Chapter 16: Quiz

Transparency in AI Marketing and Advertising

20 multiple-choice questions. Select the best answer for each.

Question 1. Which of the following BEST describes the role of AI in programmatic advertising?

A) AI is used exclusively to generate creative ad content B) AI manages real-time bidding, user profiling, bid price optimization, and ad delivery in millisecond auctions C) AI replaces human media buyers entirely for large advertisers D) AI is used only for fraud detection in the advertising supply chain

Question 2. The "lookalike audience" problem in AI advertising refers to:

A) The difficulty AI systems have in matching user photos to their behavioral profiles B) The tendency of AI-constructed lookalike audiences to replicate and amplify the demographic characteristics of existing customer lists, perpetuating patterns of exclusion C) The challenge of creating ad creative that appeals to diverse audience segments D) The inability of AI to distinguish between similar products in ad placement decisions

Question 3. Facebook's "Ethnic Affinity" advertising category was ethically and legally problematic PRIMARILY because:

A) It required users to self-identify their race, which was a privacy violation B) It enabled advertisers to exclude users from housing, employment, and credit advertising based on inferred racial identity, in violation of the Fair Housing Act and other civil rights laws C) It was inaccurate and often misclassified users' ethnic backgrounds D) It was used only by small advertisers without adequate content review

Question 4. The "proxy problem" in discriminatory advertising refers to:

A) The use of fake user accounts to conduct discriminatory advertising B) The ability to achieve demographic exclusion through variables that correlate with protected class characteristics (e.g., zip code as proxy for race) even when explicit demographic targeting is prohibited C) The delegation of advertising decisions to intermediaries who conduct discrimination the brand does not directly authorize D) The use of proxy servers to hide the origin of discriminatory advertising campaigns

Question 5. Under FTC guidance, AI-generated endorsements and testimonials in advertising:

A) Do not require disclosure because the FTC does not regulate AI-generated content B) Must be disclosed as AI-generated and must not create false impressions of authentic human endorsement C) Require disclosure only if the advertiser paid more than $10,000 for the AI-generated content D) Are permissible without disclosure if the AI-generated content is factually accurate

Question 6. Which of the following BEST distinguishes manipulation from persuasion in advertising?

A) Manipulation is more expensive to implement than persuasion B) Manipulation exploits cognitive biases, information asymmetries, or emotional vulnerabilities to produce choices that do not serve the individual's genuine interests; persuasion presents genuine information in an appealing way C) Persuasion is regulated by the FTC; manipulation is regulated by the FCC D) Manipulation requires deceptive factual claims; persuasion does not

Question 7. Dark patterns in digital commerce are BEST defined as:

A) Advertising that appears in dark-themed user interfaces B) Excessive use of negative emotions (fear, anxiety) in advertising content C) User interface designs that deliberately trick or mislead users into making choices that serve the company's interests at the user's expense D) Advertising that is placed in contextually inappropriate environments

Question 8. The academic research on algorithmic advertising delivery (e.g., Datta et al. 2015, Ali et al.) has found that:

A) AI advertising systems consistently produce non-discriminatory delivery when demographic targeting options are disabled B) AI advertising systems can produce demographically skewed delivery based on optimization for engagement, even when advertisers do not specify demographic targeting criteria C) Gender and racial discrimination in advertising delivery is exclusively produced by deliberate advertiser choices, not algorithmic optimization D) Advertising algorithms are incapable of learning from discriminatory patterns in training data

Question 9. Dynamic pricing using AI raises the MOST serious ethical concerns when:

A) Prices change more than once per day B) The pricing algorithm systematically charges higher prices to customers whose characteristics correlate with lower income or race through geographic or behavioral proxies C) Consumers can easily detect that prices differ from one moment to the next D) Dynamic pricing is used for luxury goods rather than essential goods

Question 10. The Cambridge Analytica scandal involved PRIMARILY:

A) Facebook's unauthorized sale of user data to foreign governments B) The harvesting of 87 million Facebook users' data without consent and its use for psychographic profiling and political micro-targeting C) Cambridge University's research into social media's effects on mental health D) A Russian intelligence operation that used Cambridge Analytica as a front company

Question 11. Which of the following is a distinctive ethical concern about AI-powered political micro-targeting that does NOT apply equally to commercial advertising?

