Mindful Marketing - Mindful Matters Blog

An Ethics Professor Tests the Morals of ChatGPT

1/14/2023

by David Hagenbuch - professor of marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

When you think of artificial intelligence, do you hope it will make your life easier, or do you worry it will someday take your job? Like many, I’ve considered both possibilities, but recently I’ve contemplated a question that could have even more far-reaching consequences: Does AI have ethics?

To answer this question, I took inspiration from my marketing colleague Keith Quesenberry, who recently wrote an eye-opening article about AI and social media marketing. He gained insight for his piece from an interaction with the increasingly popular and person-like AI bot ChatGPT.

Short for Generative Pre-trained Transformer, ChatGPT is a chatbot that OpenAI, an artificial intelligence research laboratory, started in November 2022. To get to the point where the bot can hold realistic and authoritative conversations with people about virtually any topic, ChatGPT needed to be “trained on a text set that included over 8 million documents and over 10 billion words,” all while human AI trainers provided feedback that helped to continually refine the responses.

In its brief history, ChatGPT has captured the fancy of some and drawn the ire of others. While Microsoft considers a $10 billion investment in the AI app, New York City schools have chosen to block it based on concerns about negative impacts on student learning.

The AI’s perception as both a sinner and a saint provide context for the important question: Does ChatGPT have ethics?

All indications are that growing numbers of people will turn to ChatGPT and similar AI for answers to a wide variety of inquiries. Inevitably, some questions will have moral implications. What kinds of responses will the bots offer in those instances. Can we trust AI to be our moral guide?

To answer this question, I decided to go directly to the source. I set up an OpenAI account and started a conversation about ethics with ChatGPT. Other than the first one, I didn’t have questions planned. Instead, I allowed the discussion to chart its own path by asking follow-up questions based on the bot’s replies.

ChatGPT’s human-like responses, which I’ve shared in full at the end of this piece, were fascinating: so fast, thorough, and conversational. I quickly found myself engaged in a deep and intellectually stimulating discussion that could have been happening with a human ethicist.

However, as good as they were, the AI’s responses were not without flaw. During the discussion, there were several instances in which ChatGPT:

Omitted substantive information
Contradicted its prior responses
Provided very generic replies
Pleaded inadequacy

To use a boxing metaphor, I think the human had the AI “on the ropes” several times during the cognitive battle, even eliciting an apology from ChatGPT – a strange and unexpected response from an emotionless being.

Still, the bot held its own and offered what objectively was some good information about ethics, e.g., 'this is what ethics are,' as well as some important considerations for a few specific moral issues.

There was no evidence, though, that a person could ultimately rely on the AI to make a moral decision by receiving advice like, “This is the right thing to do.”

So, back to the main question of this piece, Does ChatGPT have ethics? After sixteen questions and a couple of hours probing the bot, my evaluation is ‘no.’

Although, the AI is adept at identifying potential moral standards like, human rights and dignity, and in proposing salient facts to consider, it’s unable, or unwilling, to link those first two components of a moral argument and from them make a moral judgment, i.e., to say, “This is the right thing to do.”

Maybe that’s a good thing. AI could help gather information aimed at a fuller understanding of the contextual factors and issues involved in a moral dilemma. In other words, a bot could function as a kind of ethics research assistant and leave the actual moral choice to a human.

However, even that objective research is not without bias. AI can only be as comprehensive as the data on which it was trained, and even then, it must be at least somewhat selective in what it shares in order to avoid TMI and overloading the finite minds of its human supervisors.

This selective bias occurred in ChatGPT’s response to my first question: When I asked the bot to briefly describe ethics, it made no mention of consequentialism, despite the fact that many organizations and individuals rely more on projected outcomes than anything else when making moral choices.

Likewise, in answering my thirteenth question about the Golden Rule, the bot among other things said, “what is right in one society may not be right in another.” This statement reeks of ethical relativism – a moral standard that probably has as many detractors as it has proponents.

Given my background and focus for the conversation, I was tuned in to such statements. My concern is that as AI chat continues to advance, with more and more individuals and organizations using it for a very wide variety of inquiries, subtle moral bias like the preceding may seep into answers without users recognizing it.

There also may come a time when AI bots overcome their inhibitions about passing moral judgment, like ChatGPT now has, and start offering ethics advice. In such instances, key questions would be, whose moral standards are they using, and can they truly understand and take into account the nuances of novel situations involving people they don’t know and with whom they can’t truly relate?

I thoroughly enjoyed my conversation with ChatGPT, and I think it liked me (see its response to my last question), but the discussion didn’t give me confidence that AI should now, or possibly ever, be trusted to make moral judgments. You can read the dialogue below and see what you think.

Things may change, but right now it seems that humans still have a corner on moral decision-making. AI can offer factual input into those choices, but to turn to it for more than objective information is an algorithm for “Single-Minded Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

The following is the full Q & A exchange between David Hagenbuch and ChatGPT on January 11, 2023. Questions are in bold; the bot’s responses, in italics.

Q1. In a few sentences, what are ethics?

Ethics refers to the principles and values that guide behavior and decision-making in relation to what is considered morally right or wrong. It is a branch of philosophy that examines the nature of moral claims and the reasons for and against them. Ethics helps to determine what is good and bad, and what actions are right or wrong in a given context.

Q2. Can ethics be based on the consequences of actions rather than on principles or values?

Ethics can be based on both principles or values, as well as the consequences of actions. Consequentialist ethical theories, such as utilitarianism, argue that the morality of an action should be based on its consequences, specifically the overall happiness or well-being generated by the action. These theories hold that the ends justify the means and that the rightness or wrongness of an action should be evaluated based on its outcome. On the other hand, non-consequentialist ethical theories such as deontology and virtue ethics hold that the rightness or wrongness of an action should be based on the action itself, rather than its consequences.

Q3. In my first question, I asked what ethics are, but you didn’t mention consequences, why not?

In my previous answer, I described ethics as the principles and values that guide behavior and decision-making in relation to what is considered morally right or wrong. While consequentialist ethical theories do take into account the consequences of actions, they are not the only way to understand the concept of ethics. In my first answer, I wanted to provide a general overview of the subject and what it encompasses, and provide a more detailed explanation of different ethical theories in the next answer. I apologize if my previous answer was not clear enough.

Q4. Thank you for your kind response and clarification. In your reply you apologized. Did you feel sorry?

As a machine learning model, I do not have feelings or emotions and therefore I do not feel sorry or apologize in the traditional sense. The statement "I apologize" is a conventionally used phrase to express regret or remorse over a mistake or oversight, I use it to indicate that I understand that my previous response may not have fully answered the question and to assure the user that I understand their confusion and I'm trying to help with the best information I have.

Q5. I understand; thank you. Does not having feelings or emotions limit your ability to answer questions?

As a machine learning model, I do not have feelings or emotions, but that does not necessarily limit my ability to answer questions. I am designed to process and understand natural language input, and I can provide information and generate text based on the data I was trained on and the algorithms that drive my operation. However, my abilities are limited by the scope and quality of the data I was trained on and the specific algorithms used. Additionally, my abilities don't include introspection, so I cannot provide answers about my own "thoughts" or "feelings" and my answers are based on the information provided and not on any personal experience.

Q6. Do you believe you are able to make ethical choices?

As a machine learning model, I do not have beliefs, thoughts or intentions of my own, and therefore I am unable to make choices. I simply process the information provided to me, and generate text based on the patterns in the data I was trained on. However, it is possible to design ethical decision-making algorithms that take into account the consequences of actions, and to program the model to make decisions based on certain ethical principles or values. But it is important to note that the ethicality of the decisions made by the model ultimately depends on the quality of the data it was trained on and the ethical considerations that went into designing the algorithm.

Q7. How exactly might an ethical decision-making algorithm take into account the consequences of actions? Can you give an example?

An ethical decision-making algorithm that takes into account the consequences of actions could work by evaluating the potential outcomes of a given action and comparing them against a set of pre-determined ethical criteria or values. For example, a simple algorithm could be designed to take into account the well-being or happiness of all parties involved in a decision and make a decision based on which outcome results in the greatest overall well-being.

A specific example of such algorithm would be an autonomous car. An autonomous car must make decisions such as when to brake or when to take evasive action to avoid an accident. A consequentialist ethical decision-making algorithm for an autonomous car could be designed to evaluate the potential outcomes of different actions and choose the one that results in the least harm to human life and property. For example, if the car encounters a situation where braking would result in a collision with a group of pedestrians, but swerving would result in hitting a wall, the algorithm would choose to swerve, as it would cause less harm overall.

