Decorative image of a cave, as a metaphor for hidden nature of covert marketing

What is covert marketing and how does it work?

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Businesses have always attempted to sell – and for a long time, advertisement was an easy way to reach out to potential customers. But over time, people realised the game that businesses were playing, and developed increasing resistance to being sold to.

As a result, revenues from product-focussed advertising dropped, and businesses looked for new ways to deliver their advertising message. They researched the drivers of purchasing decisions and developed emotional campaigns that tapped into the underlying experiences of human psychology.

The success of psychological marketing – was however, equally short-lived, as consumers became wise to fact that businesses manipulate their emotions to increase the probability of purchase. Consumer backlash led to more stringent advertising regulations and marketers soon saw dwindling returns on traditional media campaigns.

In a bid to salvage profits, businesses adapted. They branched out into new marketing channels – especially online – and adjusted their strategy to include ever more subtle marketing techniques.

These techniques are jointly called ‘covert marketing’ or ‘stealth marketing’ and rarely recognised as a form of advertising today. This is because in covert marketing the message:

  1. masquerades as news or entertainment
  2. and is spread by “trusted” third-parties on behalf of the company selling a product

Few people see this type of marketing for what it is, and so businesses experience much lower resistance to their message when using stealth marketing. But how does covert marketing look today?

Covert marketing through political and traditional media networks

One place where you often see covert marketing play out is the political arena. Here, companies use personal relationships or financial incentives to steer political decision-makers towards certain beliefs.

  • Financial incentives: corporate sponsorships, payments for speaking appearances, benefits such as free publicity, exclusive invitations, donations, party sponsorships, etc.
  • Personal relationships: building likeability through mirroring (“cultivating an asset”) confirming and reinforcing people’s beliefs, spreading positive energy.

Politicians then, consciously or unconsciously, spread these beliefs by way of their work. As a result, these beliefs eventually reach other politicians, think thanks, media institutions and ultimately consumers.

If political decision-makers become strong proponents of their adopted belief, they may even pass legislation favouring that belief – creating an easier market environment for particular companies to operate in. As a result, the politician can become a ‘lobbyist’ for companies whose executives steer that politician’s perception.

Of course, the same holds true for media institutions. Many news outlets receive funding from companies – in the form of donations or advertising spending – and see staff cultivating personal relationships with company leaders at conferences and press events.

With increasing proximity of such relationships, news outlets have strong incentives to fine tune (or ‘fact check’) their messaging to preserve the value (monetary or otherwise) of the relationships.

Corporate messages are often packaged as ‘news’ or ‘entertainment’ by the media in one of the following forms:

  • Paying media owners – through advertising. Sometimes the purpose of buying advertising is not so much in the advertising message itself, but in getting the media institution to rely on the advertising income from the company. This encourages the media institution to refrain from publishing negative news about their ‘paid customer’.
  • Groupthink and copy-paste culture: Many news outlets copy their news from press associations, changing only a few words at a time. When a company influences writers for these press associations to share a certain message, that message will usually be distributed to all major newspapers that trust or rely on said press association.
  • Corporate press releases: While press releases save independent journalists a ton of time in gathering ‘newsworthy’ content, they also shape their perception of a specific industry or topic, and may subconsciously encourage journalists to adopt a stance that aligns with the company’s message (as a result of confirmation bias). However, real covert advertising happens when journalists are paid by article or word, and they start copying content from press releases almost verbatim – critical analysis – and package those as news to maximise their own income. In such cases, a journalist essentially becomes a company’s free media spokesperson or advertising asset.
  • ‘Experts’ from ‘independent’ organisations: Charities, NGOs and many other seemingly credible, independent organisations are backed by large corporations or governments. Unlike a crowdfunding model, in which an organisation receives financial support from a large, decentral network of supporters, a financial structure that has one or a few large financial contributors runs the risk of favouring the viewpoints of its financial supporters. Still, the experts (READ: PR people who get the most eyeballs) are widely cited across media outlets.
  • Product placements in movies, social media and other entertainment content

Example: Covert advertising in the pharmaceutical industry

The promotion of pharmaceuticals by media and politicians since 2020 was one of the largest covert marketing operations of recent times. Only a fraction of people realised that the fear-based messaging on national television, coupled with the promise of ‘saving lives’, was a highly effective form of covert advertising for manufacturers of masks, vaccines and anti-viral drugs. Politicians and media even seemed to trust or favour certain brands over others – significantly boosting demand for those products and pushing up their stock price

