Behavioral Data: Valuing Customers. Then Avoiding Them.

Behavioral Data: Valuing Customers. Then Avoiding Them.

Summary: There’s little question that just about every profit-making company out there would like to know exactly what you’re doing on the Web, all the time.And that there’s a clear (profitable) market to be had in data that captures your “behavior” on the Internet.

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There’s little question that just about every profit-making company out there would like to know exactly what you’re doing on the Web, all the time.

And that there’s a clear (profitable) market to be had in data that captures your “behavior” on the Internet.

There is in fact, a street value for behavioral information, as Gartner analyst Andrew Frank, points out. And it’s captured in “cost per thousand” calculations on data exchanges such as BlueKai and Exelate.

These relate to the anonymous IDs, aka cookies, that Web sites use to track sale, purchase and other activities. Advertisers pay ad networks anywhere from $1.50 a thousand to about $10 a thousand, for the information, which then lets them target their pitches better and get higher returns on the “cost per thousand” they in turn pay for placing ads.

The latest company to get caught in the crossfire of using this behavioral data is Sears, the once-proud retailer of all things American. Even kits to build houses (way back in its early catalog days).

Its current incarnation, the Sears Holdings Management Company, in fact, put a price of exactly $10 on being able to attach some sort of code that would track very precise details about a person’s “online browsing.” This, according to the Philadelphia Inquirer, included details about online shopping, drug-prescription records, video rentals, library-borrowing histories, names and addresses of e-mail correspondents as well as bank statements.

The recipient also would be able to take part in a "dynamic and highly interactive online community" where they could converse with Sears and its sister retailer, Kmart.

But Sears and Kmart did not tell their past, present or potential customers (about 5,000 of the) that their “online browsing” would be tracked in such detail. And the Federal Trade Commission took the company to task. The charges were settled, with undisclosed (surprise, surprise) details.

There are problems here that seem to be repetitive, among profit-making companies.

a. A desire to know everything about a person’s Web behavior. b. A desire to disclose as little as possible about what is being collected. c. A propensity to compensate the past, present or potential customer as little as possible.

But the biggest problem seems a combination of not fully disclosing what you’re doing or trusting your customer to understand that what you are doing is in his or her best interest.

If it was in the customer’s best interest, then it’d be an easy sell. You’d tell the existing or prospective customer that tracking his or her behavior would allow you to provide more useful features or services, or keep down subscription or other fees by allowing you to sell ads that would save them money, in the long run.

In effect, you’d be able to get every customer to “opt in” for the service you’re trying to provide. It’d be easy to explain, easy to get customer assent and easy to operate. It would be a win-win.

You wouldn’t have customers questioning what habits were being tracked, how deep the inspection of their packets went and what the uses were, a la the NebuAd kerfuffle last year. And you’d have, quite literally, buy-in from the customer for what you wanted to do.

You know, eventually, opt-in – getting customers’ agreement first – is going to happen. Has to happen. Google’s the quintessential behavioral ad company and it will increasingly come under the microscope. Cable operators, from Comcast to Time Warner to Cox, all want to get into very targeted advertising on TV, not just the Internet.

And yet, the Network Advertising Initiative that is supposed to be so mindful of customers and their rights to privacy is still opting for … opting out as the principle of the day. Put the onus on the customer to say they DON’T want to be watched, rather than putting the onus on the company to get permission that they DO.

What’s the problem?

That companies might actually have to listen to the customers they want to track and do more business with?

Yes.

What’s got to change?

The idea that interacting with customers, talking to and with them, is a hassle.

“The first mindset change has to be the customer is an asset,’’ said Anthony Nemelka, the president and CEO of Helpstream, a company that provides an integrated suite of customer support services over the Web. “The second is that the customer wants to be an asset -- and it is simply a matter of asking.”

What's holding them back?

The mass of customers they might have to actually deal with. Millions of customers who you have to ask for assent before you can market to them. Or begin to listen to them. It’s a hassle.

