Commercials permeated our very lives. The number of commercials to which people are exposed dramatically increased. Yet, we hardly notice it. Eventually, these senseless commercials led to many social problems. ST discusses recent issues surrounding the field of marketing, and examines incidents related to advertisements in 2020. ST also listens to a marketer who has been dealing with SNS (Social Networking Service) advertising. Now, let’s see what happened in the world of advertisements...................Ed
Expansion of Online Marketing in 2020
You might have seen online advertisements recently. You might even have clicked on an ad on SNS because of curiosity, or you might have searched for video reviews of recommendations. Online marketing is the next emerging field, more so as the coronavirus pandemic persists, in the untact culture stratagem. Amazon and Google, two giants in the global Internet business that subsist on ad revenue in the past few years, declared increases in advertising share in the next quarter. Meanwhile, there was a controversy involving YouTube creators who omitted paid ad clips, and there were disputes in quality content production. By
attracting both investment and clear content production, online marketing is at the center of the controversy.
Target Marketing: Using Big Data in Ads
From TV shows and newspapers to banners and displays in the recent past, now comes the digital ad generation in the 21st century. Ads in the New Media Age have become more sophisticated and distinguished, moving beyond search ads and keyword exposures and into programmatic ads. Online advertising provides customized ads according to the users’ online behavior, of which Big Data has tracked, analyzed, specified, and classified. This method is called target marketing. You may have experienced seeing keywords you typed on Google search that also appeared on Facebook’s promotion of related events and links that immediately pop up to urge you to participate in. This process demonstrates how ads that are tailored to consumption can permeate a consumer’s daily life. From the advertisers’ point of view, this marketing method is highly preferred because online advertising costs less than banners or visuals with greater influence. Consumer clicks are highly likely to mean interest in the product, so the target marketing achieves a high number of hits. However, there are concerns about consumer security. Customers will indiscriminately receive products with fake news, click-baits, and data mining. Furthermore, the blurred line between facts and ads will result in confusion. Thus, the fatal disadvantage of finding a line of criticism or regulation, despite
excessive abuse of online advertising, has emerged.
Social Marketing and Profit Earning System
Broad platforms, such as SNS, blogs, video channels, and endlessly evolving media, bring accessibility, and link sellers and customers. One way of achieving it is through community posting of event entries on SNS. People participate in by writing their entries on SNS, blogs, and communities. People can
conveniently write reviews and provide feedback in real-time. Fluent online communication benefits both sellers and customers. Customers get enhanced products, while a business attracts loyal customers. Through online marketing, sales can increase, and product development can be accelerated by automatically forming a platform for feedback and responses. Another way is PPL(Product Placement). Previously, PPL could be seen in drama video clips. Now, you can see branded content posts, reviews of sponsored products, and MCN (Multichannel Network) PPL. MCN includes all content production companies, production departments, networks, and broadcast companies. There is an increase in MCN with direct advertising content that is commissioned by companies. This increases trust capital and content revenue for MCN. However, the process of content production has led to a power transition between advertisers and social media, leading to an excessive number of ads on social media. Vendors fill out forms in advance, and deliver them to users as they are, while users hired by various communities, sites, and SNS post them as if they are subjective reviews. Due to corrupted information, consumers cannot verifyads wisely, creating a problem of data transparency. Starting with a proposal worth 10 million won to billions of won, the influenital reviewer expressed the difficulty of rejecting a request from an advertising production company. Producing ads in succession will offend subscribers, and eventually lead to MCN producer losses.
Controversies Surrounding SNS Marketing
SNS has the same amount or even greater impact than previous media outlets like TV or print media. It influences peoples’ lives in the same manner. As such, ‘influencers’ on SNS have power over consumers’ perceptions of brands and consumption. The new type of marketing that capitalizes on this aspect of SNS is called ‘influencer marketing’. In influencer marketing, brands pay influencers to advertise their brands. This comes with plenty of controversy. First, since it is a type of ads that ordinary people partake in, it is less trustworthy than other types. Also, it is hard to distinguish the boundary between ad and review due to the lack of indication methods. When a company asks an influencer to advertise their product without disclosing such endorsement, it becomes ‘undisclosed advertising’. With the rapid expansion of the influencer/SNS marketing scene in 2017, there have been numerous scandals and controversies surrounding such ad campaigns. ST has gathered a few of the more noteworthy ones in the following section.
