Perhaps these childhood stories are why people often freak out about data. The legends of people recording others’ actions, especially those of children, as a form of behavioral modification have been with us for millennium. In Bavaria, the Santa myth is actually split into two figures, a Saint Nicholas who rewards good children with gifts and a devilish, horned Krampus who punishes bad children. Japan has a similar tradition, with an Namahage figure played by men wearing huge, ugly masks, who knock on doors and warn children not to misbehave. Religion is filled with data tracking, starting with God watching Adam and Eve’s naughty apple-biting in Eden, moving on to the widespread but vague idea that somehow all of your actions in your lifetime are being observed for a final post-death judgment. In our deepest beliefs, we perceive there is a connection between what we do, how others record it, and how we will be rewarded.
Which brings us to marketing surveillance
If you collect enough data to form a baseline for comparing people, you end up with a “database” — and this idea has been around for at least 400 years. In America in the 1600s, clergy tracked births, marriages and deaths; officials called “tythingmen” would also enter homes to inspect families for observed moral behavior. The first consumer database in the United States was set up in Massachusetts in 1629 to track property ownership. As data expanded, intrusions did too. In the early 1700s, U.S. postal mail was opened regularly to spy on message content.
And then marketers figured out they could make money from all of this information. Database marketing started in the 1940s, first driven by direct-mail marketers (who needed target lists of consumers to mail things to and then calculations to see what worked), later by credit-card companies and banks (who rapidly learned that not all consumers have the same credit risk), and then in the 1990s by Internet marketers who realized they could measure a treasure trove of consumers’ online behavior. While the basic approaches are the same — identify potential customers, differentiate by their value to you and what they need from you, continue to gather more information through interactions, and then customize your response — the cycle time of data marketing increased. Direct mail list updates used to take months; if you purchased a pair of boots at a store in December, it might be March before another company’s boot catalog showed up in your mail. But the Internet enabled a cycle time of identification, differentiation, interaction and customization within days, hours, and now even seconds. Visit zappos.com, look at shoes, don’t buy them, and you’ll see ads for similar shoes on other web sites within seconds. The prevalence of such digital “retargeting” has gotten so rapid that many consumers are beginning to freak out.
The systems are growing ever-more sophisticated. Digital media vendor Rocket Fuel has begun testing device fingerprinting to track consumers by their individual mobile phones; in a recent campaign for Brooks running shoes, it identified the mobile devices of everyone standing along the running route of the New York City marathon, and then later served ads to those devices for running equipment long after the crowds had dispersed to Baltimore, California or even foreign nations. Digital marketers can pick up the IP address of a home’s Wi-Fi connection, and then retarget multiple devices — based on a trigger of one person’s behavior — across the many iPhones, tablets and computers residing in a household. Creative-based retargeting is another digital approach in which banner ads or online videos can be retargeted based on a single ad appearing on any web page, whether or not a consumer clicks on it; for marketers, this provides the advantage of being able to “lift” a publisher’s audience, such as a reader of WSJ.com, and chase that individual around the web later with a pretty good idea of their demographic profile based on the original reading material.
Consumers are rebelling, so what is the balance?
Not everyone is happy about this. Early in 2014, a survey by Truste, a global data management company, found that 74% of Internet users had increasing worries about the use of online data. While only 38% expressed worry about government surveillance, 58% said they had concerns about business use of their personal information. Beyond simple consumer annoyance, the growing use of online data may actually be harming marketing results. 83% of survey respondents said they were less likely to click on an online ad due to privacy concerns. In a deeply ironic circle, the data collection sophistication used to make online marketing work better may actually be depressing response rates.
Smart marketers are recognizing this and beginning to tone down the creep-factor of retargeting, using tactics such as impression caps, dayparting, ad creative versioning, and opt-out options to allow Internet users more breathing room before they are inundated with braying offers.
Data tracking will not ago away, because it is how all of us assess the outside world to calibrate our actions. Marketing in particular is all about treating different customers differently, as the great Don Peppers once wrote — after all, if you have unique needs, you should receive messaging about products or ideas that appeal to your interests, and marketers who play this right will gain greater results from their advertising investments. Just as parents and Santa Claus watch over children to assess behavior, other people will always be watching you too. The practice isn’t creepy in and of itself; what has gotten scary is the instant cycle time it takes someone else to pass their judgment. For our clients, we recommend looking beyond just response and conversion rates to also assess the real end customer experience. You’re trying to share information that benefits the customer, so pace yourselves, people. Everyone likes an elf who brings presents, but we all get nervous if he’s watching us too much.