In effect, Nemelka says, companies want to be protected from the customer. Heaven forbid they should ask for something. Or provide feedback. They couldn’t handle “the deluge.”

But, you know, therein lies the power of blogs, tweets and other methods of instant publishing of experiences and sentiments. Companies who don’t realize they aren’t in control of their customers – that they have to get them to say “yes” in everything they do – aren’t in control of their own businesses.

"You can't deflect any more,’’ says Nemelka. “You deflect at your own peril.''

Topics: Privacy, Banking, E-Commerce, Google

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14 comments
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  • How to cop an attitude...

    This is what web facing companies do. They think they have to hide everything with one pixel web bugs, packet inspection and the like just to know what I like or want.

    This sort of stealthy attitude, sneaking around to collect my behavior, attempting to lock me in as a customer (Oh hear me, Microsoft), selling my information to "partners", all of it has engendered an attitude on my part. That is this: if you have to advertise it, I probably don't need it.

    Until advertisers and their customers change their attitude about why I should want to purchase their goods and services, I won't be changing mine.

    Give me the option to control my information. Or give me a piece of the action. But don't tell me that I have to put up with behavior tracking just for the sake of revenue, all without my consent or with my implied consent.

    If you want my business, treat me like a customer, not a scoundrel.
    epitax
    • attitude too early?

      I believe advertisers are meant to introduce a product or service, not simply sell only. Selling is considered part of the total ad, but going as far as to say that "I probably don't need it" is shortsighted.

      I will agree however that companies take a backwards stance on "opt-out" options, rather than asking customers to "opt-in" a service. Same with credit card companies systematically "opting in" customers with high FICO scores into a 10% increase APR.

      Hey, how about I "opt-in" anyone's belongings when they come over to my house without their knowledge. They can't "opt-out" unless they find their belongings.

      mcaarlington
    • i hear ya, but that's not going to happen.

      Well, it'd be nice if it would, but we're just walking wallets... if you'll put up with my cynicism for just a moment. :)

      At least Microsoft gives people such control under some circumstances; I turned off error reporting and other things for them to get free QC and troubleshooting... (and with Win7 having a built-in keylogger disguised as a means to help support users who can't easily say "I pressed this key followed by that one followed by hitting ENTER followed by clicking 'OK'"... if one don't know how to use a computer, one shouldn't be on one.

      How's that for traversing 3 mostly irrelevant tangents... :D

      Besides, the way bing dishes out information, putting in a computer term results in showing fast food restaurants, and not to mention that porno scandal... or their own free abuse of fair use while being two-faced anti-piracy doorknobs that have openly said they don't mind China pirating their software... oops, more tangents, but I'm sure I'm marketing something... ;)



      HypnoToad72
  • Belongings: Opting In and Out

    Re:
    Hey, how about I "opt-in" anyone's belongings when they come over to my house without their knowledge. They can't "opt-out" unless they find their belongings.


    Clearly, you're reversing the analogy and becoming the "company" not the "customer." You're hosting your guests and you're deciding to take their stuff. And you're making them "opt out," because you want to take their stuff in the first place, without telling them when they arrive that you are doing so.

    Because it is your house, you think you have the right to take the stuff. But you don't.

    TST
    Tom Steinert-Threlkeld
    • Taking what stuff?

      If someone comes over to my place with a "kick me" sign taped to their back, I think I'd have every right of viewing that sign and possibly telling them about it. If they have a letter in an envelope in their pocket, that's not something that I would be taking out of their pocket, opening it up and reading it.
      aeriform
  • What's a "big brother" again?

    Also, people need to be paid money for them to spend on all these marketed lovelies. Devaluing workers' wages isn't going to do anybody any good -- and statistics, going back some 36 years, have shown a trend about buying and saving power and it's not all the fault of those who work to bring in the pittances each day.
    HypnoToad72
  • I opt out of everything I can

    I can't imagine any value in any retailer knowing my shopping habits. They aren't going to stock things just for me. They aren't giving me any compensation for the information. In the worst case they are intrusive or their systems don't work.

