You Are What You Click: On Microtargeting
Every few months there’s a headline story about privacy violations committed by a high-profile online company, and the violations usually span the spectrum. Google was recently slapped with two fines: $22.5 million for tracking users of Apple’s Safari browser, and $25,000 for impeding an FCC probe into a bizarre episode of alleged wireless data “sniffing.” For some years now, the privacy policies of Facebook have been under investigation in Germany and the United States.
What’s always missing from these stories is context. Accounts of privacy violations bubble through the news and stir public outrage, which is often followed by a backlash and occasionally a fine. But these stories rarely reveal the porous privacy lines of the digital realm, or whether other types of violations are being committed online, by companies other than the household names. The outrage is selective and the enforcements ad hoc. News stories about hacking, data sniffing and the like have become red herrings. They provide false assurances that, in the normal course of things, our privacy is not being invaded on the Internet, that our personal data is safe, and that we are anonymous in our online—and offline—activities.
But we aren’t. “Privacy” and “anonymity” are being defined down, and single violations of individual privacy like hacking and identity theft, while aggravating, are trivial compared with efforts toward the comprehensive accumulation of data on every single consumer. The marketing industry is attempting to profile and classify us all, so that advertising can be customized and targeted as precisely as possible. Google, Facebook, Apple and thousands of lesser-known companies are making it their policy and business to profile us in detail, all in the hopes of crafting better sales pitches. For these companies, your value is expressed most often when you click on an ad, signaling that you’re interested in the product being sold. But will you buy it? For those paying for the ads, your value depends on other factors: your socioeconomic class, your credit, your purchasing record.
The sort of consumer profiling that has become increasingly necessary for targeted marketing has yet to generate significant increases in revenue. However, even the modest success of “microtargeting” has been enough to encourage the collection of vast quantities of consumer data, which is cheap and easy to do with today’s technology. There is no incentive to stop this activity; no law prohibits it, and the growing electronic data hoard will be very difficult to expunge. Big Brother is watching you, but he’s no longer a dictator; instead, he’s a desperate and persistent door-to-door salesman. Call him Big Salesman.
Big Salesman is engineering a far grosser violation of our privacy than most people suspect—not a single incident, but a slow, unstoppable process of profiling who we are and what we do, to be sold to advertisers and marketing companies. Information that we reveal about ourselves constantly every day in our online and offline actions has become valuable to those who collect and amass it. Because the value does not lie in any one piece of data but in its unification and aggregation, the data in sum is worth far more than its individual parts. Ticketmaster may know which concerts I’ve attended and Amazon may know which albums I’ve bought, but each company would benefit if it had the other’s file on me. It’s a slow death by a thousand clicks: thousands of people see you on the street every day and it does not feel like an invasion of privacy, but if one person follows you everywhere as you work, read, watch movies and do myriad other things, it becomes stalking. And so we are stalked in the pursuit of marketing optimization.
Where the Money Is
The key data lesson of the Internet age is that the amount of data one possesses is just as important as the type. With enough data, it becomes possible to see patterns that one could never guess in isolation. Consider two contrasting examples: toothpaste and the flu.
Google Flu Trends is an example of apparently beneficent data aggregation. By tracking when and where people are searching Google for terms related to the flu, flu symptoms and flu treatments, Google has been able to predict outbreaks of influenza before government agencies do, and has made it easier to track the path of a flu virus. In many First World countries, Google’s predictions have correlated reasonably closely with subsequent government data. Only an entity with access to an enormous plurality of all Internet searches could achieve such accuracy in prediction.
The same goes for consumer data. If a marketer sees me buy toothpaste at a drugstore, that is not tremendously valuable information by itself. But if he knows my entire history of toothpaste purchases, including which brands I buy and how often, he can predict when I might need to buy toothpaste again, and whether I might be inclined to click on an ad directing me to a lower-cost brand, or to a store selling my usual brand at a cheaper price. If my dental insurer knew my toothpaste purchases, it could classify me as higher or lower risk and adjust my premiums and payments accordingly.
Google Flu Trends gauges collective tendencies among many people, but market research is oriented toward the individual. Targeting the right set of consumers has always been at the heart of advertising, but when web ads first appeared in the 1990s, their click-through rates quickly plummeted as users wised up; people stopped clicking on even the brightest banner ads. The revolution in Internet advertising did not come until 2000, when Google introduced its AdWords program, which allows anyone to bid for placement on ad spots that appear in response to searches for keywords. Google’s system collected little to no data about a user; the ads were displayed based merely on the search query itself. Searching for “watches” generates watch ads, searching for “asbestos” generates ads for tort lawyers. The advertising model fortuitously avoided many of the privacy concerns that are emerging today, because the very nature of Google’s business ensured that it would find out exactly what consumers wanted at the exact moment they wanted it: during the search.
Yet Google’s system was dependent on its having a search engine—the search engine, in fact. Click-through rates for online ads not generated by search engines are considerably lower, and Google’s success in search ads has not been replicated anywhere else. For comparison, consider that Google’s gross revenue was $37.9 billion in 2011 (96 percent of it from advertising), while Facebook’s was merely $3.7 billion. And search continues to make up nearly half of all Internet advertising revenues, with Google dominating its competitors. Thus the social revolution precipitated by Facebook has not yet amounted to a shift in advertising effectiveness—one possible reason for Facebook’s drastic decline in share price following its IPO in May 2012.
Internet marketing companies that aren’t Google can’t observe people at the moment of search, but knowing more about their lives might help refine targeted advertising. And so it has: while microtargeting hasn’t come close to matching Google’s success, it appears to have increased click-through rates sufficiently that several industries have sprung up around profiling and targeting consumers for advertising.