Big Data and the Future of Privacy

Marketing professor David Schweidel discusses how marketers gather and use personal data, the role of privacy concerns, and what the government regulation of data collection and use will mean for businesses.

Commercial uses of personal data
The goal of marketers is to better understand their audience so they can offer the products and services that people are going to be interested in. That requires learning about the customer. Marketers used to rely on demographic information. They knew customers’ zip codes and could get census-tracked information and would rely on customer surveys. A lot of that information was gathered or being directly elicited from consumers themselves. That's not necessary anymore.  Today, marketers learn what people are interested in by seeing what they’re posting on social media. People talk about brands they’ve bought and post photos with products in them. They interact with brands on social media. They also express opinions about brands and share experiences with them. For example, if someone posts online about a horrible customer service experience with their cell phone provider, that's a signal to other cell phone providers that this might be someone they can potentially poach. People provide signals of the strength of the relationship they have with brands and those conversations are potentially observable by other brands. This isn’t not necessarily just useful for competitors. If someone reports having a great experience at a retailer or reports they saw great show at a theater, that's information that those venues and brands can use to determine that someone has a good relationship with them and they should keep that in mind for subsequent interactions.

The gathering of personal data is widespread. Everyday actions taken on cell phones and computers share data; people share data through apps when they just carry their cell phones around over the course of the day. When people search for something on Google, listen to Spotify, or watch something on Netflix they leave digital traces behind. Some of those are proprietary, such as what people watch on Netflix, and others can be captured by a broader range of firms. For example, mobile location data from cell phones, is packaged, aggregated, and resold to brands and organizations.
Data isn’t just for commercial use
In the current pandemic, Google and Apple are collaborating on ways to use mobile location data to do contact tracing, and software developers all over the world are developing contact tracing apps that will run in the background on phones. That will provide the public health community a with great weapon to combat pandemic situations going forward. Social media activity can provide insights into whether people are in the midst of a potential mental health crisis, based on what they're posting online and the type of language they use. This does raise questions about where responsibility lies if a social media platform, such as Facebook, uses this information to determine what ads to show people and whether they should intervene if it seems someone is experiencing depression.

The trade-off with privacy
On the one hand, we value privacy, on the other, we value the convenience and features of our internet and mobile-driven lives. This balance is addressed in a book on surveillance capitalism by historian Shoshana Zuboff that provides insight into how we ended up where we are today. One factor was that the dot com boom, when a lot of today's behemoth companies like Google were in their growth stages, happened in the wake of 911. Zuboff argues that there was a shift in mentality that you could attribute to that event. Before 911 people believed that privacy was essential and could not be infringed upon; after 911, the mentality shifted to believing that we couldn’t allow something like that to ever happen again, even if it meant sacrificing some of our values with respect to privacy. The TV show Person of Interest takes that perspective. The premise is built on the government building a massive surveillance system In the wake of 911. It’s interesting to explore the ramifications being under surveillance 24/7 and whether that’s a society that we want to be a part of. Now companies are collecting as much data as possible and thinking about how they can turn it into something useful. In return, many tech companies have developed many tools whose usefulness may outweigh privacy concerns, such as Google search engines, Gmail, recommendation engines for shopping, and predictive text for messaging and email communications --  all of which require data collection. A New York Times article examined location data and the question of how it needs to be regulated because of how personally identifiable and sensitive the information is. Now that we’re going through a pandemic, tech companies can help us solve this problem by collecting this type of information. The question is how to build this system in a privacy-friendly manner. Any time there is a massive paradigm shift, we're going to re-evaluate how important privacy is.

Marketers will have to make the case for giving up some privacy
Putting a premium on privacy means forgoing the benefits that come from allowing organizations to collect data they used to deliver a better experience. From a commercial standpoint, the onus is on marketers to make the case that the benefits outweigh privacy concerns. Marketers have to convince consumers that providing access to their social media accounts and sharing their location and browsing data is worth the benefits they derive from companies having access to that data. 

Consumers can control data gathering and use but it isn’t easy
There is some recognition that consumers should have some control over who want more control over what data about them is gathered and how it’s used. Regulations like the General Data Protection Regulation in the EU and the California Consumer Privacy Act have made it easier for people in those respective jurisdictions to opt-out of data collection. It’s also possible for people to opt-out of many websites’ data collection practices, but it’s not a perfect solution because there are data aggregators that accumulate data from public sources and product warranty registrations. They have been the bread and butter of direct marketing for years, and they build very comprehensive profiles of consumers that marketers use. People can opt out of that collection in the moment but need to be mindful that they could take an action online that creates a new profile for them. Each consumer has to make their own decision about how comfortable they are with their social media profiles being accessible, and their mobile location data, browser data, and financial information being collected. And they should be aware that this data is aggregated. People who want to be vigilant need to read terms of service for apps and websites and not click through if they don’t like the privacy clauses.

Businesses have a role to play in helping consumers feel comfortable with data collection 
Unfortunately, terms of service are usually very long and difficult to understand and that’s an area where businesses need to get better. Businesses should be able to show consumers on a single screen what data they’re going to collect and how it will be used. It’s likely that the use of data is going to become subject to government regulation, and part of that regulatory push will be for consumers will have more control over their data. When that happens, consumers will need to be mindful of what rights they have and how to avail themselves of those rights. This is an opportunity for marketers to build stronger relationships with their loyal customers and an opportunity for brands to differentiate themselves as valuing privacy and personalized experience. Brands that are able to deliver a personalized experience in a privacy-friendly manner will have a competitive advantage.

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