But covert marketing through politicians and media is widely used in almost any industry, not just pharmaceuticals. Here’s how it tends to look:

  1. Companies influence decision-makers in politics and media to adopt certain beliefs
  2. Decision-makers then spread these beliefs by way of their work
  3. Beliefs are shared widely through the media, think tanks and the decision-makers’ network
  4. Political decision-makers pass legislation favouring their adopted beliefs, while media endorses and promotes such legislation to the public

Covert marketing in social networks

A more modern, but certainly no less effective, approach to covert advertising is through social media. Here, companies tap into the power of trusted authorities (‘influencers’) to create awareness for and endorsement of their products.

The underlying strategy is quite similar to traditional media, as companies win over influencers through incentives or personal relationships. They might, for example, invest in:

  • Free networking events and conferences, so influencers can try the latest products
  • Direct sponsorships or brand deals whereby an influencer gets paid to share a specific message or feature a product in their entertainment content
  • Affiliate marketing campaigns with free merchandise or revenue sharing for the influencer
  • Contests, prizes and giveaways that draw attention to the company’s brand
  • Podcast appearances, where spokespeople from their company are presented as industry leaders

With these incentives, companies can encourage influencers to endorse their product or brand on social networks. And thanks to a large influencer following and word-of-mouth, this branded content may be shared widely across social media, covertly influencing the recipients.

When doing covert marketing campaigns through social media, companies benefit from strong personal relationships that many influencers build with their fanbase and the credibility offered by clicks and shares, which have become a new form of social proof.

In contrast to traditional media, where credibility comes from authority figures and government actors, trust towards influencers is usually based upon the size and quality of their audience.

Is covert marketing unethical?

Now that we’ve covered how covert marketing works, we can consider its ethical implications. For this purpose, we’ll look at ethics a spectrum, ranging from marketing practices that are completely unethical to completely ethical.

Ethical spectrum of marketing activities ranges from not at all ethical (such as deceit and exploitation) to absolutely ethical. On this spectrum, we find misreprestation (not so ethical), truthful communication (more ethical) and truthful and value-adding interactions (most ethical option listed).

We’ll also consider how ethical a particular marketing activity is in comparison to other marketing actions. This gives us a useful context for practical decision-making. And lastly, we’ll assume that no one can make perfect ethical choices continuously, as we are all still learning as human beings.

With that in mind, we can create a set of criteria that indicates a more ethical approach to marketing, and set of indicators for less ethical marketing activities.

Indicators of more ethical marketingIndicators of less ethical marketing
Focussed on maximising benefit for everyone involvedFocussed on maximising benefit for the marketer
Communications rooted in integrity and honestyDeception and manipulation are seen as favourable means to an end
Encourages autonomy and freedom of choiceEncourages social conformity over the development of the individual

With these indicators, I would venture that covert marketing is unethical, if it:

  • makes false statements about or misrepresents a product, company or brand
  • hides information that would discourage consumers from purchasing
  • involves the deliberate, wrongful discreditation of better offers for consumers
  • promotes products or services that are not (sufficiently) useful or valuable

Covert marketing in its most ethical form:

  • communicates a true message about a product, industry or brand
  • openly acknowledges when a product’s main function is to compensate for a lack of self-love or positive emotion (e.g. status symbols, dopamine enhancers, etc.)
  • works only through a network of people who believe in the message they are sharing
  • empowers the audience think for themselves and make their own choices
  • packages a message in news or entertainment only when that creates more value for the customer than being upfront

Should you use covert marketing for your product or service?

The answer depends on the goals you have and the values you hold. Covert marketing may not be a good fit if you feel uncomfortable operating ‘behind the scenes’ to influence people. It may, however, be worthwhile, if you can find a way to add more value through covert messaging than direct communication.

To evaluate whether it would be right for you, you may want to ask yourself some of the following questions:

  • Would you feel comfortable explaining your covert marketing strategy to a close friend?
  • Why would you want to manipulate or change people’s perception? What would the benefits for you be? What would the benefit for them be?
  • How do you think customers would feel, if they heard you were promoting your product or service in this way?
  • Do you feel any guilt, anxiety or uncertainty around sending a covert message?
  • What other, more transparent, alternatives would there be? How would those compare to a covert marketing approach?

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