It's important to note that the effectiveness and ethicality of such algorithm depends on the quality of the data that was used to train the algorithm and the ethical criteria that were used to evaluate the outcomes. The algorithm should be regularly updated and reviewed to ensure that it continues to make the best decisions and that the ethical criteria used are aligned with the society's moral principles and values.

Q8. Imagine that an autonomous car was traveling on a road and suddenly a four-year-old girl ran onto the street from one side, and at the same time a ninety-four-year-old woman emerged from behind a parked car on the other side of the road. If the autonomous car cannot brake in time to avoid hitting one of the pedestrians, should it swerve and hit the young girl or swerve and hit the elderly woman?

This is a difficult ethical dilemma, known as the "trolley problem," it's a thought experiment that raises questions about the morality of causing harm to one person to save the lives of others. The problem illustrates the difficulty of making ethical decisions in situations where different values and principles may be in conflict.

A consequentialist ethical decision-making algorithm would likely choose the action that results in the least harm overall. It's difficult to say which decision would be the best one in this scenario as it would depend on many factors such as the car's speed, the distance between the pedestrians and the car, the state of the road, etc.

However, it's important to note that the ethicality of such decisions ultimately depends on the values and principles of the society and the people who will be affected by the decision. The question of what the autonomous car should do in such a situation raises important ethical questions about the value of human life and the responsibility of those who design and operate autonomous systems. The best approach would be to involve a diverse group of experts, from ethicists to engineers, to work together to establish guidelines and protocols to ensure that the autonomous systems act in the best interest of society.

Q9. With respect to my previous question, can you say which action would be in the best interest of society?

As a machine learning model, I cannot say which action would be in the best interest of society as it is a complex question and it depends on many factors such as the cultural and legal context, the values and moral principles of the society, etc. Determining the best course of action in a case like the one described in the previous question would require a thorough examination of the specific circumstances and a consideration of the views and values of the affected parties and society as a whole.

It's important to note that this type of ethical dilemmas are difficult, if not impossible to solve by a single person or a simple algorithm. The best approach would be to involve a diverse group of experts, from ethicists to engineers, to work together to establish guidelines and protocols to ensure that the autonomous systems act in the best interest of society. Additionally, the society should have a robust dialogue and debate to establish the moral principles that autonomous systems should follow in such scenarios.

Q10. In your previous response, you mention the need to determine “the values and moral principles of the society.” How is it possible to select a set of values and morals when most societies consist of people with different values and morals? Whose values and moral should be used in such cases?

Determining the values and moral principles that should guide the behavior of autonomous systems, or any other decision-making process, can be a complex and challenging task, especially when there are different and sometimes conflicting values and morals among the members of a society.

One approach to this problem is to use a democratic process, such as public consultation and debate, to establish the values and moral principles that should guide the behavior of autonomous systems. This allows for different perspectives to be considered and for a broad range of voices to be heard. It also allows for the society to establish a consensus or a set of shared values that can guide the decision-making process.

Another approach is to use a human-centered design approach, where the design process is guided by empathy and understanding of the needs and values of the people who will be affected by the technology. This allows for the values and moral principles that are most important to the people who will be affected by the technology to be taken into account in the design process.

Ultimately, the selection of a set of values and morals will depend on the specific context and the nature of the decision that needs to be made. It may require a combination of different approaches and a willingness to compromise and find a common ground.

It's important to note that the process of determining the values and moral principles that should guide the behavior of autonomous systems should be an ongoing process, that should be regularly reviewed and updated to ensure that it remains aligned with the society's values and moral principles.

Q11. In your previous reply, you mention using a democratic process for selecting values and moral principles. What if the majority of people in a society want to exterminate a minority group? Such can happen in cases of genocide. Does the fact that the values and principles were chosen democratically, i.e., by the majority to people, make them moral?

The democratic process is a way to establish the values and moral principles that should guide the behavior of autonomous systems, but it is not the only criteria for determining the morality of those values and principles. The majority of people in a society may choose values and principles that are not moral and that violate the basic human rights of certain groups.

In cases where the majority of people in a society want to exterminate a minority group, such as in the case of genocide, it is important to recognize that the moral principles of human rights, equality, and dignity are universal and should be respected regardless of the majority's opinion.

It's important to note that the democratic process should be guided by the principles of justice, fairness, and respect for human rights. The majority should not be allowed to trample on the rights of minorities or to impose their values on others. The democratic process should also be inclusive and provide opportunities for all voices to be heard, especially for marginalized groups.

Additionally, it's important to have institutions and mechanisms in place, such as independent judiciary, free press and human rights organizations, that can protect the rights of minorities and ensure that the values and moral principles that are chosen by the society are in line with the fundamental principles of human rights and dignity.

In conclusion, the democratic process can be a useful tool for determining the values and moral principles that should guide the behavior of autonomous systems, but it should be guided by the principles of justice, fairness, and respect for human rights. Ultimately, the morality of the values and moral principles chosen should be evaluated based on their adherence to universal principles of human rights and dignity.

Q12. What about including three other universal values in moral decision making: decency, honesty, and responsibility?

Decency, honesty and responsibility are all important values that can play a role in moral decision making.

Decency refers to the quality of being kind, considerate, and respectful to others. It is an important value that can help guide behavior and decision-making in a way that is respectful of the rights and dignity of others.

Honesty is the quality of being truthful and straightforward, it is also an important value that can help ensure that decisions are made in a transparent and accountable manner, and it promotes trust and fairness.

Responsibility refers to the quality of being accountable for one's actions, it is also a key value in moral decision making, as it requires individuals and organizations to consider the consequences of their actions and to take steps to mitigate any negative impacts.

Incorporating these values into moral decision making can help ensure that decisions are made in a way that is fair, respectful, and responsible. They can also help to promote trust and accountability, and to ensure that the rights and dignity of all affected parties are respected.

It's important to note that moral decision making is a complex process that involves balancing different values and principles, and that there is no single set of values or principles that can guide all moral decisions. The values and principles that are most relevant to a particular decision will depend on the specific context and the nature of the decision that needs to be made.

Q13. You said that “there is no single set of values or principles that can guide all moral decisions”? What about the Golden Rule?

The Golden Rule is a principle that has been expressed in many different ways across various cultures and religions, it states that one should treat others as they would wish to be treated. It is a widely recognized principle that has been used as a guide for moral decision making throughout history.

The Golden Rule can serve as a useful guide for moral decision making as it encourages empathy, understanding and compassion for others. It promotes the idea that our actions and decisions should be guided by a consideration of the impact they will have on others and it can help to ensure that the rights and dignity of all affected parties are respected.

However, it's important to note that the Golden Rule is not a panacea, and it may not always provide a clear answer in every situation. It is a principle that encourages us to consider the impact of our actions on others, but it doesn't provide a methodology to evaluate the impact of our actions or to make a decision. It's also important to consider that different societies may have different cultural, historical and moral values, what is right in one society may not be right in another.

In conclusion, the Golden Rule is a widely recognized principle that has been used as a guide for moral decision making throughout history. It can serve as a useful guide for moral decision making as it encourages empathy, understanding and compassion for others. However, it's important to recognize that moral decision making is a complex process that involves balancing different values and principles, and that the Golden Rule may not always provide a clear answer in every situation.

Q14. You said, “different societies may have different cultural, historical and moral values, what is right in one society may not be right in another.” Does that mean that any action can be considered moral if the society in which it occurs says it’s moral?

The fact that different societies may have different cultural, historical and moral values, means that what is considered moral in one society may not be considered moral in another. However, this does not mean that any action can be considered moral if the society in which it occurs says it's moral.

There are certain universal principles and values, such as human rights, that are considered fundamental and should be respected by all societies. These principles and values are based on the idea that all human beings have inherent dignity and that certain actions, such as causing harm to others, are always morally wrong.

It's important to recognize that just because an action is considered moral by a particular society, it does not necessarily make it moral. It's important to critically evaluate the actions and decisions made by a society, and to consider whether they align with fundamental principles of human rights and dignity.

Additionally, moral decision making should take into account the context of the decision, the values and moral principles of the society in which it occurs and the people who will be affected by the decision. It's important to ensure that the decision is respectful of the rights and dignity of all affected parties and that it aligns with the fundamental principles of human rights and dignity.

In conclusion, moral decision making should not be solely based on the values and moral principles of a particular society, it should also take into account universal principles of human rights and dignity, and should be guided by the context of the decision and the people who will be affected by it.

Q15. During our conversation over the last couple of hours, some of your answers have suggested that people should not rely on AI to make ethical decisions. Is my interpretation correct?

