Ethical Advertising in the Digital Age
One of the best aspects of my job as Dean is that I have the pleasure of speaking with our students on a regular basis. Based on these conversations, I can say with certainty that Schulich students are keen to develop a strong ethical compass. They want to ‘do the right thing’ in business. They want to be ethical managers and leaders. They also want to be part of successful and growing enterprises that act in a highly ethical manner.The following column in this month’s edition of Dean’s Desk is by Schulich Professor David Rice, Director of our School’s Future of Marketing Institute. The column touches on a vital ethical issue in marketing today – can we trust AI advertising algorithms to look out for the best interests of the consumer? It’s a subject I explored in a research paper published several years ago that examined how digital marketing brings about unprecedented levels of consumer empowerment while at the same time giving marketers greater control and manipulation of the ads we see through AI algorithms and Big Data surveillance.
I hope you enjoy the column and the questions it raises. These issues will grow in importance as the digital transformation of business intensifies in the years ahead.
Detlev Zwick, PhD
Dean, Tanna H. Schulich Chair in Digital Marketing Strategy
Schulich School of Business
Ethical Advertising in the Digital Age
Teaching ethics has long been a core value at the Schulich School of Business. Ethics is a regular component of many courses that we teach in all of our functional areas. The Centre of Excellence in Responsible Business (COERB) at Schulich is a global leader in creating and disseminating new knowledge about the social, ethical, environmental and political responsibilities of business. It is one of the reasons why Schulich is ranked among the very best in the world in teaching responsible business by such publications as Corporate Knights.
The problem, however, is that even though our students learn to be ethical actors, recent technological innovations and the rapidly advancing digital transformation of business pose new challenges for managers. Consider this question: how can you ensure ethical decision-making when an increasing number of decisions are taken out of the hands of managers and transferred to artificial intelligence and automated systems?
I can highlight this problem in the field of digital marketing, which is my area of expertise. Today, more and more marketing decisions are being made by artificial intelligence. This may come in the form of recommendation engines, which are complex AI algorithms that determine what types of content and advertising a person will see. If you watch Netflix or listen to Spotify, you will receive personalized content and recommendations driven by the algorithms. In this context, algorithms recommending what shows you should watch and what music you should listen to may not seem very problematic. However, what if the same principle applies to the entire world of modern marketing and all of us receive unique advertising sent to us based on our attributes and behavior as an individual? In other words, an algorithm makes the choice of what ads we will see, when they will be shown, and with what frequency. We call this modern practice ‘marketing automation’.
Now, things might very quickly become more complicated because these algorithms can compromise a marketer’s attempt to act ethically. For example, marketing algorithms are built to maximize consumer response such as creating interest or spurring purchase among the audience. Put another way, the algorithms are instructed to send advertising to those most likely to purchase. However, what if the person most likely to purchase is someone who should not be buying the product and seeing ads for it? As an example, would it not be considered unethical to bombard a recovering alcoholic with advertising for alcoholic drinks? But that is exactly what the algorithms do in marketing automation. Or what about a person with bipolar disorder? One of the possible symptoms in the manic phase of bipolar disorder is uncontrollable and usually unwanted shopping. In the case of marketing automation, the algorithm identifies and reacts to shopping behavior in real-time. The algorithm might identify this vulnerable person simply as an eager shopper willing to spend money and increase the amount of advertising sent to that person at the exact time when they may be least able to make informed purchasing decisions.
When confronted with such a scenario, our students would univocally describe such marketing as unethical. They would not want the algorithm to send out alcohol advertising to recovering alcoholics or send an amped-up advertising schedule to people exhibiting manic shopping. However, the problem is that once our students are hired as marketers, they may find that many marketing decisions are made by AI, and AI is often a black box. Indeed, as MIT Technology Review reports, the algorithms are often so complex that even the creators don’t fully understand how the decisions are made! In the case of marketing, companies literally have thousands of pieces of data on every individual, and these are regularly bought and sold by companies called Data Brokers. With so many variables, it becomes impossible for a marketer to completely understand what this data means and how the algorithm works. At this point, AI may not tell the marketer,” I have identified people who are bipolar and will stop sending them more ads.” The AI will merely optimize the algorithm to achieve the desired outcome, which typically is more sales. The end result is that even though our aspiring ethical marketers want to do the right thing, technology and digital transformation may make it harder to know if one is doing the ethical thing.
The black-box nature of artificial intelligence is just one of a large number of ethical challenges that the next generation of managers and business leaders will face and often there are no easy answers and solutions. What I do know is that the choice for businesses is not between ‘using AI’ and ‘not using AI’. Artificial intelligence is here to stay and will continue to radically transform all areas of management. Schulich faculty are at the forefront of research in business ethics, and we are bringing the newest approaches and most relevant knowledge into the classroom to help our students be prepared to be ethical and responsible managers in an increasingly technological world. I believe this to be one of the most important responsibilities of a world-class management education today and we at Schulich are embracing it with vigor and excellence.
Associate Professor of Marketing & Executive Director of the Future of Marketing Institute