In 2019, a customer o f the ‘ I mbeu l l i ’ influencer brand bought a box of the product called ‘Pumpkin Juiced to the Seed’, and found fungi growing on the spout pouch opening. They proceeded to post pictures of the problem on their SNS account wit h the ca p t i o n , “This pumpkin juice has fungi growing in it. When I asked the brand for a refund, they told me that a total refund would be impossible, and they would only exchange the fungi-infested juice pack and remaining unconsumed juice packs with new juice packs. I feel scammed.” Later, there was an outrage toward the influencer Imbeulli, who had already been called out multiple times for reselling cheap items at a high price. Around the same time, an influencer by the name of ‘Chiyu’ who launched a brandnamed, ‘Chiyu’s Wardrobe’, was exposed to have scammed people into buying ‘sponsor’s’ dresses, which are ordinary dresses falsely advertised by her as “an item worn by a celebrity as part of a sponsorship deal.” She was also found to have copied designs of luxury brands for her self-made fashion line. Later, she formally apologized. In 2017, there was a large-scale, Instagram viral marketing campaign surrounding the then-upcoming ‘Fyre Festival’ in the US. The festival, organized by hip-hop godfather Ja Rule and young entrepreneur Billy McFarland, was planned as a luxury music festival set in a tropical island. Its advertising campaign focused on releasing footage of top models basking in tropical weather and paying top Instagram influencers to promote the festival on their Instagram accounts. The exotic and vague nature of this marketing campaign played out well, and the festival was sold out in two days. However, the festival planners’ incompetence and rob-Peter-to-pay-Paul method of managing finances resulted in the most exaggerated and worst organized festival in history, leaving several guests starving, dehydrated, and without proper lodging. What was advertised as a gourmet meal became a small cheese sandwich.
What was advertised as a beachside resort became a vinyl tent. Although both organizers were sued and served justice, it remains one of the most prominent instances of influencer marketing gone wrong to this day.
Controversy surrounding undisclosed ad hit hard YouTube Korea in 2020. What started as a drunk streamer, ‘cham-PD’ discussing the YouTube scene and its unhealthy, undisclosed ads quickly became a whistleblowing session. In the stream, cham- PD stated “Several YouTubers are getting sponsors for items,
yet they are forgoing the ‘paid advertisement’ mark on their videos, making it seem like they bought sponsored items with their own money.” He then went on to say that it would only take him speaking up “to end everything,” while mentioning the names of offending YouTubers, YouTube channels, and MCNs. The next day, several people named in the stream formally apologized, confirming the allegations against them. As more and more people became aware of the issue and calls for change increased, the KMCNA (Korean Multi Channel Network Association) took some action. The KMCNA decided during a non-public meeting on August 13, in which they would establish a regulatory board and would henceforth impose self-regulation on the channels it is associated with. The KMCNA also sent feedback to the Korean FTC (Fair Trade Commission) on the “Guidelines for examination on labeling and advertising of recommendations, guarantees, etc.” amendment, which was to be enforced in September. The Korean National Assembly also started proposing amendments for the Act on Fair Labeling and Advertising on August 11. Meanwhile, a similar case occurred overseas, the CSGO Lotto scandal. In 2017, CSGO Lotto, a site where players of the online game, Counter Strike Online, could gamble on rare skins, was charged by the U.S FTC (United States Fair Trade Association) on the ground that the marketing for their site was not done with full disclosure. CSGO Lotto had paid YouTube influencers to promote their site without disclosing the nature of the endorsement. As this came to light, the KFTC (Korean Fair Trade Commission) interfered. For the first time in history, this scandal led the U.S. FTC to play an active role in agreeing into a settlement with individual influencers on the ground of undisclosed ad.
