Consumer backlash stings in response to sneaky sales tactics

A company is unlikely to gain satisfied and loyal customers when they feel they've been duped. Companies that employ stealth marketing — otherwise known as undercover or guerilla marketing — hire shills to pitch products or services to potential but unsuspecting consumers. It may seem a clever idea on its surface, but research shows stealth marketing can be a risky tactic. Several W. P. Carey School of Business professors recently shared their opinions of stealth marketing, citing examples of campaigns that backfired, alienating rather than attracting potential customers.

You're sitting at an outdoor cafe. An attractive stranger drives up on a Vespa, catches your eye and joins you for a cappuccino. Before speeding away, your new acquaintance hands you a phone number. When you call, you reach the sales department at a Vespa dealership. You're the target of a stealth marketing campaign, one that Vespa actually used to promote its motor scooters in the United States.

If you're like many consumers, you'd resent being hoodwinked by Vespa's product-pushing biker gang. Therein lies the risk of the promotional approach known by several names: undercover, guerrilla and stealth marketing. Companies may find that hiring shills to pitch potential but unsuspecting customers is an unwise tactic in the battle for market share. Some experts think consumers begrudge these covert approaches.

Origins of a secret weapon

Several factors contribute to the invention and recent proliferation of stealth marketing. "Consumers today are inundated with marketing messages," says Vincent Blasko, professor of advertising at the W. P. Carey School of Business. With product placements on TV and in films, ads in the movie theater, pop-ups online, even ads at baseball games and in bathroom stalls at trendy bars, Blasko says consumers are increasingly overwhelmed and unresponsive.

"Customers are looking for ways to avoid commercials," he says, pointing to TiVo and other digital video gadgets that put the power to avoid ads in the consumer's hands. But the tribal nature of the Millennial Generation — people born between 1977 and 1995 — may have already reduced the effectiveness of those deleted commercials.

"These folks aren't tuned into traditional marketing methods like TV and print advertising," notes management Professor Barbara Keats. She says "millennials" are team-oriented, prone to talk about things they encounter in their immediate circle of friends. "They're more tuned-in to what marketers call 'the buzz,'" she says. "Whatever you can do to create buzz will help you get the attention of these consumers."

To harness that buzz, marketers have upped their use of word-of-mouth (WOM) promotional techniques. Word-of-mouth marketing is a $40 to $60 million business that "grew at a rate of 100 percent in the last year," according to Advertising Age, the journal of the advertising industry.

But, those in the word-of-mouth marketing industry say there is a big difference between stealth campaigns and legitimate WOM marketing. Disclosure is the distinguishing feature: In stealth marketing campaigns the people talking up a product don't necessarily reveal that they have been paid for the endorsement.

Fake tourists and vocal vodka drinkers

Though stealth marketers try to stay under the radar, consumer and professional groups are aware of their activities. A consumer group called Commercial Alert filed a complaint concerning stealth marketing with the Federal Trade Commission (FTC) on Oct. 18, 2005. Gary Ruskin, executive director of the organization, wrote that some companies "are perpetrating large-scale deception on consumers by deploying buzz marketers who fail to disclose that they have been enlisted to promote products."

The Word of Mouth Marketing Association agrees that this is wrong. The association's code of ethics includes the promise: "We stand against shill and undercover marketing, whereby people are paid to make recommendations without disclosing their relationship with the marketer."

Even so, examples of deceptive campaigns abound. Last February, The Wall Street Journal reported that Sony Ericsson's "Fake Tourist" campaign "faced wide criticism" when that mobile phone manufacturer sent 60 good-looking actors and actresses to popular tourist spots such as the Empire State Building in New York and the Seattle Space Needle.

Armed with Sony Ericsson camera phones, the thespians pretended to be tourists and enlisted other sightseers to take their pictures. Of course, that required a little explanation of the phone, leading to an ad hoc product demonstration. Other stealth campaigns have placed people in bars to talk up a specific drink or handheld game; put actors in slow-moving lines at government offices, talking about a nearby sale; or had shills post product opinions on Internet sites and blogs. The FTC has yet to decide if the practice is illegal. Is it ethical? That's another question.

In buzz we trust

Business ethics Professor Marianne Jennings says there's no question that the practice of promoting products without disclosure is an unethical approach to product promotion. "Absolutely," she says. "Right out of the box, you're being dishonest. You're getting people, even children, to trust you. Then, you're abusing that trust," adds Keats.

In that context, Jennings sees stealth marketing as downright harmful. "It's underhanded. That introduces an element of cynicism that, when it permeates society, leaves us completely closed off," she says. "We become suspicious of everyone and the very foundation of our society — that we do help others and that we do strive to do the right thing — becomes eroded because we've been taken."

"It's a tremendous invasion of people's marketing-free space, too," Jennings adds. She likens stealth marketing to the telemarketers of a few years ago. "They drove us all so crazy that eventually we said 'no more.'" The law stepped in with no-call lists and other prohibitions. It's also bad business, says Blasko.

"Any time you do something that will mislead the consumer or is purposefully dishonest, there's the risk that consumers will find out." That, he adds, can be dangerous to marketing success.

Honesty pays

"Backlash — I would think that would have to be a very big concern for stealth marketers," says Keats. Discovering the deception is usually a "turnoff" for consumers. "When people are offended by products or advertising, they speak with their pocketbooks," adds Jennings. She cites the recent holiday hullabaloo as an example. "Target got a backlash for disallowing Salvation Army bell-ringers," she says, "and Macy's had to come out and tell clerks, 'It's OK to say Merry Christmas.'"

But it isn't consumer outcry that made BzzAgent, a word-of-mouth marketing firm, impose a mandatory disclosure rule on its volunteer agents in November 2004. BzzAgent works by giving unpaid "agents" product demonstrations and samples and inviting them to tell their friends about the product.

"The previous policy was to leave it up to an individual volunteer's discretion to disclose affiliation or not," says Joe Chernov, director of public relations for the Boston-based firm. Chernov explains that his company had subscribed to the conventional wisdom that word-of-mouth marketing worked best when those talking aren't mentioning their relationship to the product or company being promoted.

"We found that the conventional wisdom was wrong," he says, adding that campaigns worked best when agents said something like, "I'm with BzzAgent, and I just got a sample of product X, and I like it." According to Chernov, "Those events were much more positive, they were better received by conversational partners, they were longer exchanges, and more meaningful information changed hands."

The difference was so dramatic, in fact, that in December 2005, BzzAgent added a compliance feature to its mandatory-disclosure rule. When agents log in and report a buzz event, they must check a box promising that they disclosed their affiliation with the product. If they don't say they mentioned that affiliation, they don't get any more products to sample without taking online training about the "benefits of disclosure."

"When somebody discloses that they're part of BzzAgent, it debunks any stigma that these people are paid, that they're shills, or that they're piggybacking product promotion on their friendships," Chernov says. "Stealth marketing has caused a lot of damage for the companies that have engaged in it," he adds. Chernov named Vespa's phone-number caper as the "crown jewel of shill marketing." When people called that phone number and found a Vespa dealership rather than a hot date on the other end of the line, they were more likely to be embarrassed than enticed to buy.

The Vespa and the Sony Ericsson "fake tourist" promotions left some consumers feeling betrayed, set up and duped, Chernov recalls. Like Blasko, Chernov thinks that deception is ultimately bad business. "You don't build a good brand by duping your potential customers," he says.