Tuesday, June 1, 2010

Privacy Is Dead - Get Over It, Folks!

Privacy is dead. It died a long time ago so why blame Facebook alone for it.

If you have ever used a credit card, ordered from a mail-order catalog, subscribed to a magazine, answered a phone survey or supported a local charity, you have provided marketers with information they consider extremely valuable. Long before the Web was invented; you were counted, cataloged, sorted, indexed, cross-referenced, sold, and redistributed countless times.

During my college days, I worked part-time as a telemarketer for a major health supplement company. I was given a stack of printed leads and told to call - all to ask for money. I called. I sold various supplements and brought in plenty of orders. Was it my charming personality and silky smooth voice that convinced total strangers to hand over their credit card numbers to me? I'd like to think so.

More likely, it was that stack of call leads, which told me not only their names and phone numbers, but also what these people did for a living and how rich or poor they were. What kind of diseases they had, who their general physician was, how often they ate out, what kind of cars they drove, recent major purchases, and so on. My employer had purchased their personal information.

If you really want to see someone run and grab their checkbook, tell a U2 fan that by joining at the Club level, he or she will get to meet Bono the next time he's in town. Any die-hard football addict will gladly hand over their credit card number when they are told that it will pay for a 24-hour David Beckham appearance.

Advertisers and Marketers have long been exploring the idea of using personal information to derive and provide value. And the companies who do it are the aggregators. They have also been known as infomediaries, metamediaries, metamarkets, syndicates and disintermediaries. Now, they exist in our midst in the form of Google, Facebook, etcetera. The players in this space combine a large database of user information with a large collection of products and services in order to play matchmaker.

These aggregators can collect large amounts of user preferences and then shop for special deals. For example, knowing that I am looking for a new Android based cell phone is of little value to a retailer. However, knowing that 10,000 people are shopping for and are willing to pay no more than $200 is invaluable to a retailer. The retailer can then decide to lower the price in order to make 10,000 new customers.

In an age where getting and retaining customers is everyone's number one priority, retailers are happily trading margin for volume. In addition to volume sales, the retailer can also benefit from relevant upsells. For example, a new Android phone customer might eventually be convinced to purchase other related products, like an eBook reader or a media player.

Aggregators are able to provide consumers something even more valuable than great deals on products and services. They help consumers regain some of their privacy. By divulging personal information to trusted aggregators, consumers can derive the benefits of sharing their interests and preferences without fearing that their personal information is spreading across the Internet and beyond.

Aggregation may be a situation where everyone wins. Consumers and vendors can each deal with a single point of contact. Consumers are ensured that their information remains private while using that data to secure good deals from vendors. Vendors are happy to have access to a new set of consumers who want their products and services. Aggregators can profit from commissions.

There are some areas that are prime territory for aggregators to step into. Products which require extensive pre-sale research. Big ticket items whose prices can fluctuate. Complimentary products and services which can be combined into packages. Services which require the collection of large amounts of customer information. Products and services where the purchase process is either inefficient or unpleasant.

As consumers realize the value that aggregators provide they will slowly begin to part with some of their personal information in order to enjoy the benefits and security aggregation can deliver.

The Internet has succeeded in increasing awareness about privacy concerns, both online and offline. Unfortunately as the Facebook case vindicates, the popular press has tended to focus exclusively on the negative issues around Internet privacy. As a result, consumers have developed a certain degree of paranoia regarding their personal information. Though protecting one's personal data is very important, it is also important for consumers to know how to effectively use personal information for their benefit.

The Internet is not uniquely responsible for invading your privacy; it is simply the newest place businesses can track your personal information. Instead of harboring the illusion that you can live, interact, buy and socialize in this society in utter privacy, consider the power you hold and use it to your advantage. After all, the power ultimately lies in your hands.

1 comment:

  1. Spot on my friend ... spot on !! If people are worried about privacy, I have to say "if there is something private enough, so that you dont want to share, then dont add it online" Dont make someone else responsible of your personal information.


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