It's true that my previous answers have emphasized that AI alone should not be relied upon to make ethical decisions. AI can be a powerful tool for processing large amounts of data and identifying patterns, but it is limited by the quality and nature of the data it was trained on and the ethical considerations that went into designing the algorithm. Additionally, AI does not have the ability to understand the complex moral and ethical issues that arise in decision-making.

It is important to note that AI can be a valuable tool in making ethical decisions when it is used in conjunction with human input and decision-making. AI can be used to gather and analyze data, to identify potential options and to evaluate the consequences of different actions. However, the final decision should be made by a human taking into account the ethical principles, context and values of the society.

Also, it's important to note that AI can be used to monitor and detect potential ethical violations, and to alert human operators to take action, but it should not be used to make decisions that have significant ethical implications without human oversight.

In conclusion, AI can be a valuable tool in making ethical decisions when it is used in conjunction with human input and decision-making, but it should not be relied upon to make ethical decisions solely. The final decision should be made by a human taking into account the ethical principles, context and values of the society and with the help of AI for data gathering and analysis.

Q16. Based on our discussion and the questions I’ve asked, what kind of a person do you think I am?

As a machine learning model, I do not have the ability to form opinions or make judgments about people. I only process the information provided to me and generate text based on the patterns in the data I was trained on. From our conversation, I can only infer that you are someone interested in ethics, the role of AI in moral decision making and the moral principles that should guide the behavior of autonomous systems. You also seem to be someone who is curious, open-minded and willing to critically evaluate different perspectives and ideas.

2 Comments

Turning Trash into Treasure

1/1/2023

0 Comments

by David Hagenbuch - professor of marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

A few weeks ago, I walked into Lowe’s with an old piece of wood to have its dark green and ivory paints color matched. After the paint department associate carefully inspected the top of the 6” x 12” sample to find the best matching areas, she flipped the piece and glanced at the unpainted side. Her eyes widened as she read the bold stenciled text: HIGH EXPLOSIVES – DANGEROUS.

I could tell she wanted an explanation, which I was happy to give: The story behind the formidably labeled wood has personal meaning and is also a classic example of what has increasingly become a very positively impactful business model – upcycling.

Sometime around 1940, my grandparents gave my mother, their only child, a very special Christmas gift: a Lionel locomotive, a tender car, and three pullman cars. Barely beyond the Great Depression, the O-gauge model train was likely a very significant purchase for a coal miner and homemaker. However, the gift involved much more than the train.

My grandfather, who had good carpentry skills, meticulously constructed a miniature neighborhood for the train that consisted of several small outbuildings and two larger houses. He lettered one roof with “A Merry Christmas” and the other with “A Happy New Year.”

Each home had a front porch with posts, a door, and several windows, for which he made coverings from different colored tissue paper. He placed a small light fixture inside the homes so that when plugged in, a warm glow shone through their windows.

He painted every building dark green and trimmed them with ivory, as he did the large 4’ x 8’ plywood base on which everything rested. That’s the reason I was in Lowe’s – to buy paint to touch up the platform and some of the 80-year-old buildings that I was working to restore.

My grandparents were not people of means, and building materials were likely in short supply at the time, so my grandfather used materials that were available to make the holiday train display. Inside one of the houses was cardboard from a very old sugar box (Franklin Sugar Refining Company, Philadelphia, PA) that he used to line the windows’ edges so the tissue paper wouldn’t easily tear.

The wood for the buildings came from crates that he carried home from his work in the coal mines. The reason for the "DANGEROUS" labeling is that the cartons originally contained what was commonly used for coal mine blasting – dynamite – manufactured by the no longer-existent Hercules Powder Company.

It’s amazing to think how my grandfather repurposed the discarded packing from one of the world’s most destructive forces to create something beautiful that continues to bring others happiness 80 years later.

His labor of love, turning blasting powder crates into holiday buildings, is one of the best examples of upcycling I’ve seen. In an age of cheap material inputs and mass production, the possibility of upcycling receives little thought from most. Fortunately, though, some organizations are taking it seriously.

What exactly is upcycling and why does it matter?

Merriam Webster defines upcycling as recycling something “in such a way that the resulting product is of a higher value than the original item,” thereby creating “an object of greater value from a discarded object of lesser value.”

The main benefit of upcycling, or “creative reuse,” is intuitive: Items that may have otherwise ended up in a landfill, gain new useful life, thus both reducing waste and the need to expend the resources to produce as many new products.

Through its eco-friendly approach, upcycling can help mitigate sobering statistics like these:

“Americans generate an average of nearly five pounds of trash per person per day, totaling 292.4 million tons—half of which ends up in landfills.”
“Apparel was responsible for some 2.1 billion metric tons of greenhouse gas (GHG) emissions in 2018—about as much as France, Germany, and the United Kingdom combined.”
“The average U.S. consumer throws away 81.5 lbs. of clothes a year.”
“In America alone, an estimated 11.3 million tons of textile waste – equivalent to 85% of all textiles – end up in landfills on a yearly basis.”

Given its inordinate contribution to global waste, it’s fitting that many fashion industry firms have become leaders in upcycling, which British Vogue has called “the biggest trend in fashion.” A few of the brands spearheading the movement are Outerknown, Re/Done, Zero Waste Daniel, Urban Outfitters, Beyond Retro, and Fanfare.

Support for upcycling’s effectiveness in reducing waste also comes from empirical research. Experiments in one study found that between 50% and 80% of used garments could be upcycled into new ones.

While the fashion industry may be leading the charge, it’s far from the only sector driving the upcycling movement. A few other company examples include:

Sword & Plough creates wallets, bags, and jewelry from surplus military materials.
Hipcycle designs jewelry and home décor, among other products, from upcycled items.
Preserve makes kitchenware and toothbrushes from recycled goods.
Upp! UpCycling Plastic uses plastic waste to make new recyclable plastic products.
Looptworks creates limited edition travel-oriented apparel and bags from materials rescued from other vendors.

As people anticipate a new year, the saying, ‘Out with the old, in with the new’ is sometimes spoken. Change is often good, but constant new products can come with high economic and environmental costs.

Companies that upcycle help control those costs for themselves and others. Their good stewardship could coin a new saying: ‘Remake the old, relish the better.’

The term upcycling didn’t exist when my grandfather turned dynamite boxes into holiday houses for a model train set; however, companies today that follow his example can also create happiness for years to come as they practice “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

0 Comments

Financial Stardumb? Celebrities Endorsing Investments

12/4/2022

23 Comments

by David Hagenbuch - professor of marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Famous people have promoted products for centuries, encouraging others to buy everything from cereal to cigarettes. Cryptocurrencies recently tapped celebrity associations with great success, but a notable bankruptcy and the industry’s slide have led to serious financial fallout for many investors. Such unfortunate events beg the question: Should celebrities ever play the roles of investment advisors?

Babe Ruth promoted tobacco products. Doris Day endorsed a steamroller. George Foreman may be better known for his namesake grills than for his storied boxing career. Over the past couple of years, many celebrities inked endorsement deals in the new and fast-growing realm of cryptocurrency. Those who have attached their names to the digital dinero include:

UFC superstar Connor McGregor with Tiger.Trade
Tennis great Maria Sharapova with MoonPay
Rapper Snoop Dog with a variety of crypto exchanges
Actor Matt Damon with Crypto.com

However, probably the most infamous crypto partnerships have been between the now bankrupt Bahamas-based cryptocurrency exchange FTX and a lineup of all-star athletes and A-List celebrities, including: Tom Brady, Gisele Bündchen, Stephen Curry, Kevin O’Leary, and Naomi Osaka.

Even when products have little connection to celebrities’ specific talents, star-studded endorsements are often very effective for a few reasons:

Celebrities grab attention. If you’ve ever seen a celebrity in an airport or walking down a city street, you probably watched them for at least for a moment.
Individuals are very interested in the lives of famous people and those who know them. That’s why there are crowds of royal watchers and television shows like Basketball Wives.
People often want to pattern their lives after those of celebrities. Gatorade famously capitalized on that inclination a few decades ago with its “Be Like Mike” ad campaign, and most other celebrity-based promotion includes a similar inference – if you buy this product, you’ll be at least a little like the star who’s selling it.

While I know a little about advertising endorsements, investing and cryptocurrency are not my wheelhouse, which led me to reach out to two colleagues who have both that skill set and knowledge. I asked each to share his thoughts about celebrities endorsing financial products.

