Target knew one of its shoppers was pregnant before her own father did.
That’s the provocative story of at the center of Charles Duhigg’s New York Times article, “How Companies Learn Your Secrets”. The article highlights the power of “big data” and the ability of a few smart statisticians to turn mounds of customer data into actionable insights. Duhigg also explains why a retail store like Target is in the business of pregnancy predictions:
There are, however, some brief periods in a person’s life when old routines fall apart and buying habits are suddenly in flux. One of those moments — the moment, really — is right around the birth of a child, when parents are exhausted and overwhelmed and their shopping patterns and brand loyalties are up for grabs. But as Target’s marketers explained to Pole, timing is everything. Because birth records are usually public, the moment a couple have a new baby, they are almost instantaneously barraged with offers and incentives and advertisements from all sorts of companies. Which means that the key is to reach them earlier, before any other retailers know a baby is on the way. Specifically, the marketers said they wanted to send specially designed ads to women in their second trimester, which is when most expectant mothers begin buying all sorts of new things, like prenatal vitamins and maternity clothing. “Can you give us a list?” the marketers asked.
“We knew that if we could identify them in their second trimester, there’s a good chance we could capture them for years,” Pole told me.
Being lured and “captured” by a company’s stealth aggregation of your personal information is not a comforting thought for most consumers but that’s reality- personal data is now a commodity, and a very valuable one at that. However, predictive analytics and the resulting hunt for personal data is not a result of particularly greedy or immoral companies but rather a very natural byproduct of technology. Banks have always wanted to know who will pay their bills on time and retailers have always wanted to forecast who will buy their products. However, insights into these behaviors were previously hindered by the quality of inputs- and that’s where technology comes in. Computers revolutionized the kinds of data the average marketing team could record, store and analyze. The internet allowed online and offline behaviors to be causally linked and tracked in a unified, seamless way. Said another way, Don Draper would have used Google Analytics and Facebook Insights if he could.
Harness Mobile: Smartphones are game changers. In the next decade these devices will reach near ubiquity in the United States and that has serious implications for data collection. With most consumers carrying internet enabled, mini-computers in their pockets, smartphones push traditional “offline” channels into the online space. Consumers can be tracked during every step of the purchase funnel; GPS and other location-based technologies will enable targeted advertisements and search results, mobile apps will offer customized coupons the minute you enter a store, and any actions or purchases you make using your phone will be recorded at an incredibly granular level (time, date, location, User ID, etc). In the era of always being “plugged-in” there is an unbelievable opportunity to personalize, optimize and record a consumer’s experience with your brand using big data.
Everyone Needs Data: I have been focusing on the marketing side of big data but almost every single department of a business, from operations to HR, can benefit from expanding their data sets. McKinsey & Co. recently praised Procter & Gamble’s company-wide embrace of big data citing “better innovation, higher productivity, lower costs, and the promise of faster growth” for tasks as varied as manufacturing and developing products to maintaing relationships with retailers. Researchers are predicting that 80-90% of Fortunate 500 companies will have big data initiatives underway by the end of 2012. At its core, big data represents the intersection of new streams of data, innovative ways to combine data and better tools to parse data. Though not yet perfected, this new paradigm of improved decision represents growing source of competitive advantage.
Big Data & Consumers
Brace Yourself: Imagine you’re the CEO of Walmart and you’ve just read about Target’s remarkable predictive analytics results. What are you going to do? Hire a bunch of smart statisticians (I’m sure they have some already) and launch an aggressive big data initiative. Consumers are already hounded for their personal information but with case studies piling up around the efficacy of big data you can expect more invasive, cunning and tempting ways for companies to acquire data about you.
Educate Yourself: Unless you are going to pull a Jason Bourne and go completely off the grid, chances are you will run up against personal data collection from brands or third-party companies. It is certainly no small task to protect your personal data; a Carnegie Mellon study found it would take 76 work days to read the privacy policies of all the major websites you visit in a year.
Google’s most recent privacy change (unifying all Google properties) provides an important teaching moment with many consumer privacy advocates ranting about how to disable your Web History without reading the fine print. The truth is, disabling your web history will only reduce the customized advertisements and messaging during your Google experience- the company is still very much recording all of your data for both internal and legal purposes. By unifying their privacy policies that means that if you are signed into YouTube or Google+ or Gmail, in Google’s eyes you are signed into all of their properties (i.e receiving a Google ad based on the last YouTube video you watched).
Protect Yourself: If the worst thing that comes from the age of big data is eerily accurate targeted advertisements we should consider ourselves lucky. Here are a couple things to keep in mind to help protect yourself:
1) Everything is connected: Don’t blindly click at things to get a service you want. Often if you “sign-in using Facebook” to a mobile app or website you have just given the company key identifying information about yourself (birthday, age, school, location, etc).
2) Stay off the beaten path: If you are worried about Google or Bing knowing everything about you, don’t use it! Blekko and DuckDuckGo are two smaller search engines that still do a great job of producing relevant search results.
3) Pay for privacy: Online users have been spoiled by the freemium business model. We have an amazing digital universe to play with and we don’t have to pay for most of it due to revenues from “premium services” and advertising. I believe the next decade will see this paradigm clash with privacy concerns stemming from overly invasive data collection. Expect to see an influx of both retailers and third-party “privacy specialists” offering to sterilize your online experience- for a price.
Thank you for reading. To show my appreciation here’s Elvis Costello warning us about all this madness before Mark Zuckerberg was even born.