Jan 30

Death of privacy: if you aren’t paying, then you’re the product?

We live in an era in which companies have productified internet users. Considering that a product is simply something that is the result of a process that can be used or sold, data that is collected from internet users shopping or browsing history that is then used or sold by companies are products commonly referred to as “Big Data”. Despite ongoing privacy complaints, Big Data helps companies more efficiently deliver value to core customers.
In response to the prompt, big data is developed from internet usage and search history whether or not consumers are purchasing goods or services or browsing the web for free. Last month Facebook rolled out a rebuilt ad platform, Atlas that allows marketers to leverage its detailed knowledge of users for direct ad campaigns.

Facebook, which is largely a free platform for members, has been actively tracking social media and usage patterns for years. The company has managed to transform this data into marketing products that help retailers and advertisers better target customers. Additionally, companies whose products and services are sold to customers have also managed to productify consumers. Amazon mines data from a 152 million customer base, leveraging the data from shopping history to build a customer service operation and recommender systems that keep users shopping. Therefore whether or not internet users are purchasing goods or services online or merely browsing for free, web behavior is being increasingly monitored by institutions looking to leverage consumer insights for internal or external gain.

Ultimately when data is properly maintained and used accurately by institutions the benefits to companies of selling or leveraging big data is clear, albeit mostly anecdotal. According to a Forbes Insights paper, the more a company makes use of big data the more likely it is to meet or exceed goals: of the organizations that used big data 92% said they met or exceeded their goals, 75% who used big data at least 50% of the time could measure the effects of multi-channel campaigns, and 70% in the 50% or more group said that they were able to pinpoint the right audience in all or most of their media activities, double the number in the under 50% group. Overall, the use of data helps companies have a better idea of where their marketing campaigns are having effect.

By using big data, companies and institutions are able to deliver value to customers too. With more information on user behavior, institutions can curate experiences that meet the unique needs of any individual in real time. For example, Seamless understands that its users are loyal to select food vendors. As such, the company tracks user food orders and personal delivery details in order to expedite the shopping and checkout process, saving time for customers. Additionally, data can help better inform company product and pricing strategy, in some cases reducing costs for end users. For example, cities, including Oslo in Norway, are leveraging resident energy usage data to deliver smart solutions, working to reduce taxes to residents. Oslo cut street lighting energy consumption by 62% by incorporating data usage into its lighting strategy.

Despite the benefits, the obvious challenge around the use of big data comes down to privacy. The President’s Council of Advisors on Science and Technology (PCAST) explains that “the challenges to privacy arise because technologies collect so much data (e.g., from sensors in everything from phones to parking lots) and analyze them so efficiently (e.g., through data mining and other kinds of analytics) that it is possible to learn far more than most people had anticipated or can anticipate given continuing progress. These challenges are compounded by limitations on traditional technologies used to protect privacy (such as de-identification).”

In conclusion, whether we are paying for products or merely using them for free, companies have figured out how to turn our behavior and search history into products that deliver both direct and indirect benefits. The greatest challenges continue to exist around preserving user privacy in the face of theft and fraud, issues that are being actively explored and monitored by the current administration.

Carolyna de Laurentiis is a second-year MBA student at NYU Stern and president of the NYC InSITE Chapter. She has worked in business and product strategy for American Express.

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