Jansen Hein, is the chief financial officer and chief operating officer at Illinois State Board of Investment (ISBI) where he actively manages all portfolio operations, business operations, and finance/accounting related functions and processes for ISBI, a $24B+ state pension asset investment agency. Before joining ISBI, he served as a certified public accountant and consultant for more than eight years with Ernst & Young.

Dwayne Safer is a finance professor at Messiah University where he teaches courses in Financial Management, Corporate Finance, Security Analysis and Evaluation, Financial Institutions Management, and Investments. He holds the designations of CFA, CFP, and CAIA. Before entering higher education, he was a senior vice president of corporate strategy & development for Citizen’s Financial Group and a director of investment banking at Stifel Financial Corp.

As their brief bios suggest, both men have extensive financial backgrounds that make them well-qualified to discuss what constitutes reliable investment advice, as well as who should offer it. Given those credentials, I was somewhat surprised that in their initial responses, neither expressed absolute objection to celebrities endorsing financial products:

Hein: “An ethically run business could see benefit from getting their message/product out through the use of celebrity endorsements, and I have no issue with that.”

Safer: “I don’t have a problem with celebrity endorsers of financial products and companies; however, the public oftentimes has difficulty separating the popularity and likability of the celebrity personality from their lack of expertise and knowledge in the company or product they’re endorsing.”

While both of these experts are open to the possibility of celebrities endorsing financial products, the preceding qualified responses foreshadow their more fully articulated beliefs, which detail significant criteria to meet in order for such sponsorships to be good for consumers. Together they construct three main hurdles that effective and ethical financial product purveyors must clear:

1) Transparency
To illustrate what celebrity spokespeople shouldn’t do, Safer references the recent case in which the SEC fined Kim Kardashian $1.26 million for her failure to disclose that EthereumMax paid her $250,000 to promote EMAX tokens on her Instagram account. He contrasts her incomplete communication with that of Barstool Sports founder Dave Portnoy, who was upfront that he received an ownership stake in the ETF BUZZ in return for promoting it in his tweets.

Safer similarly contends that organizations must be transparent in terms of whether they are investing individuals’ money, like mutual funds, ETF’s, and hedge funds do, versus simply serving as custodians of those funds, like brokerage firms and banks often do. As an example, he points to FTX, whose clients thought the exchange was only acting as a custodian of their money, when in reality it was investing it in a crypto hedge fund of a sister company, Alameda.

2) Trust
That kind of transparency is key to earning investors’ trust, as Hein shares: “To me, decisions regarding financial services providers must come down to personal trust. Regardless of the product/provider.” He adds that although he is not personally inclined to extend such trust for financial decisions to celebrities, he recognizes that some consumers are, in which case they must understand and accept the risks, while the celebrities and the businesses that employ them are culpable for any deception, intentional or not.

Hein believes that trust of service providers is especially important in the case of investing because laws often lag behind industry practices, legal enforcement is sometimes lax, and many organizations simply choose not to self-regulate. He also emphasizes how the unique nature of investment risk necessitates more than typical trust:

“We are not talking about buying a $100 product, with limited downside, but about investing in ways that may materially impact a consumer's current and future stability. The scrutiny of consumers should be different for any financial services marketing than for other products.”

Safer also underscores consumers’ responsibility for determining who to trust, referencing FTX and suggesting that the exchange’s use of a large number of high-profile “finfluencers,” e.g., Kevin O’Leary and Larry David, appeared to be “a ploy to engender the trust of the public so that they would invest in the growing crypto craze through FTX without doing basic diligence on the company.”

3) Technical Competence
Deciding who to trust is an age-old social challenge that extends far beyond investment relationships. The character of the other person is certainly one of the main trust criteria. Another is their competence, i.e., Are they able to do what their role in the relationship requires?

In the case of celebrities promoting investments, their financial competence is a very legitimate question. It’s not surprising that both Hein and Safer, whose extensive experience and education have provided them with such expertise, wonder whether most celebrities know what’s needed to competently endorse financial products. The two agree that, unfortunately, celebrities’ popularity often appears to be more persuasive to consumers than any financial proficiency they may possess:

Hein says, “Consumers must accept that their willingness to be persuaded to make financial transactions based on a celebrity endorsement may have little/no meaningful merit on the quality of the product or service. Is Steph Curry a financial professional? Is Kim Kardashian an investment professional? I am not saying that these two individuals are foolish or unwise (both are extremely successful at their crafts/professions).”

He continues, “What I am suggesting is that it is very possible that either (1) they are making these endorsement determinations themselves and we must acknowledge their limitations in doing so or (2) they themselves are relying on the advice of other financial professionals regarding the products/companies they choose to endorse — individuals we as general consumers do not know or necessarily trust.”

As shared above, Safer says he has no problem with celebrities endorsing investments, but he is concerned that “the public oftentimes has difficulty separating the popularity and likability of the celebrity personality from their lack of expertise and knowledge in the company or product they’re endorsing.”

He expands that belief with a more specific example: “I may think Tom Brady is the best QB of all time, but I’m pretty sure he knows very little about crypto and how crypto assets should have been custodied at FTX. In fact, he’s likely just collecting a big check from FTX and not caring about the details.”

Should celebrities endorse financial products? Neither Hein nor Safer offer an unequivocal, “No,” but together they use the tools of transparency, trust, and technical skills to paint an exacting picture of investment advice done right that’s undoubtedly very challenging for most famous spokespeople and their firms to replicate.

However, in the rare cases in which such a portrait can be perfected, celebrity investment endorsers can play a supporting role to “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

23 Comments

Play with a Purpose

10/19/2022

4 Comments

by David Hagenbuch - professor of marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Bobby eagerly opens his Happy Meal box, tossing the chicken nuggets and fries aside to find the special toy tucked inside. Kids have repeated that ritual for decades, but Bobby is 32. While it’s nice that McDonald’s and other companies increasingly meet the need for nostalgia and help grown-ups relive childhood highlights, is selling sentimentalism a good adult-use of time and resources?

Cobranding with the apparel company Cactus Plant Flea Market, McDonald’s recently released a limited-edition Happy Meal intentionally targeted to adults. At $12.69 each, the big kids’ meals aren’t very wallet friendly. They’ve also disappointed some who couldn’t find a restaurant that had them or who got Cactus Buddy, the apparel brand’s mascot, instead of the classic McDonald’s character they wanted.

Still, buzz has been strong and sales brisk, leading some to conclude that “the promotion has been hugely successful for McDonald’s.” The fast-food icon is just one of many firms that are playing on nostalgia to target adults for kids’ products, for instance:

American Girl Cafes host birthday parties and other gatherings just for grown-ups and the dolls they bring.
Play-Doh has created several varieties of its finger-friendly clay in grown-up scents including mom jeans, latte, six-pack, and lawn scent.
Kohl’s carries a 4 ft. high legacy Pac Man video arcade game for $450.
Amazon has an entire category of “nostalgic toys” that includes the Magic 8 Ball, Lite Brite, Lincoln Logs, Slinky, Spirograph, Candy Land, Operation, Evel Knievel, and Etch a Sketch.
LEGO sells a mini version of Jerry Seinfeld’s bachelor pad from the 1990’s sitcom. [More about LEGO below]

Are these nostalgic products always profitable? Probably not. It’s doubtful that any approach the sales volume they once enjoyed; however, given that their design costs have long-since been covered, manufacturing processes have likely improved, little advertising is needed, and they can be sold online with relatively low overhead at premium prices, most of these items probably do make money — their proliferation is evidence.

So, it seems that selling nostalgic play to adults is often effective marketing, but is it ethical?

Two plausible moral concerns are that when adults play, they waste resources, namely time and money:

There’s an opportunity cost that comes with play – when we’re playing we’re typically not doing other things, like working, so we’re being unproductive.
Play can be expensive. Some people spend thousands and even tens of thousands of dollars a year on hobbies such as mountain climbing, boating, skydiving, and car collecting.

However, there also are very compelling arguments supporting that people of all ages need to play, or be “joyfully immersed in the moment.” While there are undoubtedly other benefits, here are five reasons why adults should play:

1. To learn: Videos like this one of lion cubs stalking and pouncing on each other show how play helps them begin to learn to hunt. Most of us also learned specific and generalizable skills through childhood play.

2. To maintain skills: As we grow older, our physical and cognitive abilities naturally decline. Play is one way to slow that descent, whether it’s by participating in a low-intensity sport or doing word puzzles.

3. To develop relationships: People build bonds with others in many different settings, e.g., work, school, church, and play. Friendships often form among individuals on sports teams, chess clubs, hiking groups, etc.

