzahl and Jaffe (1998:811) emphasize that their communication ethics matrix only can predict the likelihood of whether a particular communication is more or less ethical. This likelihood needs further measurement by employing content analysis in order to evaluate a priori the extent of disguise and obtrusiveness of a particular communication technique as well as by consumer research in order to estimate the proportion of respondents who do not believe that a particular message is sponsored by a commercial source. In essence, although both proposals are taking a deontological point of departure, they also both suggest further investigations of the impact and effects of communication (Wei et al., 2008). They hereby recommend a combination of their normative ideals with a utilitarian oriented empirical investigation of perceptions, consequences and results of particular communication techniques. For the same reason, it appears to be impossible to decide right away from a research desk, whether stealth marketing techniques per se should be considered as unethical and/or socially unacceptable. Of course, individual consumers or even particular groups can have their private or semi-private opinions about, what they consider as ethical and socially responsible communication. Private or semi-private opinions, attitudes and beliefs can,


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however, not be a sufficient guideline for general ethical judgments or decisions about whether a social contract between marketers and society has been broken. Hence, when applying these arguments to different stealth marketing techniques, the following has to be taken into account: Proponents of stealth marketing claim that placement sponsors usually do not cover their sponsorship, as there names are displayed in the credits of media programs (e.g. TV-shows and movies). Hence, only content analysis can help to decide whether sponsors of a specific product placement seek to cover their sponsorship. Along with this, only empirical surveys among consumers can illuminate whether consumers actually are aware of sponsor names in these credits (Wei et al., 2008). That is, if and when - and only if and when - marketers succeed in getting “the right people talking about the product or service without it appearing to be company-sponsored”, Langer, 2002 describe the main objective of stealth marketing, a specific communication event must be labeled as being both socially unacceptable and ethically unsound communication. Without a closer look at the outcomes of communication in terms of perceptions and effects, stealth marketing techniques as a whole can hardly be described as unethical or socially unacceptable as such.

Conclusion Taking the point of departure in an understanding of CSR as a strategic and holistically oriented management concept from a bird’s eye perspective and in the challenge for CSRproponents to relate empirically to critical issues in the relation between business and society, which traditionally have been discussed within different fields of practice and scholarship, this conceptual paper raised the question of how companies should communicate via varied media in order to be seen as socially responsible and ethically sound. By putting the question of marketing communication ethics in the case of stealth or covet marketing it exemplified that the questions of whether or not, to whom and how CSR should be communicated strategically cannot be answered without looking at the specific content of marketing communication as well as at the communication strategies and techniques used for the business purposes (Laczniak, 1993; Laczniak and Murphy, 1993). Hence, nuanced and valid answers about communication ethics need to be based on a shift from a bird’s eye perspective to a more discipline oriented perspective on CSR that is aware of and incorporates empirical and other research results on specific business issues in marketing communications, accounting, HRM, and the like. Based on a distinction between social responsibility and business ethics and on a short historical introduction to ethical issues in marketing communication, the recent growth of stealth / covert marketing has been critically discussed with regard to social responsibility and business ethics. It has been argued that the decisions about whether a particular marketing communication strategy, technique or content is social responsible and/or ethical, must take into account established rules and ideals compared with the intentions of the sender of a message (in marketing communication the marketer). But - and although marketers intentions’ can be seen as either ethical sound or not, qualified judgments about the ethics and social responsibility of communications should not be solely based on and examination of senders’ intentions (Wei et al., 2008). They must as well take the outcome of these intentions (content analysis of the message) and effects/impacts on the receivers’ side (reception analysis) into account and examine all constituents of marketing communication processes (Laczniak, 1993; Laczniak and Murphy,

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Acknowledgement The author sincerely appreciate the contributions of Ms. Shalini Bhandari, Research Scholar in the form of valuable time and effort which she undertook in giving constructive suggestions, manuscript typing, collecting relevant references, proof reading the whole work and making it more lucid for end users.