The impact of online marketing on children's behaviour. CMEG Brussels,

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The impact of

online marketing

on children's

behaviour

CMEG

Brussels, 17.02.2016

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Presentation structure

• Aims and objectives

• Research process and methods

• Key findings:

• Problematic online marketing practices • Impact of marketing on children

• Parents’ perspectives

• Policy interventions in place

• Key conclusions

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• Identify the most common and questionable marketing techniques used to impact the consumer behaviour of children online.

• Test and assess the influence of sophisticated marketing techniques on children and their behaviour.

• Investigate to what degree parents are able to recognise and

understand the implications of different online marketing practices, and how they attempt to regulate the online commercial activities of their children.

• Map and classify policy interventions in place in Member States and at EU level to alleviate children’s vulnerability.

The key aim is to provide an understanding of the new and

dynamic channels of online marketing directed at children in

order to provide a basis for future policy.

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The study was set out to:

• Provide input to the revision of the Audiovisual Media Services Directive (AVMSD).

• Provide input to the revised Guidance document to the Unfair Commercial Practices Directive (UCPD).

It will also:

• Provide input to the fitness check of the UCPD.

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Research process

and methods

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Preparatory phase:

• Systematic review of literature

• Review of legislation and regulatory framework

• In-depth analysis of games

Research process

Methods

Focus groups and

survey in 8 countries: ES, IT, FR, PL, NL, DE, UK, SE. Two behavioural experiments in NL and ES. Preparatory phase covered EU28 +

Norway and Iceland

Main phase:

• Focus groups with children and parents • Survey with parents

• Behavioural experiments with children

Final phase:

• Overall analysis of findings • Policy recommendations

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Problematic

online

marketing

practices

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Examples of what previous studies find:

• Internet has become the largest marketing channel when targeting children (Winpenny et al., 2013).

• Almost a quarter of advertisements on popular children’s

websites in UK were unsuitable for children, and 70% of websites visited by children were not created for children alone (Nairn,

2008).

• Seamless, hidden and embedded advertisements are common (e.g. Alvy and Calvert 2008; Kervin et al 2012).

• Online advertisements children are exposed to often fail to comply with existing regulation and broadcasting codes of

practice for mainstream advertising (Cairns 2012; Kervin et al. 2012).

Problematic marketing practices

Scope of online marketing to children

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About the analysis:

• 25 most popular games on Apple App Store (6), Google Play (6) and Facebook (6) + advergames of popular brands (7).

• Analysis covered advertisement features, game features, user engagement and protective measures.

• Both free and paid online games were studied.

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Key findings: In-depth analysis of online games

App

store Google Play Facebook Advergames

Advertisement features

Embedded advertisements 3/6 2/6 1/6 7/7 Contextual advertisements 0/6 1/6 6/6 3/7

Game features

Purchase available/required* 5/6 4/6 6/6 0/7 Inducements to extend game

play 5/6 3/6 6/6 5/7

Game personalization options 3/6 2/6 6/6 1/7

User engagement

Social media 6/6 2/6 6/6 3/7

Register or create an account* 2/6 2/6 0/6 3/7 Message/Invite friends 0/6 1/6 6/6 4/7 Prompts to repeat or prolong

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Key findings: In-depth analysis of online games

App

store Google Play Facebook Advergames

Protective measures

Ad breaks / Ad alerts 0/6 0/6 0/6 0/6 Privacy policy 5/6 5/6 6/6 6/7 Terms of usage 5/6 2/6 6/6 5/7 Age limit suggested 6/6 5/6 6/6 2/7 Age limit enforced (birth date) 0/6 0/6 6/6 0/7 Parental permission required 0/6 0/6 2/6 1/7 Parental section/warning 0/6 0/6 0/6 1/7 Contact information/report a

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Impact of online

marketing on

children and their

behaviour

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Examples of what previous studies find:

• The results on the effect of gender are mixed and inconclusive. •Age is found to be important for the effect of online

advertisements, brand placements, in-app purchases, persuasion knowledge and the ability to recognise advertising.

• Some studies find that the family’s socio-economic status

impacts children’s vulnerability to online marketing.

• Some studies find that internet use and peer pressure impacts children’s vulnerability.

Impact of marketing on children

Determinants of children’s vulnerability

Some of these findings are confirmed by the focus groups and behavioural experiments

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Findings from literature review:

• Several studies on the impact of online food marketing, especially in games. Online marketing is found to impact children’s behaviour, their attitudes towards the products advertised and their familiarity with advertised brands.

• Some studies on factors driving in-app purchases. It is found that in-game achievement factors, hedonistic factors, social and

status factors, as well as age and frequency of game play are important factors influencing the children’s propensity to make in-app purchases.

Impact on behaviour and perceptions

Some of these findings are confirmed by the focus groups and behavioural experiments

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Advertisements seen by children as:

• “The most annoying thing on the Internet” as they get distracted by them.

• The price they have to pay to play free games and access free content. • Easy to spot and easily distinguishable from other content.

Focus groups

The children had difficulties identifying advergames as such. When faced with an advergame for Coca-Cola they said that the game was about, recycling, a picnic, weather, party, summer etc.

Focus groups with 11-12 year old children in 8 countries

In-app purchases:

• Several children reported having made in-app purchases without fully realising that it would cost money.

• The majority of children in the focus groups expressed that they find it difficult to make a decision when prompted to make an in-app purchase in games.

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• Overall, children playing the advergame promoting energy-dense snacks had higher snack intake than children playing non-food advergame (not in the

youngest age group, 6-8, in Spain).

• Brand attitude and

brand/product recognition did not differ between the two groups.