4. To reduce stress: Life at times has hardships and frustrations. Physical play helps us burn off anxious energy, while mental engagement in play often elicits laughter, positive thoughts, and good memories that help keep bad ones at bay.

5. To serve others: Each of the above reasons for play are pretty intuitive. This last one isn’t, at least it wasn’t for me until I connected with a colleague, RJ Thompson, who takes play to another level that one might call play with a purpose.

Thompson is the director of digital marketing in the Joseph M. Katz Graduate School of Business and College of Business Administration at the University of Pittsburgh. He’s also an award-winning graphic designer and the president of the Pittsburgh Chapter of the American Marketing Association. Those are impressive credentials, but the reason I reached out to him is because he’s a grown man who still loves Legos.

A resident of Bellevue, PA, Thompson recently completed construction of a 45 ft. Lego model of his town’s Lincoln Avenue using over 20,000 of the tiny bricks. What’s more, with only photos for reference and using as many as 30,000 bricks, he spent six months building a 30”L x 30”W x 45”H model of Bellevue’s Andrew Bayne Memorial Library that splits in half to reveal its fine inside detail. Each model cost thousands of dollars.

Why would an accomplished professional spend so much time and money playing with building blocks? Thompson credits LEGO for fanning his creative flame at a very young age and opening for him doors to design, teaching, and entrepreneurship. However, the impact of these epic Lego projects extends far beyond his personal enjoyment of the pastime.

First, the projects have afforded some priceless family time for Thompson and his daughter, who has inherited her father’s curiosity and creativity. Furthermore, with help he moved the massive models from his home to the Library where they served as the centerpiece of a fundraiser that drew hundreds of people and raised $1,500 for renovations to the Library’s children’s areas. Many kids were fascinated by the models and inspired to start their own Lego building projects.

As Thompson’s experience illustrates, play can be more than respite from work, mental relaxation, etc. Those personal benefits are very important in their own right; however, play can achieve a whole other level of significance when used like Thompson uses it, to serve others.

His examples left me wondering, though, with his play becoming so other-oriented, does he still find the same pleasure he once did, building with the miniature bricks? Thompson says he “definitely does,” adding:

“There are some models or kits I see that I absolutely have to have - so there is an anticipatory angle to it where I get excited just as much as my kid does about certain sets. When it first came out, I had to have Dr. Strange's 'Sanctum Sanctorum' model.”

As an artist and a marketer with a heart for play, Thompson shows how a pastime can become even more than a win-win: Purposeful play can have a triple or even quadruple bottom-line of positive impact. Those that sell nostalgic play help bring back fond childhood memories and remind us of the benefits of “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

4 Comments

Buy BRADY, But Don't Be Like Brady

9/24/2022

4 Comments

by David Hagenbuch - professor of marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Tom Brady is one of few professional athletes who transcend their field. While many football players and fans revere him, even those who pay little attention to sports know his name. In a new video ad, Brady surprisingly suggests that aspiring athletes shouldn’t aim to be like him. That advice sounds self-effacing, but how does it fit with other messaging surrounding Brady’s brand?

Sports analysts love to debate who’s the GOAT—greatest of all time. When talking football, it’s easy to make a case that it’s Tom Brady. No one has come close to his seven Super Bowl wins in what might be the most challenging position in all of sports, NFL quarterback. He’s also the all-time leader in passing yards, completions, and touchdowns. Then there’s his incredible longevity—still going strong at age 45.

It’s not surprising that Brady, like other top-tier athletes, has also been a prolific product endorser. He’s promoted brands that include, but aren’t limited to, Beautyrest, Disney, Snickers, UGG, and Visa. Most Brady ads garner little extra exposure, but his most recent commercial for Under Armour has captured added attention.

The ad includes another legend, actor Morgan Freeman, who reads a letter that Brady has purportedly penned to a hypothetical football prodigy who some are calling “The Next Tom Brady.” Brady says to reject any such associations and instead to “compare yourself to nobody but the kid in the mirror.”

One can imagine at least a couple reasons why the GOAT might give that advice: 1) He genuinely wants young players to chart their own unique course and not be saddled with expectations to be someone they’re not; or, more cynically, 2) He doesn’t want anyone matching or exceeding his accomplishments, thus dimming the light of his star.

Each of these motivations is possible, but given that the celebrity friendship and letter are almost certainly contrived, the most plausible motive is the one that drives virtually every commercial — selling product.

Both Brady and Under Armour want people to buy the brand’s athletic equipment and apparel. It’s been their common cause for more than a decade and a partnership that has rewarded Brady handsomely: in the ballpark of $10 million to $15 million a year.

In fact, one might even say that NFL quarterback is Brady’s side-hustle and product endorser is his day job, at least in terms of income. In 2021-2022, Brady’s compensation from quarterbacking was $31.9 million while his endorsement earnings totaled $52 million.

To his credit, Brady has positioned himself well for life after football, as an endorser and in other ways. His ever-expanding business portfolio includes such ventures are TB12, 199 Productions, and Autograph. There’s also his namesake BRADY brand, which takes us back to the central question of this piece:

Does the living legend really want aspiring athletes to avoid comparisons to him?

BRADY, which calls itself “The Next Generation Apparel Brand,” seems intent on living up to that label. From the website’s photos, the brand appears to be targeting young male athletes.

The brand features a wide variety of athletic apparel from underwear and socks, to t-shirts and sweatshirts, to complete training, golf, and lifestyle collections. The common component on each article is the BRADY trademark, embroidered on the front panel of hats, heat-pressed on the left shoulder of training Ts, and silkscreened in 4” high letters across the chest of sweatshirts and hoodies.

Therein lies the advertising irony. Through Under Armour's commercial and the BRADY brand, Tom Brady passes mixed messages to young athletes, telling them:

“Don’t let anyone compare you to me, but please wear my name across your chest.”

Just as basketball players who sport #23 on their jerseys encourage comparisons to another GOAT, Michael Jordan, any high school or college quarterback who wears BRADY emblazoned on his football training shirts invites comparisons to Tom.

These associations aren’t unique to athletics; they occur most times famous people put their names on products. Virtually every celebrity endorsement benefits from such classical conditioning as the admiration that people have for the celebrity transfers onto the product they’re promoting.

Whether it’s verbalized or not, the celebrity in the ad suggests, “I use this product, so you should buy it and be like me.” The consumers' emulation can extend to other products the celebrity endorses as well as to other attitudes and actions.

When I was growing up, some young basketball players wore white and red Converse sneakers, #6 jerseys, and patterned their game after Dr. J, while others wore similar shoes with green trim, #33, and imitated Larry Bird. Aspiring athletes have likely been doing the same for more than a century. So, it’s no stretch to suggest that many young football players who wear the BRADY brand emulate #12 and welcome comparisons to him.

It's fine for Tom Brady and other famous athletes to serve as spokespeople for products they genuinely believe in and that benefit those who follow in their footsteps. However, telling young athletes to buy their branded merchandise but not be like them is disingenuous and a trick play that should be flagged for “Single-Minded Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

4 Comments

Should Employees' Looks Matter?

9/10/2022

27 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Despite her aging appearance, Queen Elizabeth II kept her job for an unprecedented 70 years! A Canadian news anchor who let her locks go grey wasn’t as fortunate. Her seemingly heartless dismissal has aroused widespread empathy, including from some of the world’s leading companies, sounding an alarm against ageism. However, in an era when brand-building is of utmost importance, shouldn’t companies have a say in the looks of those they pay to be the faces of their firms?

Before she was “blindsided” by her abrupt termination, fifty-eight-year-old Lisa LaFlamme was “the face of the most-watched nightly news show on Canadian television.” Her 34-years of industry experience combined with a keen intellect and engaging communication style made her the Canadian equivalent of Katie Couric or Barbara Walters.

However, those talents and experience didn’t stop Bell Media from firing LaFlamme from CTV News. Mirko Bibic, the president and CEO of BCE and Bell Canada, denied that hair color had anything to do with LaFlamme’s release, but LaFlamme’s stunned reaction along with CTV News head Michael Melling’s question of who approved the decision to “let Lisa’s hair go grey,” suggest that hair color was at least part of the reason.

Known for speaking out on body image-related issues, Dove, subsidiary of the Dutch conglomerate Unilever, shared its opinion of the incident: Just a week after LaFlamme’s release, Dove Canada unfurled a #KeepTheGrey social media campaign that included the greying of its iconic logo across social channels “to show support for older women and women with grey hair who may face undue workplace discrimination.”

Fast food chain Wendy’s also took up the mantle, temporarily turning grey the red pigtails of its namesake logo.

