Should Nonprofits Participate in ‘The Next Scary Thing’?

By Anna Seacat

Should nonprofits use market research tools that scrape financial records, real estate transactions, and social profiles of its donors?  | Socially Minded Marketing | Anna Seacat

Should nonprofits use market research tools that scrape financial records, real estate transactions, and social profiles to identify its wealthiest donors? | Socially Minded Marketing | Anna Seacat

Technology companies are just starting to effectively combine social sensors and big data in a package that can be sold as a valuable market research tool.  Are market researchers crossing ethical lines and compromising consumers’ right to privacy by buying these tools?  In the article below, I investigate this quandary in the realm of the nonprofit world.

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The Market Research of the Past

There was a day in my not too distant past, when I was creating marketing communications that targeted a small sub-sect of the wealthiest individuals in North America.  This target market was so small, in most cases less than fifty people, that I was able to create detailed profiles of most of these individuals (unbeknownst to them).  And, by doing so, could cater the marketing message to their needs, likes, desires, passions, and even their personal lives.  Creating these profiles and corresponding marketing messages required some creative research techniques, because it was before social media had really taken off.  Creating those profiles today would be less time consuming, since most executives realize that their careers and brands benefit by them maintaining a robust and transparent profile on various social media platforms.

Indeed, social networking technologies have created a whole new world in market research, what some are referring to as social engineering.  In “Perspectives on Social Media Marketing,” Stephanie Agresta (2011) explained that social media channels enable marketers to “isolate personal facts about them [consumers] – likes, dislikes, work history, writing style, friends, networks” (p. 68).  Consequently, where marketers used to spend tens of thousands of dollars on time consuming surveys and focus groups, today, those same marketers simply employ data mining software that displays a reliable portrait of a valuable subset within their target market.

 

The technology nonprofits can use to find donors is rapidly evolving.  However, will donors find the technology to be unethical? | Socially Minded Marketing | Anna Seacat

The technology nonprofits can use to find donors is rapidly evolving. However, will donors judge the technology as an unethical breach of privacy? | Socially Minded Marketing | Anna Seacat

The Next Scary Thing in Market Research

This social media data mining practice has not only quickly become a standard in the marketing industry, but the newest mining and analyzing tools are so sophisticated they are being described as ‘scary.’  In the most recent article of Inc. magazine, the award for the “next scary thing in social media” went to Relationship Science.  This big data mining tool scrapes “tens of thousands of databases, ranging from SEC filings, to paparazzi photos to tax records” and combines those publicly verifiable documents with data including “past and present employers, board memberships, investments, donations, politics, and even siblings, children, and spouses” (Lindsay, 2014, p. 86).  Relationship Science does this with the intent to build profiles on the wealthiest and most influential 1% of the population.

These social graphs of the rich and powerful would, without a doubt, be valuable to a variety of for-profit marketers.  But, as I started reading this article, my mind immediately went to the value in the nonprofit world.  Alas, my eureka moment was not unique, as the article noted, “Already universities and nonprofits are using the system to identify new donors.”  Both Duke and Yale were among the company’s first 300 clients (Lindsay, 2014, p. 86).

 

Is the Next Scary Thing Ethical?

But, with unparalleled access to data comes ethical issues, especially for nonprofits, which are expected to walk a straight and narrow line when it comes to marketing tools.  One could easily question whether it is ethical for a nonprofit to be so net-worth-obsessed that they would pay for a data mining tool like Relationship Science to hand over a “fine-grained, fact-checked compendium of the world’s most influential people and the web affiliations that bind them together”  (Lindsay, 2014, p. 86).

