Science-fiction author Arthur C. Clarke famously posited that a sufficiently advanced technology is indistinguishable from magic. But proponents of big data-driven marketing fret that while the technology is here, the magic isn’t.
Panelists at this month’s “Future of Marketing Summit,” conducted by the Financial Times, feared that “big brother” aspects of big data were hampering their efforts at creating marketing legerdemain. They are looking warily at America’s growing concerns over privacy, inflamed by recent revelations on the NSA’s secret data gathering and the Edward Snowden saga. Meanwhile, the industry is coming under regulatory scrutiny for potential privacy issues tied to the unprecedented rate of collection of consumer data.
Big data holds the promise of untold riches for marketers; its adherents claim it can predict, and thus influence, customer behavior. But it works only if you have large and constantly accumulating amounts of data to begin with--data on the online activities of ordinary people.
And there’s the rub. As issues of data security have intruded on the public’s consciousness during the summer, a growing backlash over personal privacy violations has emerged. Though much of the public’s ire has been directed against the NSA, marketers are well-aware that they’re guilty of snooping, too; many hundreds of millions of user profiles are routinely available to marketers. (“Creepy” was the reaction from the FT’s Andrew Edgecliffe-Johnson, moderator of the panel.)
While marketers agree that their practices aren’t completely transparent, they also defend them as legitimate. But their mantra, “Give notice, give choice to opt out,” rings hollow. Many people simply don’t believe that “opting out” is a sufficient safeguard. Some go further: Security expert Bruce Schneier, a Fellow of Berkman Center for Internet & Society at Harvard University, says the Internet is nothing less than one huge "surveillance state. . .efficient beyond the wildest dreams of George Orwell.”
Of more immediate concern is the backlash against cookies. That scared the panel; if cookies go away, so does their ability to serve targeted messages. Earlier this year, Mozilla, the community responsible for the popular Firefox browser, announced its intention to disrupt the practice of third parties routinely placing cookies on user browsers–a shot across the bow for Internet advertising networks.
The move was bitterly criticized by the Interactive Advertising Bureau (IAB) as detrimental to user choice. Panelists at the FT summit warned that if cookies went away, larger businesses would get larger at the expense of small ones and, worse, that the cookie inevitably would be replaced by something else–a more insidious “indelible fingerprint,” outside of the customer’s control.
On the other hand, the concern over cookies may well yield alternate, more benign techniques that actually do a better job. It’s clear that users want fewer ads, in general, but, conversely, they do appreciate better-targeted ads. Marketers recognize that their attempts to target through cookies alone are going astray as often as not. That irritates users. And that’s reflected in the fact that click-through rates are falling, now less than 1 percent.
Clever ad-serving techniques that don’t rely on cookies for targeting are cropping up. Intent Media of New York City, for example, uses commerce sites to measure consumer intent. If a potential consumer does not consummate a purchase on a particular e-commerce site, Intent Media can use its data-science techniques to “monetize” the visit by serving ads for complementary, or even competitive, offerings at the appropriate time.
The Weather Company has mined a vast database in weather-related product sales to create marketing opportunities. General manager Vikram Somaya says that "depending on the city you are in or the microclimate you live in, your relationship with products is different."
Procter & Gamble Co has used this expertise in target marketing Pantene shampoo. If a woman checks the weather in a hot and humid location, she’s presented with an ad for Pantene Smooth. However, if she's in an area experiencing low humidity, she would see an ad for a volumizing product. In other words, consumers see ads most relevant to the weather in the Zip code they are in. The results were measured not in terms of views or click-throughs, but in terms of shampoo sold. It’s working, P&G says.
Ultimately, the best kinds of data are those that consumers volunteer about themselves. But what is the incentive for them to do so? Jaron Lanier, a technology intellectual, thinks he has the answer. In his new book, “Who Owns The Future?” Lanier proposes that people be paid–in small amounts–for giving up information about their online activities.
Grand utopian visions such as Lanier’s are usually improbable; to ensure accurate payments, his scheme would involve more tracking and less privacy. Better regulation or standards aren't the answers, either. The nascent Do Not Track initiative has all but collapsed with the withdrawal of the Digital Advertising Alliance, which damned the working group as having "reached the end of its useful life."
Ultimately, the solution to online privacy concerns is likely to be based on technology, not standards or regulations, and will likely come from one of the usual suspects (Google, Apple, Microsoft), either as something they invent or buy from a startup. And, as these things go, that will consolidate more power in one or or two players–for a while.