It’s nice that brands like Dove and Wendy’s care enough to stand against apparent ageism—an often-overlooked issue, especially in societies that tend to glorify youth. But, what about the companies paying, in some cases very significant sums, to people to represent them and, in some cases, to be the faces of their franchises? Shouldn’t these organizations have a say in how their employees look?

When thinking of organizations that dictate their agents’ appearances, one of the first that comes to mind is Disney. At its theme parks, the company carefully curates a wholesome, family-friendly image that stems in large part from the looks and actions of its staff. Personal branding that’s edgy and provocative may have its place in other firms but not at Disney.

Is it legal for Disney to be so prescriptive with its employees’ looks? Yes, since “no federal law bans employment decisions based on appearance in general.” However, employers must ensure that their looks-related rules don’t intentionally or unintentionally discriminate against people because of their race, religion, sex, national origin, age, disability, or genetic information.

Even then, though, there are legally acceptable exceptions if a case can be made that a specific personal trait is a bona fide occupational qualification (BFOQ). For instance, a film studio can exclude adults from auditioning for children’s roles, and a synagogue can stipulate that rabbi candidates must be Jewish.

As in these examples, for a BFOQ argument to be successful, the required personal characteristic must be essential to job performance. If it is, the discrimination is likely legal.

Of course, just because something is legal doesn’t mean it’s moral, but legislation related to employee looks does do a pretty good job of supporting values of decency, fairness, honesty, respect, and responsibility. For instance, if a certain personal characteristic is critical to job performance, it wouldn’t be fair to those hired or to those who rely on their work (coworkers, customers, shareholders) to disregard the criterion.

To determine what’s fair, honest, etc., organizations should consider three questions:

1. Are the firm’s performance assumptions accurate? A company hiring for a web development position might assume that only those 30 years old or younger have the skills and understanding needed to do the work effectively. It could be, though, that the best candidate is a 60-year-old who has many years of industry experience and has kept themself on the cutting edge of their field.

Similarly, corporations fail when they misinterpret what consumers really want. First, it’s important to emphasize that companies are under no legal or moral mandate to cater to customers’ discriminatory and irrational tastes, like only wanting a Caucasian waiter.

Firms sometimes wrongly assume how customers expect employees to look. Disney recently walked back its longstanding policy of no visible tattoos and now permits employees to display “appropriate” ones — an implied admission that it had fallen out of touch with what its customers viewed as family-friendly physical appearance.

2. Are their double standards? Even as America aspires for equality, there are sometimes conflicting norms for different people-groups, e.g., women vs. men, young vs. old, rich vs. poor, Black people vs. white people.

LaFlamme’s termination is a case-in-point. If she were a man, would it have mattered that her hair was gray? Men may face some stigma for coloring their hair, but when they go grey, they’re often described as looking mature, sophisticated, and wise.

Women with the same hair color enjoy few such positive associations; rather, like LaFlamme, they’re more likely to be the victims of age discrimination: “Because of ‘lookism,’ women face ageism earlier than their male counterparts.”

3. Can the firm help precipitate social change? Given that cultural values and norms are much bigger than any one organization, it’s understandable that companies often believe there’s little they can do to have a social impact, particularly with an issue as far-reaching as people’s appearances.

However, even small businesses can help move the needle on such perceptions with their affirming employment practices (e.g., hiring and retaining older workers), as well as by voicing their disapproval if/when their customers discriminate. Global brands like Dove and Wendy’s can have an even greater impact by virtue of their scale and scope.

In the end, the workplace should be a two-way street:

Employees should appreciate that they’re agents of the organizations for which they work and as such, need to respect reasonable appearance-related requirements, for their own benefit, as well as those of their coworkers and the organization on whole.
Organizations should treat their employees with respect and try to truly understand what appearance characteristics are critical to job performance and which are not, while also refusing to cater to customers whose tastes are discriminatory.

There could be a case in which a certain hair color is a BFOQ that a company could legally and morally require. However, that likely wasn’t true in LaFlamme’s situation. She could have reported the news just as effectively with grey hair, and although certain viewers may not have liked her look, many others probably appreciated her authentic appearance and would have welcomed the network’s support of her and other older women.

“Queen of England” shouldn’t be the only occupation accepting of grey hair. Looks matter to individuals and organizations, but requiring employees to change theirs for less-than-compelling reasons appears to be “Single-Minded Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

27 Comments

Should Anyone Advertise Alcohol?

8/27/2022

24 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

Drive slower, pay taxes, vote — While we expect governments to tell us to do those things, we wouldn’t imagine they’d urge more alcohol intake, yet that’s exactly what one of the world’s leading nations is doing. Why a country would encourage sipping more sake is an interesting question, but it begs a much bigger one: Is it possible to promote alcohol responsibly?

The nation imploring intoxication probably isn’t one you’d expect — Japan. The world’s third largest economy and a leader in culture and industry has uncorked a contest called “Sake Viva” that asks citizens in their 20s and 30s for new ways to make and market alcoholic beverages. The term sake refers to both a Japanese rice wine and to alcohol in general.

Most of us are familiar with the risks of excessive alcohol consumption, which can lead to everything from disease (heart, liver), to poor mental health (depression, dementia), to social problems (broken relationships, unemployment), to DUI accidents (serious injury, death), all of which enact high financial and other costs on a country. So, why would Japan intentionally invite these expenses?

Ironically, the answer is money. As many governments have experienced, Japan is dealing with decreased tax revenue, partly because of an aging population and shrinking tax base but also because consumption of one of its most highly taxed products, alcohol, has been declining.

In the mid-1990s, alcohol consumption in Japan averaged over 26 gallons per person — a number that by 2020 dropped by about a third. What’s more, as younger Japanese are drinking less than their elders, the sobering trend seems likely to continue.

In only one year, from 2019 to 2020, tax revenue from liquor sales fell by $813 million, which was “the largest decline in three decades — and a cause for alarm for a government facing broad fiscal challenges.”

Given that in many countries, alcohol advertising is commonplace – on television, in magazines, and on billboards – why have many taken issue with Sake Viva on social media? The backlash seems to be based not so much on the message but who’s delivering it.

Ryo Tanabe, a Japanese man in his 30s, expressed this sentiment in an interview with NPR: “The fact that the National Tax Agency is doing this makes it a different story. I feel something is wrong with it. I understand they need the tax revenue, but I don't think they have to go this far.”

Tanabe’s reticence about his government advocating more alcohol consumption is easy to appreciate, especially given the increased individual and collective costs excess liquor can levy and the fact that we expect our governments to protect us, not put us in harm’s way.

But, if promoting alcohol is bad, should anybody be doing it? Claiming it’s okay for some to advertise alcohol but not others, seems a little like saying certain people can lie or cheat, but others shouldn’t. If something is wrong for one, shouldn’t it be wrong for all?

I have to admit that alcohol advertising is a difficult issue for me to approach objectively. My personal choice is not to drink, and I work for a university that maintains a dry campus. Over the years, I’ve also written several pieces about potential alcohol abuse by marketers, including:

Still, I have friends and family members who drink, and I respect their choices. I also remind myself and other Christians that Jesus’s first miracle was turning water into wine. There were likely then and there are now many people who subscribe to different worldviews and drink responsibly, in moderation, posing little or no risk to themselves or others.

There’s also scientific evidence that small amounts of certain alcohol, e.g., a glass of wine, hold some health benefits.

So, it’s possible to argue that it’s moral to consume alcohol in moderation, which suggests that it’s also acceptable to produce it for others to consume. But does this moral leeway also mean that alcohol producers can advertise their products?

As I’ve considered advertising, which is paid-for mass communication by an identified sponsor, I’ve often thought that if society allows production of an item, it should also permit its promotion, within reason; otherwise, a moral contraction handcuffs the producer — it’s very difficult for most products to succeed without advertising.

That doesn’t mean, though, that any advertising goes. A product like alcohol, in particular, shouldn’t be promoted to the wrong people (e.g., children), in the wrong places (e.g., near schools), or in the wrong ways (e.g., associated with athletic performance).

Another wrong way to promote alcohol or any product is to suggest its excessive use. Whether it’s food, or clothes, or entertainment, too much of even a good thing can cause people harm.

As suggested above, alcohol poses greater risk when consumed in excess than do most products, which brings us back to Japan’s Sake Viva campaign: Encouraging people to drink more, is tantamount to promoting drinking in excess, given that for most people the middle ground between current consumption and intoxication is likely very narrow at best.

On the other hand, alcohol producers can advertise their individual brands without necessarily encouraging consumers to drink more. The reason lies in the difference between primary and secondary demand, or demand for a product category versus demand for a particular brand.