A) The use of behavioral data without explicit consent B) The correlation between personality targeting and demographic characteristics C) The information asymmetry created when different voters receive different messages with no visibility into what others are being told, undermining democratic deliberation D) The legal requirement to disclose paid political advertising

Question 12. The EU Digital Services Act's advertising transparency requirements for very large platforms include:

A) A prohibition on all behavioral targeting for advertising B) A requirement for a publicly accessible advertising library and provision of research data access to qualified researchers C) A requirement that all advertising be approved by a government regulator before publication D) A mandate that platforms donate 10% of advertising revenue to civil society organizations

Question 13. Brand safety AI — systems that prevent ads from appearing adjacent to inappropriate content — has been documented to:

A) Consistently improve the earnings of creators from underrepresented communities B) Disproportionately flag and demonetize content from LGBTQ+, Black, and disability-focused creators through systematic misclassification C) Operate with complete accuracy across all content categories and creator demographics D) Have no measurable effect on the distribution of advertising revenue across creator demographics

Question 14. The COPPA enforcement action against YouTube (2019) was significant primarily because:

A) YouTube was fined for producing violent content accessible to children B) YouTube was fined $170 million for collecting behavioral data from users under 13 and using it for targeted advertising in violation of COPPA C) YouTube was found to have deliberately targeted children with harmful advertising content D) YouTube was required to remove all advertising from channels with child audiences

Question 15. Credit-based insurance scoring raises fairness concerns because:

A) It is prohibited by federal law but continues to be used by insurers B) Credit scores correlate significantly with race and income, causing Black and Hispanic consumers to pay more for auto and homeowner's insurance than white consumers with identical risk profiles C) Insurance companies share credit score data with employers in violation of FCRA D) Credit scores are inaccurate predictors of insurance claims behavior

Question 16. The Fair Housing Act's application to digital advertising:

A) Is limited to explicit statements of discriminatory preference in ad copy B) Extends to advertising systems that produce discriminatory effects in audience delivery, regardless of advertiser intent, under the disparate impact standard C) Does not apply to online advertising because the FHA was enacted before the internet existed D) Applies only to ads that explicitly mention protected characteristics

Question 17. A company that purchases advertising AI services from a third-party vendor that subsequently engages in discriminatory targeting practices:

A) Bears no ethical or legal responsibility because it did not build the system B) Bears no legal responsibility but has ethical obligations to audit its vendors C) Bears both ethical and potentially legal responsibility for the discriminatory practices of the AI systems it deploys, regardless of whether it built those systems D) Is liable only if it was warned about the discriminatory practices and failed to act

Question 18. Contextual advertising differs from behavioral advertising primarily in that:

A) Contextual advertising is always more effective than behavioral advertising B) Contextual advertising places ads based on the content of the page or context, without tracking individual user behavior across sites or devices C) Contextual advertising is prohibited under GDPR while behavioral advertising is permitted D) Contextual advertising uses AI, while behavioral advertising does not

Question 19. The SAG-AFTRA AI agreement (2023) is most relevant to marketing practitioners because:

A) It requires all advertising to use union labor for AI-generated content B) It establishes consent and compensation requirements for AI-generated replicas of actors' voices and likenesses, which apply to commercial advertising using recognizable performers C) It prohibits the use of AI in all commercial advertising production D) It sets rates for AI-generated content that significantly reduce advertising production costs

Question 20. The statement that "AI advertising systems cannot be discriminatory because they do not use race as an input variable" is MOST accurately characterized as:

A) True — if race is not an explicit input, algorithmic decisions cannot be discriminatory B) Correct as a matter of law but not a sufficient ethical standard C) False — the proxy problem demonstrates that AI systems can produce racially discriminatory outcomes without using race as a direct input D) True for employment advertising but false for housing advertising

Answer Key

  1. B
  2. B
  3. B
  4. B
  5. B
  6. B
  7. C
  8. B
  9. B
  10. B
  11. C
  12. B
  13. B
  14. B
  15. B
  16. B
  17. C
  18. B
  19. B
  20. C