    There is nothing in any of this for me. Opt out.
    ca1ic0cat
  • Did they, or didn't they?

    I'm confused.

    The Enquirer piece says that "the FTC said Sears failed to adequately disclose the depth and breadth of the information it was collecting." But it also says that "[t]he data collection was not detailed until deep into a long licensing agreement."

    So does this mean that Sears didn't tell people at all? Or that they told them, but that folks just didn't read the licensing agreement?
    ParrotHeadFL
  • Hasn't anyone heard of a "FIREWALL"

    The rules of the internet are quite simple.
    1.) Trust no one.
    2.) Treat every website you visit as the enemy.
    3.) All websites are trying to violate your privacy.

    Once you understand how the internet really works, you'll take every precaution to protect yourself.

    Use security software and make sure your machine is locked down tightly. Normal humans don't leave the doors to their home unlocked and wide open. Only a fool would use an unsecure computer.
    PZalong
    • I've heard of FIREWALL. Don't use 'em

      I don't lock my house either. I may not be normal but I'm not a fool either.
      No problems so far. What bad thing might I expect?
      Badge3832
  • Easy fix for me anyway...

    I use false profiles, don't buy online, use different emails (I kill them when I get more than five spam messages and make new ones) and I use different computers, browsers, and search engines. I was also given such a generic name (God bless my parents) that searches yeild thousands of hits even when I focus it somewhat. I won't do a full search because that becomes part of the net. I am still somewhat off the grid and it would take more dedication than most people have to "find" me.
    mikifinaz1@...
    • "Easy fix" for what?

      "I use false profiles, don't buy online, ..."

      Seems to be an interesting hobby. Thanks for sharing.
      Do you enjoy any actual benefits from doing this?
      Badge3832
  • Sears doesn't surprise me.

    About three years ago I applied for a job on Sear's website. I declined to allow them to do a credit back ground check because the position was one in which the check was not necessary. Not to mention the fact that my credit history gives no indication of my ability to do a job.

    When I clicked on the submit button, the next web page stated that I failed to comply with the Federal Laws that require me to validate my identity.

    Well guess what? Sears could check my credit score everyday for a thousand years. And that still would not validate my identity, nor would it fulfill the Federal Laws that require me to do so. Only photo copies of my drivers license and social security card can fulfill that need. My credit history, is not even on the list of required documents.

    If you think your credit history is relevant to a job position consider this potential situation that can happen to anyone and does happen to people:

    You lose your job through no fault of your own. As a result you go through years of unemployment that devastates the good credit rating you built up over the years.

    Employers check your credit history and decide you are not qualified for the job because you have a low credit score. As a result of your low credit score and the insistence of employers to check your credit score which has no bearing on your true qualifications for a job.

    You are now, through no fault of your own, <b>unemployable</b>!

    When you go to that church you gave thousands of dollars to over the years when you were employed, they respond to you saying "there's no free money". And when you go to other churches for help, they respond to you as though your not willing to work and any effort you put forth is disavowed because you are currently not working. Then when at long last you become disabled due to the unwillingness of people to help you, you are still looked at as one who is pulling some kind of a scam and trying to take advantage of people.

    Then when you end up in the hospital because you've developed a condition that will kill you if you don't have surgery, those organizations that claim they are there to help the poor, needy and homeless say that they can't help you because you are not working.

    So sears gathering information they had not right to, and the Government keeping it all hush hush does not surprise me in the least.

    We live in a wicked and evil and just plain disingenuous generation.
    satovey@...
  • Can't tell the customer a lie.

    You *could* tell the customer that tracking behavior allows you to provide more useful features or services, keep down fees by allowing you to sell ads that would save them money, in the long run. However, that would be a lie. They want to collect the info because it has value to them and to others, and they can sell that value to the highest bidder.
    3dguru