Organizations Governing Related Areas
The Korean law deals with advertising that utilizes The Act on Fair Labeling and Advertising and its sub-laws. The KFT is in charge of regulating related cases. In the U.S., the American FTC manages related cases. In the UK, the ASA (Advertising Standards Authority) fulfills a similar role.
The KFTC formulates and administers competition policies, and deliberates, decides, and handles antitrust cases. The KFTC performs OUR roles and duties independently without any intervention from an outside organization. The KFTC is committed to four main mandates: promoting competition, strengthening consumers’ rights, creating a competitive environment for SMEs and restraining concentration of economic power. To that end, the KFTC enforces 12 laws including the MRFTA (MonopolyRegulation and Fair Trade Act). The ASA has been administrating the non-broadcast Advertising Code for over 50 years and the broadcast Advertising Code for over ten. Their remit was further extended in 2011 to include claims made by companies on their own websites and in social media spaces under their control. The American FTC administers a wide variety of laws and regulations, including the Federal Trade Commission Act, Telemarketing Sale Rule, Identity Theft Act, Fair Credit Reporting Act, and Clayton Act. In total, the Commission has enforcement or administrative responsibilities under more than 70 laws.
Since both reporters and readers of ST are primarily consumers who do not partake in advertising, ST decided to prepare an interview with a person who has worked with SNS advertising, specifically utilizing YouTube ads for the B2B (Business-to-Business) branding of a certain IT company. The interviewee, who wishes to remain anonymous, has kindly agreed to share their perspective on SNS advertising, specifically on how it is different from other methods of advertising. ST hopes that this interview will provide insight into the mind of the people who produce the ads we see every day as we browse the web or
scroll down our SNS feeds.
ST: Why did you chose to use YouTube advertisements for your marketing campaign?
A: Because of COVID-19, our evolution into a non-contact society has accelerated. Nowadays, there are more people who watch YouTube than there are people who watch TV, and companies are scrambling to move their marketing to where the people are watching. YouTube ads are not only sufficiently
replacing the role of traditional TV ads, but they are also filling the role of low-cost marketing for specific niche products. For example, some YouTube ads that you see are filmed with iPhones or Android phones by actual workers of a company, not models. By doing so, companies can cut back on production costs, while also effectively demonstrating the actual performance of the phones they want to sell. This is the reason we chose YouTube ads for our campaign. The company I work with has been using TV ads in tandem with YouTube ads to create a larger marketing effect.
ST: Do you see a positive impact on sales due to YouTube marketing?
A: While I do not know the specific figures, I believe there is definitely a large difference. Since YouTube has a global reach, it is seen by more people compared to showing the same ad in traditional media. Also, the advertising cost on YouTube is cheaper. This allows for a bigger margin in sales.
ST: As a creator and a consumer, what are your thoughts on undisclosed advertisements?
A: To advertise something without disclosing endorsement raises ethical concerns. I do not have much to say other than that I think YouTube content must be separated from ads.
Advertisers should strike an appropriate balance between the original value and revenue formation of advertising content production media. Consumers in the digital age are not an easy game. Ads deeply penetrated consumers’ daily lives, and a sense of betrayal by creators on how they used people as profit making tools led to widespread anger. Customers are suspicious of the content they enjoy because of paid ads. Although regulations on advertising were enacted in September, online advertising continue to expand, making it difficult to regulate them. Moreover, consumers’ avoidance of advertising has been increasing. With the advent of new media in business and marketing, the portion allotted to advertising will increase. Transparency between businesses and consumers should be the most important thing in SNS marketing. This requires consumer’s keen awareness, government regulations, and legislation. Due to the negative public impression on current marketing techniques, companies are challenged to create proper and persuasive ads to turn consumer distrust into confidence, and, at the same time, increase their persuasiveness. Recently, the growing share of advertising participation by consumers has expanded MCN’s obligation to protect content consumption by loyal readers. Healthy recommendations must be delivered to potential consumers. There should be no wrong or exaggerated content in the product’s services, and that content influence must be only expanded within the ethics and regulations of the content production process.
Ahn So-yeon (ST Reporter)
Lee Tae-ran (ST Reporter)