Welcome to the May run of The Trust Factor, where we’ll spend the month looking at the role trust plays in advertising, building brand loyalty, and winning over new customers. We’ll also look at what happens when advertisers go too far, serving up personalized ads at the expense of user data privacy.
Consumers don’t trust ads. That’s been the key takeaway of most major consumer surveys on advertising since 2012 when market analysts Nielsen published their landmark report on the topic. According to that poll, 92% of consumers trust recommendations from friends over information delivered through traditional ads.
Things have picked up a little for advertisers since then, according to Nielsen’s latest survey from 2021, where 88% of respondents said they trust recommendations from friends over all other promotion channels.
“It comes as no surprise we all trust personal recommendations above and beyond any other channel. Human to human trust is fundamental to daily life,” Cathy Heeley, Nielsen’s international media analytics lead said at the time of the report.
So how can brands leverage this information to their advantage?
Well, according to Nielsen, the first thing to do is to “put the consumer first in every strategy, plan and execution.” The outcome of planning every aspect of business development with a view to maximizing customer satisfaction should be that the frequency of recommendations increases.
A separate survey on consumer trust from Clear Channel and JCDecaux suggests some ways brands might achieve “putting the consumer first,” such as removing hidden costs while ensuring quality and value for money.
This survey also suggests consumers may be a little confused about how much they value trust in brands. Over 80% of respondents claim whether they trust a brand is a deciding factor in purchasing products, but only 34% of respondents said they have trust in the brands they use. Go figure.
Although people put more faith in word-of-mouth recommendations, too, traditional ads don’t fall so far behind on the trust meter. Over 78% of respondents said they trust ads on TV, a fact Heeley puts down to the perception that “ads on TV are run by legitimate businesses” and so are “given credence over some of the newer forms of advertising.”
Even more remarkably, in the age of word-of-mouth recommendations, influencers and celebrity endorsements score poorly on trust. Clear Channel and JCDecaux found that only 20% of respondents said they would trust a paid-for familiar face.
This is surely not the case in China where Austin Li, the so-called Lipstick King, used livestream e-commerce to shift $1.7 billion of goods in 12 hours during a 2021 sales event. And, even in the U.S., livestream e-commerce has unlocked new opportunities for brands to promote their products and services through product placement with influencers, without deploying direct messaging.
According to Nielsen, 52% of consumers between the age of 35 and 49 said they are influenced to purchase products featured or used in livestream content. In the 18- to 34-year-old bracket that proportion is 49%.
Obviously the influencer economy, despite scoring low on trust, has a pivotal and lucrative role to play in building trust in branding. Come back to Trust Factor next week to find out how influencers manage that balancing act of promoting brands without their fanbase thinking they’ve sold out.
Eamon Barrett
eamon.barrett@fortune.com
IN OTHER NEWS
Covenantal capitalism?
When a business falls on hard times, should its customer base feel a responsibility to help the company through, in the faith that the recovered business will repay the favor in kind? If you answered yes, you might be a subscriber to “covenantal capitalism,” as proffered here by Michael Eisenberg in a Fortune op-ed, a partner at Aleph.
The crypto trough
Cryptocurrency is wallowing in a “trough of disillusionment,” says Chamber of Progress founder Adam Kovacevich in a Fortune op-ed, but the next stage of the over-hyped tech could see cryptocurrency rally stronger than before. All new tech spins through the same cycle of overhype, disillusionment, and reemergence, Kovacevich says, and careful regulation is the key to helping crypto climb out of its slump.
FTC vs. Meta
The FTC has accused Meta of violating the company’s $5 billion privacy settlement it made in 2019, alleging the Facebook parent has failed to protect user data—and kids—as promised. The FTC is calling for a ban on Meta monetizing data collected from users under 18 years old and a moratorium on the company releasing any new features until a third-party auditor determines its privacy policies are up to scratch.
More checks
Google is rolling out a blue check verification tag for Gmail users, offering the new tool to help guard against spam and scams. For corporate users, the check mark shows that a sender has verified they own the domain name the email is sent from as well as any company logo displayed in their profile picture. Unlike other blue check services—like the one in place at Twitter—Gmail’s verification tag is free of charge.
TRUST EXERCISE
TikTok has lost its head of trust and safety, Eric Han, as the company continues to fight an effort from Washington to ban the app in the U.S. Han reportedly called the job a “poison chalice” that had looked good on paper but became impossible to manage. In response to Han’s departure, due May 14, TikTok said:
“We remain dedicated to upholding our commitments to the TikTok community—both in the U.S. and around the world—as we continue to invest in trust and safety as a cornerstone of those efforts.”
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