No Prvcy 4 U

Wharton professor Shawndra Hill has co-authored a study showing that targeting the network of friends surrounding a customer can be an extremely effective marketing tactic.

Professor Hill used traffic analysis of call data from a large telco to determine customers' social networks, then watched conversion rates as a new DSL service was pitched. Customers identified by social networks were three times as likely to buy as those identified by conventional market research, a startlingly large difference. Asked about the privacy issues arising from this use of customer data, Professor Hill (in a refreshingly frank comment) said, "[F]irms own their customers' data--including e-mail content and MySpace messages--and legally can use it for such purposes as target marketing." This is reminiscent of Scott McNealy's sympathetic 1999 effort to reassure those of us who fear creeping privacy invasion: "You have zero privacy already. Get over it." (Whew! I was worried there for a moment. Thanks, Scott!)

So what?

One possibility here revolves around SMS. I'm not sure what the laws on SMS interception are, but they could probably be circumvented in the service contract ("SMS is FREE if you let us ogle your messages..."). Granted, you have to parse and understand (un)natural language--but you may not need to understand much: A word here or there could speak volumes.

What could you do with this information? Several things. First, SMS AdSense: You push ads of interest to customers based on their SMS message content--this one is obvious. Second, buzz metrics: Pick up the early buzz around a restaurant or clothing store or movie or piece of consumer electronics and sell the information as market research. Or even amplify it--offer to augment the buzz through targeted SMS advertisements. Third, identify tastemakers--the people who first mention a newly-hot item--and sell that information to retailers, who in turn might provide them with free products or services in the hope that they, too, will become hip.
All in all, an exciting prospect for SMS users, Professor Shawndra Hill, Scott McNealy, the telcos and indeed all who love commerce. For those of us nervous about privacy erosion...maybe not so much. Although, as Scott might say, "Don't worry: You can't erode it if it's already gone."