Advergame experiment

Behavioural experiment with children aged 6 - 12 in Spain and the

Netherlands

Measure BMI

Questionnaire II (Brand attitude, brand/product recognition,…) Advergame & Snack intake

Energy-dense _{Protective measure}Energy-dense + Non-food _{Protective measure}Non-food + Questionnaire I (gender, age, hunger level,...)

Effects of type of advergame on snack intake:

Children are influenced at a subconscious level.

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• Warning message did not reduce calorie intake.

• Warning message had no effect on brand attitude and

brand/product recognition.

• Most children (approx. 95%) did not remember the text of the warning message and more than half did not remember to have seen it when prompted.

• Dutch children who recognised the warning message had higher understanding of the game’s persuasive intent (but did not have lower calorie intake).

Advergame experiment

“Remember: This game is

an advertisement for X”

Effects of type of protective measures:

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• Younger children (8-9) more frequently selected the “paid” and the “in-app” version of the game.

• Younger children tended to spend more gold in the purchase situations

compared to older children. • Children in the control

group spent more gold than their peers playing the

game with various protective measures.

In-app purchases experiment

Behavioural experiment with children aged 8-12 in Spain and the

Netherlands Findings:

Questionnaire

Interventions - Treatments

Baseline

condition alternatives Multiple Disengage message Warning

Gold selection – Purchase option

Game customization Pay to continue Obtain a feature to _{improve the game}

Play levels

Instructions and familiarisation App Store mockup

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• Effects differ between countries:

• In Spain both the warning message and the

disengagement measure reduced the amount of gold spent.

• In the Netherlands none of the measures reduced the gold spent while the multiple alternatives increased the amount of gold spent.

Effects of protective measures:

Questionnaire

Interventions - Treatments

Baseline

condition alternatives Multiple Disengage message Warning

Gold selection – Purchase option

Game customization Pay to continue Obtain a feature to _{improve the game}

Multiple alternatives: Voice, text and visual cues:

"Before spending gold think of how many things you could do with this gold. You could have more

balloons, or more stickers, or more rubber bands… Or perhaps you could even use it to play another game".

Disengagement:

Children had to locate Wally, a well-known cartoon character before they could continue

Warning message:

“Think for a moment. Is it worth buying extra features?”

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Parents’

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Parents were asked about their risk perception of several problematic practices: • Overall, risk perceptions were in general fairly high, driven by the potential

harm and the perceived likelihood of occurrence.

• Being exposed to violent content and bullying were seen as both most harmful and most likely to occur.

• Various marketing practices (e.g. targeted advertisements, advertisements for unhealthy food, hidden advertisements) were seen as somewhat less harmful, but more likely to occur.

• Digital identity theft and data tracking were considered as high risks. Most important determinants of parents’ risk perception:

• Past experience: led to heightened risk perception for all practices.

• Country: influenced the risk perception levels (but not the ranking of risks). • Socio-economic status: parents with high education tended to have higher

risk perceptions than parents with lower education.

Parents’ perspectives

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Findings from the literature review:

• Parents are not particularly active in regulating their children’s online behaviour.

• They often do not get involved because many of the online problematic practices do not ask children for parental permission/approval.

• Only one in seven families use filtering software to block inappropriate content.

Focus groups:

• In general parents applied some form of online restriction on their children, but they did not extensively control them.

• Some indicated that they did not find it necessary or that the available protective measures were not effective.

Parents’ survey:

• Parents’ mediation style differs between countries.

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Most common mediation styles across countries: • Permissive: Italy • Authoritative:

Poland and Spain. • Authoritarian: Germany and Sweden. • Laissez-faire: UK, the Netherlands and France. Parents’ perspectives

Regulatory strategies

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EU and Member

State policies

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• Several EU directives serve as a basis for protecting children online (UCPD, AVMSD, DPD, ECD).

• Many self-regulatory initiatives are present in the EU advertising sector and almost all Member States

– these are criticised in the literature for being ineffective. • At national level, the study identified a broad range of policy

interventions and the regulatory initiatives in the Member States were found to be particularly diverse

- questions the uniform protection of children across EU/EEA countries.

Regulatory review

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Key

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• Children are exposed to a great amount of advertisements and marketing online – both in social media, in online games and in mobile applications.

• The games analysed in this study contained few protective measures. The measures present were limited to privacy policies and terms of usage as well as parental control tools provided by platforms.

• Online marketing can have direct influence on the children’s behaviour – often without them being aware of the effect.

• Parents are generally not very active in regulating their children’s

online behaviour, and see both government regulators and the online industry as having a co-responsibility for protecting their children.

Key conclusions

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Policy

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• Making marketing and advertisements more transparent to consumers and enhance protection of children

• Children should not be exposed to online marketing when it is likely that they will not understand the persuasive intent of the marketing practice and are likely to be misled.

• More should be done to empower children to recognise and respond appropriately to online marketing techniques.

• Introduce protective measures targeting children directly

• Making protective measures targeting children directly in games that include advertisements or other marketing practices should be considered and further researched.

• Need to update regulatory framework

• Fitness checks of UCPD and AVMSD should pay particular attention to the results of this study and the protection of children with regards to disguised marketing and other problematic online marketing practices.

• EU coordinated enforcement actions or sweeps should be undertaken to monitor and investigate the marketing practices of the online industry.

• The extent to which self-regulation should be relied upon in future regulation of the online industry should be based on the proven effectiveness of self-regulatory measures.

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• Do you have relevant evidence from you country to bring forward?

• How do you think online marketing to children should be dealt with at EU level?

• Questions or comments to the study?

For more information about the study: marthe-harvik.AUSTGULEN@ec.europa.eu