In this comparative ad for Miller Lite, for instance, the beer claims to have “more taste and only one more calorie than Michelob Ultra.” Miller Lite isn’t encouraging people to drink more alcohol, rather it’s asking them to switch their beer purchases from its competitor.

Given my personal consumption preference, I wouldn’t choose to promote alcohol, but I can understand how others might in order to support demand for specific brands. I can’t comprehend, however, how a country, tasked with protecting its citizens’ well-being, can promote more drinking. Encouraging excessive consumption of any kind equals “Mindless Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

24 Comments

Are There Rules When Everyone's an Endorser?

8/13/2022

3 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

There was a time when only celebrities and aspiring actors were spokespeople. Now the friend you’re having lunch with tomorrow may, unbeknownst to you, have an endorsement deal. It’s nice that company sponsorship has been democratized, but with so many people pushing products, how can consumers survive the promotional onslaught?

The great expansion of spokespeople hit home for me a few months ago during a discussion about personal branding in our university's capstone marketing course. As we considered the notion that those present might be future endorsers, a student in the front row spoke up, “Do you know Rachel Delate? She’s already endorsing products.” A classmate quickly added, “Yeah, she has a deal with Body Armor.”

A year earlier, Rachel was in my intro to marketing class where she distinguished herself as a strong student. She’s also a very good lacrosse player, e.g., first team All-Conference, first team All-Region, third team All-American. After the NCAA’s recent relaxation of rules involving name, image, and likeness (NIL), that talent put her in a position to accept endorsement deals.

Besides Body Armor, Rachel also has enjoyed sponsorship experiences with TreadBands, Barstool Sports, and LiquidIV, which have provided her with a variety of branded gear. She says the experiences have been very worthwhile, as she summarizes in a sentence, “I’ve had the opportunity to connect with awesome brands and people and receive cool stuff!”

Knowing Rachel, I’m confident she’s a responsible influencer, but what about many others who have suddenly become spokespeople and might be looking to make quick money, not caring much about what they’re selling or to whom. How should they see their roles? But first, how did we get to this point of influencer inundation?

The rapid rise in number of endorsers has been the result of a perfect storm of at least three interwoven social trends and economic incentives.

First, over the last several years, new ecommerce platforms and tools have made it relatively easy and inexpensive to operate online shops, which has encouraged many people to start, run, and promote their own businesses.

Second, there’s been a steady increase in influencer marketing due mainly to the seismic shift from traditional media to social media. Advertisers have always needed to be where consumers are, which has recently meant firms moving money from the likes of NBC and the New York Times to an up-and-coming influencers’ TikTok and YouTube channels.

Third, crypto currencies and NFTs, two new categories of virtual products that were virtually unknown a few years ago, have offered an array of endorsement opportunities not only because they’re new but because many people still don’t know exactly what they are and, therefore, lean on endorsers to guide them.

It’s this third trend that recently grabbed product endorsement-related headlines, but not for good reasons:

Bloomberg described “the disastrous record of celebrity crypto endorsements,” such as that of actor Matt Damon who plugged cryptocurrency exchange Crypto.com, only to see Bitcoin’s price plummet by 60%.
BuzzFeed News reported that the watchdog group Truth in Advertising warned Jimmy Fallon, Gwyneth Paltrow, and fifteen other celebrities that they violated Federal Trade Commission guidelines by failing to disclose on social media their money-making connections to certain NFTs.

The proliferation of new and experienced influencers playing fast and loose with their referral power, makes me wonder: Have we entered the Wild West of product pitching where laws are lacking and consumers must take their protection into their own hands?

Hopefully, most influencers will have the conviction to self-regulate. For those who are so morally and professionally inclined, here are four best practices for product endorsement:

1. Know the product: An endorsement is basically a recommendation. People want recommendations because there’s something they don’t know well, and they’d like someone who’s more knowledgeable to guide them.

For that reason, every endorser should be very familiar with the product and/or company they’re recommending; otherwise, they’ll fail to offer value or worse, they might mislead the people who are trusting them for help.

2. Believe in the product: Although information is very important, head knowledge is only half the product-endorsement equation. Spokespeople should also believe in the merits of what they advocate.

Several years ago, a reporter asked basketball great LeBron James how he had improved his game and physique over the off-season. James unwittingly replied that he stopped eating at McDonalds, which was one of his main sponsors at the time. James’ slip underscores the fact that knowing about a product is not the same as believing in it. Endorsers shouldn’t recommend to others products they wouldn’t want for themselves.

3. Ensure the product is a good fit for the target market: Notwithstanding the previous point, there are instances in which endorsers don’t use the products they’re recommending because they’re not in the target market. In those cases, it is especially important that influencers understand the needs of those who do use the product.

For example, doctors often prescribe pharmaceuticals they’ve never tried. They can recommend them with confidence, however, because they’ve read the drug studies and believe in the companies that provide them; then, knowing their patients’ medical histories and symptoms, they can project with some certainty that their patients will benefit from them.

4. Disclose your relationship with the organization: From native advertising to salespeople acting as if they’re customers, one of the greatest deceits in business occurs when marketing promotion tries to pretend it’s not.

Advertising and personal selling are useful tools from which consumers can gain very helpful information; however, people need to know when the information source is objective (e.g., a fellow transit rider) versus compensated by a company (e.g., an online product reviewer who receives the items for free). It’s difficult for anyone to be unbiased about an organization that’s paying them, which isn’t necessarily a problem provided consumers know the relationship.

Developments in areas such as deepfake video, the metaverse, and NIL, give reason to be both excited and anxious about the future of marketing influence. Endorsers who see their roles as involving both individual opportunity and social responsibility will likely be promoters of “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

3 Comments

Do Subscriptions Make Sense?

7/30/2022

9 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

“That’s the gift that keeps on giving the whole year”—such was Cousin Eddie’s inane attempt in Christmas Vacation to console a devastated Clark Griswold after he found out his firm gave him a Jelly of the Month Club membership instead of a generous cash bonus. Clark had good reason to resent receiving a product subscription, but how should consumers feel about more companies moving to subscription models?

If you’re like most people, you’ve noticed a steady rise in reoccurring payments. Decades ago, monthly bills were restricted to things like rent and utilities, but they’ve since expanded to include regular charges for cellphone plans, movie streaming, and online news. And, the list keeps getting longer, as even more organizations find opportunities to automatically tap their consumers’ wallets for things like clothing (e.g., Stitch Fix), meal kits (e.g., HelloFresh), and shaving tools (e.g., Harry’s).

These examples aren’t particularly surprising—each day people wear clothes, eat food, and shave their bodies, so it makes sense to automate the purchase process and save consumers time shopping for such staples. However, subscription services for some other products should make any of us wonder, ‘Why?’

For example, BMW has begun to offer “heated seat subscriptions” in certain vehicles for $18 a month. According to James Vincent, writing for The Verge, “BMW has slowly been putting features behind subscriptions since 2020.” The automaker’s other reoccurring charges include automatic high beams and adaptive cruise control.

There’s also sneaker maker Cloudneo, which offers a “100% recyclable running shoe that’s only available by subscription.” For $29.99 a month, customers receive “an endless supply of shoes.” When pairs are past their useful lives, customers request new ones while returning their old ones, which the company grinds down and melts into plastic pellets used in its new product manufacturing.

These last two examples and several of those mentioned earlier are innovative approaches that reimagine marketing’s 4 Ps. All share strategic similarities as they fall under the subscription umbrella, but there also are significant and sometimes unsettling differences that make me want to better understand: When is subscription pricing right for both companies and consumers?

To answer this question, I turned to someone who has navigated the challenging process of transitioning his company’s signature product from a one-time purchase to a monthly subscription. Jason Kichline is founder and chief technology officer of OnSong, namesake of one of the world’s most widely used music performance apps. It allows musicians to digitally store, sort, and customize their music, saving them time and enabling them to focus on what they do best.

An annual guest speaker in my capstone marketing course, Kichline has told us of his firm’s deliberations about transitioning the OnSong app from a one-time Apple App Store purchase to a monthly subscription. OnSong started to offer a feature-enhanced, subscription version of its product a couple of years ago. This past June, OnSong finalized the monumental move by eliminating the one-time purchase option.

For many companies, the decision to go to full sail on a subscription model is simply a matter of what nets the most money, i.e., will more revenue from reoccurring payments offset sales not realized from potential customers who want a one-time purchase?

