The Korea Consumer Affairs Ministry's ‘2023 Consumer Redress Yearbook’ reveals a darker side of modern marketing. The number of applications for consumer redress has been on the rise, especially in the fields of financial investment products and educational services, where the damage caused by ‘false and exaggerated advertising’ is concentrated. This suggests that modern people's anxiety about economic success and self-improvement is becoming a major target of marketing.
The KFTC's monitoring results for the e-commerce sector in the first quarter of 2024 show a more concrete picture. False and exaggerated advertisements in social media marketing using influencers are on the rise, and urgency marketing that encourages consumers to make immediate purchases, such as ‘limited sales’ and ‘imminent deadline’, is a major problem.
New risks in the digital age
The Korea Internet & Security Agency's (KISA) ‘Internet Usage Survey 2022’ warns of new risks in the digital age. It found that 54.3 per cent of social media users are tired of being exposed to ads, with the figure rising to 62.8 per cent among 20-somethings. These numbers are particularly alarming for two reasons. First, the fact that even 20-somethings, who are often referred to as digital natives, complain of fatigue suggests that the current intensity of online advertising is already beyond acceptable limits. Secondly, the higher the ad fatigue rate, the more vulnerable the group is to anxiety marketing. Fatigue from excessive ad exposure eventually reduces our ability to make comparative analyses and makes us more susceptible to emotional appeals.
Recent deliberations by the CRTC show that these concerns are becoming a reality. The number of false and exaggerated advertisements on online platforms has been on the rise, and anxiety-promoting content is particularly prevalent in the financial, diet, and education sectors.
The hidden cost of anxiety marketing
The results of the Financial Supervisory Service's 2022 Financial Consumer Protection Status Assessment show the true extent of the damage caused by anxiety marketing. The number of incomplete sales by banks and insurers increased year-on-year, with the most notable being complaints about pension insurance products that triggered retirement anxiety. The fact that these products have a higher cancellation rate than other insurance products proves that fear marketing ultimately hurts both consumers and businesses. Consumers lose money and companies lose brand credibility.
The KFTC's estimate of KRW 100 billion in consumer damage related to exaggerated advertising in 2021 is just the tip of the iceberg. The actual damage is expected to be much higher for two reasons. Firstly, most consumers don't take the time to file a formal complaint, and secondly, it doesn't account for psychological anxiety and stress, which can't be measured in monetary terms.
Brands succeeding by selling value
Unilever's announcement in its 2022 annual report demonstrates that ethical marketing can be successful. The company's Sustainable Living Plan (USLP) brands grew 50% faster than other brands.
This figure is particularly noteworthy for three reasons.
First, it's not a short-term experiment, but a long-term follow-up of more than five years, which gives it credibility.
Second, it shows the resilience of value-driven marketing, as this growth was sustained during the global recession.
Third, the results are common across a wide range of product lines, suggesting that it can be a universal strategy that is not limited to a specific industry.
Outdoor brand Arc'teryx's ‘ReBird’ programme has set a new standard for value spending. Launched in 2019, the programme tackled consumer anxiety about premium pricing head-on with a message of ‘more expensive, but longer lasting’ products. With repair and recycling as the core values of the products, the programme saw a 39% year-on-year increase in global sales in 2021. Most notably, customers who used the product's repair service were 2.1 times more likely to repurchase than those who did not. This shows that marketing that emphasises the intrinsic value and sustainability of a product, rather than anxiety triggers, can lead to real results.
Regulation and change
The KFTC's 2023 revision of the Important Labelling and Advertising Notices is significant. The ability to impose fines of up to 2 per cent of turnover is more than just an increase in penalties. First, it signals a shift in perception that anxiety marketing is no longer just a sales tactic, but a serious violation of consumer rights. Secondly, the tying of fines to revenue reflects a social consensus that large companies should be held to a higher level of ethical responsibility.
The establishment of ESG advertising review standards by the Korean Advertising Self-Regulatory Organisation (2022) is an important milestone that demonstrates voluntary change in the industry. It is particularly noteworthy that the standards do not simply regulate false and misleading advertising, but actively promote corporate social responsibility and ethical marketing. It marks the beginning of a new paradigm in marketing that goes beyond the elimination of negativity to the creation of positive value.
Our choice
The problem with anxiety marketing is clear, based on real-world data. Strategies that stoke consumer anxiety to increase short-term sales not only undermine a company's credibility in the long run, but also cause measurable economic losses. Values-driven marketing, on the other hand, has proven to be more than just an ethical choice; it can be a viable business strategy.
More importantly, this shift is becoming more of a necessity than an option. Increasing regulation, rising consumer awareness, and the rapid spread of negative information pose a fundamental threat to the sustainability of fear marketing. Sell the product, don't sell the fear. It's no longer just a mantra, it's a data-driven, essential principle of the future of marketing.
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