Nonprofits are held to exceptionally high standards when it comes to ethical marketing practices.  How can they benefit from big data without crossing ethical lines? | Anna Seacat | Socially Minded Marketing

Nonprofits are held to exceptionally high standards when it comes to ethical marketing practices. How can they benefit from big data without crossing ethical lines? | Anna Seacat | Socially Minded Marketing

Whenever questions about the ethics of a marketing scenario present itself, I always fall back on what I learned in a graduate level ethics course I took at Southern New Hampshire University.  The objective of that course was to practice the process of analyzing ethical issues by applying to them one or more ethical theories.  For instance, in the scenario of a nonprofit using big data and social signals as a new form of market research, one could apply a deontological-based theory to judge its alignment with ethics.  This would require the decision maker to use three formulations when judging the marketing opportunity.  First, does the practice go against some universally accepted moral law?  Second, would the market research produce good corporate outcomes, but significantly hurt other stakeholders in the process? Last, are the means (buying highly targeted consumer data) and the end result (superior market research) both within ethical limits? When using a deontological-based theory to judge the ethics of a business decision, both the means and the end are significant considerations. (Bowie, Klein, Laczniak, & Murphy, 2005, p. 26).

 

Can the Next Scary Thing be Justified?

Even if applying ethical theories indicates that a nonprofit should avoid exploiting social networks and big data, it would be easy to form arguments that justified the decision.  As the authors of Ethical Marketing suggested, “The consensus regarding what constitutes proper ethical behavior in a decision-making situation tends to diminish as the level of analysis proceeds from the abstract to the specific” (Bowie, Klein, Laczniak, & Murphy, 2005, p. 16).  In other words, while most board members at a nonprofit would agree that the organization has an obligation to operate transparently and ethically, the general agreement may dissolve if that organization is struggling and is in dire need of market research that would reveal new names of qualified, wealthy donors.

Justin Ware, a marketing leader in the nonprofit industry, suggested that organizations should be transparent about what marketing research tools they use. | Anna Seacat | Socially Minded Marketing

Justin Ware, a marketing leader in the nonprofit industry, suggested that organizations should be transparent about what marketing research tools they use. | Anna Seacat | Socially Minded Marketing

In this situation, two grounded arguments could be presented in favor of paying for a market research tool like Relationship Science.  First, the organization would be acquiring the data in a completely legal manner via a technology that scrapes completely public data.  Second most people are becoming more accepting of the fact that, by actively participating in new media, they have “created almost a new kind of permission in society to be connected” to strangers (Agresta & Bough, 2011, p. 70).  If one agrees with this logic, it would be easy to explain that, because details of our private lives have been digitized, and because we knowingly participate in social sharing, society has been reshaped, and the rules of how we connect to each other have been rewritten.

Justin Ware, an advocate of transparent philanthropy and a consultant for nonprofits at Bentz Whaley Flessner, explained that his agency sees so much value in social media mining that it will soon be launching its own market research tool for clients.  Ware suggested that nonprofits can employ these tools with a clear conscience as long as the organization keeps transparency as a business objective.  He explained, “I would suggest the key is doing nothing in secret.  Let your donors know how you’re obtaining and using their data and respectfully listen to their feedback” (Personal communication, April 16, 2014).  Consequently, it could be argued that a nonprofit hiring Relationship Science is wisely participating in the new world of market research and can do so ethically as long as it discloses its use of the tool to its stakeholders.

 

Summary

Nevertheless, let’s not forget that when market research crosses over into social engineering, it makes its way on to the cover of magazines that describes it as “The Next Scary Thing.”  While there is great value in a nonprofit using a one-click method to identify their most qualified leads and hence being able to make better marketing decisions, it should consider whether it can defend itself in the public marketplace for doing so.

 

References

 

Agresta, S. & Bough B. B. (2011). Perspectives on Social Media Marketing. Boston, MA: Cengage Learning.

 

Bowie, N. E., Klein, T. A., Laczniak, G. R., & Murphy, P. E.  (2005). Ethical Marketing: Basic

 

Ethics in Action. Upper Saddle River, NJ: Pearson Prentice Hall.

 

Lindsay, G. (2014, April). Doctor Whom: If Business Really is all about Relationships, This

 

Guy’s got it Down to a Science. Inc, 36 (3), 84-88, 118.

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Ethan McCarty

Digital strategy | Social business | People-centric biznology

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