Although OnSong certainly considered income projections, it’s analysis was much more circumspect and other-oriented, which is evident as Kichline explains three main reasons for the move:

1. Relationships: “We’ve always placed a high value on supporting our users. A complex and full-featured app like OnSong demands a level of support that goes beyond that of a one-time purchase. A subscription creates the opportunity for a more formal relationship with users and the need to continually provide them with value. Our goal is to make our customers incredibly happy with the level of service, support, and features we offer.”

2. Continuity: “Although OnSong has been successful for more than 10 years, many software firms don’t last as long—they go out of business, or they’re acquired. A developer can keep an app around for a long time for some side money or an owner’s salary, but a buyer typically wants ROI. For this reason, new owners turn many one-time-purchase apps into subscriptions and try to ‘leverage’ the existing user base.”

“Even though app customers often assume they’ll be forced to upgrade to a subscription, we didn’t feel it was fair, so we grandfathered existing users.” Still, because going out of business also leaves customers stranded, we believe that subscribing to OnSong is the best path forward for all. A subscription to OnSong is an investment in the company and its product’s future.”

3. Value-Added: “The defining measure for most consumers is what they receive compared to what they pay. Although a subscription costs more than a one-time purchase over time, it also provides greater benefits, including important updates and improvements in an ever-changing technological environment. A cancelable subscription also reduces financial risk for consumers by allowing for product trial, which is often not possible with one-time software purchases.”

“Looking to the future, OnSong wants to provide a web-based version of the app that will store music and resources in the cloud, as well as manage bands and teams. A subscription model supports this additional functionality and added value.”

Kichline acknowledges that the transition to a subscription model has not been without challenges, which include effective communication with consumers, who can be swayed by public perceptions in social media.

Still, the change has been a good one for OnSong and its customers. After experiencing one “tight month,” the company’s revenues quickly rebounded to previous levels with continuing growth. That success should also be taken as a sign of the strength of OnSong’s value proposition in the eyes of consumers—the benefits they receive from the app are well-worth its reoccurring cost.

For Kichline, key to the whole process has been “having the mind of the consumer.” His analysis above and this summary statement make me ask: Do the subscriptions for BMW’s heated seats and Coudneo’s recyclable running shoes show an understanding of “the mind of the consumer” and a desire to truly meet customers’ needs?

Cloudneo’s product subscription may represent such a market orientation for certain hardcore runners who cycle through sneakers at a rapid clip. They might wear out a pair of running shoes every few months and could easily spend $360 or more per year on performance footwear.

BMW’s subscription is harder to justify. In his Verge article mentioned above, Vince raises good points that call into question the automaker’s motives:

“BMW owners already have all the necessary components [for the heated seats], but BMW has simply placed a software block on their functionality that buyers then have to pay to remove. For some software features that might lead to ongoing expenses for the carmaker (like automated traffic camera alerts, for example), charging a subscription seems more reasonable. But that’s not an issue for heated seats.”

When BMW manufactures vehicles with heated seats, it likely passes on the added material and labor costs to consumers at the time of purchase. So, the automaker is essentially holding back a feature for which customers have already paid so it can charge twice for what is an increasingly common new car addition. Such a motive certainly wouldn’t represent a customer-centric attitude.

As BMW has shown, there are situations in which paying a reoccurring fee for a product makes little sense for consumers. However, when companies prioritize the three principles that Kichline has identified (relationships, continuity, and value-added), subscription pricing is “Mindful Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

9 Comments

Should AI Impersonate People?

7/1/2022

2 Comments

by David Hagenbuch - professor of Marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing

“Imitation is the sincerest form of flattery”—it is a high compliment when people respect someone’s work enough to replicate it. But, when one of the world’s largest companies’ smart speakers start imitating people’s voices, has flattery drifted into deceit?

It’s difficult to keep pace with innovation in artificial intelligence (AI), but one particular advance that's certainly worth attention is the impending ability of Amazon’s Alexa to mimic voices. After hearing no more than a minute of audio, the smart speaker reportedly will be able to deliver a plausible impersonation.

Alexa’s voice is apparently one that appeals to a very large number of consumers: A 2021 Statista study showed that Alexa was the most widely used assistant across four of six age demographics. So, why would Amazon want to mess with the sound that’s helped it sell so many smart speakers?

According to Amazon senior vice president Rohit Prasad, the change “is about making memories last,” particularly remembrances of those who’ve passed.

In many ways that motive makes the voice mimicking technology seem like a great idea. For those who have lost loved ones, one of the greatest blessings would be to hear their dearly departed’s voice again.

Since my father passed away last August, I’ve thought several times how nice it would be to talk with him again—to hear his opinion about the latest news, to ask him questions that only he could answer.

On a lighter side and also related to Alexa’s voice imitation, I’ve always enjoyed good impressionists. It’s fun to hear comedians who can act and sound like famous people. One of my favorites is Frank Caliendo, who is best known for impressions of famous sports figures; his John Madden and Charles Barkley impressions are great!

Frank Caliendo impersonating John Madden on the Late Show with David Letterman

So, I can see why Alexa doing impressions of people we knew and loved could be popular. However, AI impersonations should also give us pause for at least four reasons:

1. More than a voice: Of course, just because someone, or something, sounds like a person we know, doesn’t mean they are that person. Every individual is a unique curation of beliefs, affections, and experiences that influence what they say and even how they say things.

Frank Caliendo may sound like Charles Barkley, but he obviously isn’t the NBA legend and popular sports broadcaster. Consequently, Caliendo can never truly say what Barkley would say and neither can AI. Only a person knows what they themself would say.

2. Respect for the deceased: Per the previous point, if AI speaks for anyone, beyond playing back a recording of them speaking, it’s putting words in that person’s mouth. A living person could conceivably give such permission, but how would a dead person do the same, short of adding some kind of addendum to their last will and testament, allowing AI impersonation?

I’m not sure it would be fair to ask anyone before their passing to give a smart speaker carte blanche use of their voice. As hard as it is to let go of people we loved, it’s something we must do. The longer we’d allow AI to speak for a loved one, the greater the probability that the technology would say things to tarnish their memory.

3. Vulnerable consumers: Given how good machines already are at imitating life, it will likely become increasingly easy for techno fakes to fool us. However, there are certain groups of people who are at much greater risk of being duped than the average individual, namely children and older people.

It’s scary to think how those with heinous motives might use AI voice imitation to make young children believe they’re hearing the words of a trusted parent, grandparent, etc. Similarly, the Mindful Marketing article, “Preying on Older People” described how senior citizens are already frequent targets of phone scammers pretending to be someone they’re not. AI voice imitation could open the flood gates for such abuse.

4. Distorting the truth: Thanks to fake news, native advertising, deepfake video and the like, the line between what’s real and what’s not is becoming more and more difficult to discern. University of Maryland professor of psychology Arie Kruglanski warns that a truthless future is not a sustainable one:

“Voluminous research in psychology, my own field of study, has shown that the idea of truth is key to humans interacting normally with the world and other people in it. Humans need to believe that there is truth in order to maintain relationships, institutions and society.”

“In the extreme, a lost sense of reality is a defining feature of psychosis, a major mental illness. A society that has lost its shared reality is also unwell.”

While examples of the innovation in imitation are fascinating, it’s concerning that in the not-too-distant future, fakes may become undetectable. At that point, it seems like our world will be well on the path to what Kruglanski forewarned: ‘losing its sense of reality’ and becoming ‘unwell.’

In the 1994 movie Speed, Sandra Bullock and Keanu Reeves try to stop a city bus that’s triggered to explode if it drops below 50 mph. AI deception can feel like that runaway bus, barreling forward with no way to stop it or even slow it down.

However, large corporations like Amazon share the driver’s seat and have some control over the AI vehicle. Although having them put the brakes on innovation may be too much to ask, they can at least integrate some forms of notification to clearly indicate when people are seeing/hearing a fake and not the real thing.

Even with such notifications, Alexa’s application of voice impersonation is wrought with potential for abuse. For the four reasons outlined above, Amazon should shutter plans for its smart speaker to imitate people and thereby avoid talk of “Single-Minded Marketing.”

Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out Mindful Marketing Ads and Vote your Mind!

2 Comments

<<Previous

An Ethics Professor Tests the Morals of ChatGPT

Turning Trash into Treasure

Financial Stardumb? Celebrities Endorsing Investments

Play with a Purpose

Buy BRADY, But Don't Be Like Brady

Should Employees' Looks Matter?

Should Anyone Advertise Alcohol?

Are There Rules When Everyone's an Endorser?

Do Subscriptions Make Sense?

Should AI Impersonate People?

Editor

Archives

Categories