In the online era of social networks, e-commerce and the increasing culture of sharing despite concerns about privacy online, the amount of everyday personal data-points that we generate is unimaginably high. At the same time, data analytics and profiling techniques have started to catch up, enabling companies to capture, track and analyze all this data, and create sophisticated consumer profiles.

The advent of big data analytics has not been related only to the online environment. Most major retailers have for a long time focused on collecting vast amounts of data on their customers, and invested in “predictive analytics” capabilities to better understand their consumers’ preferences, lifestyle and habits and in this way target them more efficiently. The story of “how Target figured out a teen girl was pregnant before her father did” is the perfect example of how companies are able to put together different pieces of information collected directly from consumers or purchased from other sources to create profiles (in this particular example assigning a “pregnancy prediction score”) to better target sales efforts.

Another example is how insurers are increasingly using big data to help improve their risk profiling and thus pricing, like car insurers monitoring driving data collected to help augment consumers risk profile. While still small at only about 2% of the US car insurance market now, analysts expect this insurance segment to grow to 10-15% of the market by 2017. At the same time, most insurers seem to be using social data in claims (like the infamous case of Nathalie Blanchard who was denied health insurance benefits based on pictures she posted on her private Facebook account while she was on long-term leave for depression) and underwriting, to evaluate customer health.

Online has been a game changer in terms of the data sets that companies can capture and analyze, and thus what they know about us. We willingly give away personal information to be able to use certain services or get personalized offers and experiences – according to a study conducted by Accenture, while 86% of respondents were concerned about their data being tracked, 85% understood that this information enabled online retailers to present them with more relevant, targeted content; almost half said they accepted to have their data tracked by trusted in exchange of a personalized shopping experience.

But are we really aware of the amount of our personal information is captured and used (directly or sold) by different entities? Take Google’s decision to integrate user information across various applications and services (around 60 in total). Think about it, if you are a Google user, it means that the company knows about every single search you’ve conducted from your computer or mobile phone, every single e-mail you have received or sent from your Gmail account, every single video you’ve watched on YouTube, every single calendar appointment, location data, contact, personal and political views that you’ve ever discussed on Google hangouts and so much more. And while I think this is a great business idea to integrate information and use it across services, and that it can translate in a more intuitive Google user experience, I do not think the vast majority of users really understand the implications of Google owning this data across platforms.

In the digital world dominated by Google, Facebook, Amazon etc. and as predictive analytics has made it easier to piece together information about individuals, national and international regulators are struggling with the challenge of how to deal with personal data protection. The European Commission drafted a new General Data Protection Regulation (GDPR), to help individuals get more control over their personal data online. Key changes include a “right to be forgotten” to ensure that unwanted data is no longer processed or retained, but deleted upon request. Also, whenever data processing requires consent it will have to be explicitly requested. Companies will also have to guarantee easy access to one’s own data. But even if these regulations get enforced, does it really protect the individual from the personal information derived from big data analytics – like the Target pregnancy example, or the health benefits example? And this is only the private sector perspective, but there are plenty of recent examples to indicate that our personal digital information can also be easily tracked and accessed by the government.

Someone told me recently that Google can supposedly tell who you are based on 5 google searches you make – if this is anywhere close to reality, the reality is pretty scary. I personally am not too excited about giving up that much privacy for “personalization” or better experience, unless I am convinced that personal data protection is in place, and right now that does not seem to be the case. I see this as a tension point between the advances in customer experiences that personalization and digitalization bring, and the lag of development of personal data protection approaches.

References:

http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?pagewanted=all&_r=1&

http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/

http://ec.europa.eu/justice/data-protection/minisite/users.html

http://www.bbc.co.uk/news/business-24941415

http://www.theguardian.com/technology/2012/apr/22/me-and-my-data-internet-giants

http://www.digitaltrends.com/social-media/why-consumers-are-increasingly-willing-to-trade-data-for-personalization/

http://venturebeat.com/2013/07/08/online-privacy-hahaha-wheres-my-tin-foil-hat/


read more

According to eMarketer, U.S. advertising spend on mobile platforms will reach $7.65 billion in 2013, nearly doubling its 2012 size of $4.36 billion. Smartphones, of course, store all kinds of personal information, ranging from deliberate storage of information like contacts to less intentional storage of information like products purchased and topics searched. However, unlike desktop computers, mobile devices cannot always rely on cookies to assess a user’s behavior. Mobile apps, for example, do not hold cookies. We can thus infer that much of the $7.65 billion spent on mobile advertising has a lot of room left for improvement when it comes to targeting end-users, and thus also significant potential for market growth. Smarter technology to track users’ tastes on mobile phones would likely be worth big bucks in the online retail world.

Drawbridge is one start-up making inroads in this space. As discussed in a recent NYTimes article, “Selling Secrets of Phone Users to Advertisers” (5 Oct. 2013), one of Drawbridge’s main goals is to connect a user across multiple devices. Since cookies gleaned from desktop browsing can reveal highly coveted information to merchants, consider how valuable it would be for a merchant to also know which mobile devices are connected to that desktop. If I search for “Best restaurants in Cambridge, MA” on my desktop, Drawbridge’s technology might allow advertisers from Grafton Street to display a message on my smartphone shortly thereafter because it would know which smartphone was mine.

This type of behavioral tracking and connecting, I am sure, is just the beginning of companies looking to piece together and profit from all of our online usage. Even if current privacy laws allow companies like Drawbridge to collect and share information, where are the users’ rights? The onset of mobile technology has been rapid and convenient for millions of users, but any relevant education of long-term implications has been heavily ignored, if not entirely absent. Is the challenge to make users more aware of the types of information they are making public and profitable for third parties? Or are the conveniences offered so great that users do not really care about the tradeoff? I consider myself a fairly educated consumer when it comes to privacy laws, but any fears I have of creating an entire cyber footprint of my life are outweighed by the benefits that come with using technologies like social media and online shopping.

As we continue to become a world that is less private, my biggest concern is that the monetary rewards of this alleged transparency will fall into the hands of only a few. What if, instead, the mobile revolution could lead to a new era of self-empowerment for users? What if users could sell their buying behavior and personal information directly to interested parties? Though the cost implications would undoubtedly be higher, the quality of the information would inevitably be much richer and more accurate, likely leading to a higher lifetime customer value.

 


read more