Chart: Data Privacy, Marketing ROI, and Creepy
If Your Digital Marketing Strategy is Creepy, You Need to Opt Out
At a recent industry event, I was asked to be on a panel to discuss location-based marketing solutions. The group was in front of 100 local marketing professionals who specifically have the task of helping local businesses or national brands with a local retail presence. They drive more foot traffic to their bricks-and-mortar locations through various digital marketing efforts. This is the battleground for some of the most important data privacy questions of our time.
There were three of us on stage, and honestly, this wasn’t one of your friendlier discussions. Because consumer location data is so helpful in targeting would-be visitors to a particular store location, this real-time data is intoxicating for most marketers. Imagine, every consumer walking down the street being bombarded with ads telling them where they can get lunch, a deal on coffee, or where to find the cheapest gas. Who doesn’t want that convenience and benefit?
As it turns out, I don’t.
And all the marketers on stage do.
Your Location and Proper Value Exchange
The benefits of location-based marketing are obvious. You have a consumer, who has opted-into an app on their phone that, buried deep in their privacy policy, has the right to share or sell that data to third parties. This drastically increases the targeting ability for that consumer. So, that seemingly innocuous game your kid downloaded to pass the time while you were having the tires rotated is now tracking your every move and selling it to marketers who can then deliver an ad to your browser, send you a text, or reach you through their app. With this information (and usually the addition of the time of day), most marketers can increase ROI on their spend.
But should they?
The issue here is about a proper value exchange. When a customer downloads your app or accesses your website (pop-up consent aside) they are expecting some sort of value exchange. The consumer is expecting that either your retro-Tetris-style game is great, or that the weather information your app provides is accurate. Essentially, they are expecting something for little money or for free to work well and to provide them with value. In exchange, they likely expect some ads inside the app, the occasional in-app purchase offer, or some other cost to either their wallet or their attention span. The quick consent to terms and privacy you have designed (to be ignored) or designed to “nudge” the consumer forward don’t really even begin to fairly express the imbalance in value.
What consumers don’t expect is your company using their real-time location data to sell or share with third parties. Don’t tell me they don’t care. A new study from NBC and WSJ clearly show that 93% of Americans want companies to specifically get permission to use their personal data. If consumers knew that you were tracking them to later sell that data (regardless of your hidden promise of anonymity in your terms) they would likely say “no.” Onstage during our industry panel, my co-panelists offered comments like:
“Honestly, as long as people get value, they’re okay with this.”
“Polling shows people don’t care about privacy issues.”
“Overall, people won’t pay for Facebook or other ‘free’ apps and therefore are okay with location tracking and targeting.”
The problem with many of these statements is that they tend to reference this old poll from Morning Consult from 2017, which states that 67% of American’s aren’t willing to pay for services in order to reduce or remove ads. This poll appears to conclude, with similar types of findings from the Interactive Advertising Bureau (IAB), that being able to target the right ads at the right time to the right person is an ideal outcome of value for value. Of course, the IAB also points out the following in the same presentation…
“Nearly Half Say the Greatest Benefit of Targeted Ads is in Reducing Irrelevant Ads”
Meaning, respondents to these surveys are basically asking to reduce the number of ads when asked to choose between more general ads verse more targeted ads. That’s akin to asking…
“would you like to be swarmed by 100 bees all around you, or only 20 bees that know you have an affinity for the outdoor lifestyle?”
Of course, we choose 20, but honestly, show me a marketer that actually reduces the number of ads they deliver, once they can target you more effectively. No one ever does that. They just show more (now targeted) ads.
More importantly, the studies being referenced aren’t about location-based marketing. They are about online tracking ads via cookies, television, roadside billboards, and print ads. These studies are not about real-time, location-tracking based ads. I argue that is exactly why they can’t be used as a valid proxy for consumer attitudes toward location tracking. The value exchange for tracking a person online is different than the one for location-based tracking offline. The New York Times article on apps tracking consumer location shed some intense light on this and was a major milestone in dissecting the real value equation.
Marketing ROI vs “Creepy”
Before going into the potential harm of location-based data targeting, it might be worth explaining (in broad terms) how marketers got here. First, the balance between Return on Investment (ROI) for every marketing dollar spent is a tough one. For marketers, whose job it is to drive traffic (both digital and foot traffic), the allure of more data and better data is hard to discount. They constantly want to move to more targeted solutions because that ROI number will increase (as you move to the right in the chart above.)
Unfortunately, this has to be measured against the y-axis, which is the tendency for marketing to become more creepy over time. Every chart like this one will be unique for each company. A major CPG company might get better ROI from classic marketing tactics vs a food truck who leverages location data because their location isn’t fixed. Don’t get hung up on the lengths of the lines nor whether they are to scale or not. More, focus on the main types of data at each step.
Aggregate, or classic targeting data, is how we market snow shovels to consumers in the northeast during the cold months. No one really minds this, and I would argue it is far from creepy. In fact, it just seems like a logical thing to do and many marketers get the vast majority of their ROI from these de-humanized, aggregate efforts. Another example of this is buying ads where your customers are likely to spend time. For example, if you run a fintech company in the banking sector, you can assume that the audience visiting the websites of American Banker (disclosure: I work for SourceMedia, owner of American Banker), Financial Times, and the Wall Street Journal are good bets.
From here, most companies move up the y-axis to cookies. Why? Cookies really help you get to the next level of personalization from aggregates. They allow for an understanding at the individual level for data points like topics of interest or prior browsing session data. This is the first step toward creepy in many ways, and what a slippery slope it is from here. There are permissible ways to use cookie data, and there are overly aggressive ways. Regardless, the public thus far has not necessarily risen to a level of outcry about cookies and while regulatory authorities are beginning to really crack down on cookie usage, the public, in general, appears to view this as part of the normal value exchange between content and value.
At the next level, though, we see some real concern by the public. As we use cookies to track and follow consumers online, they definitely have a lot to say here. That Casper mattress advertisement has been following you for weeks now, and you can’t escape it even though you already bought the mattress. Twitter has some hilarious examples of these demonstrations of re-targeting gone awry.
The analogy is that people seem to accept they are being watched while on a property, but they do not then expect to be followed all over from there.
When I walk into Best Buy in the physical world, a store employee in the bright yellow shirt doesn’t then follow me out the door and back to my home. I would notice that, and similarly, people do notice re-targeting.
This is why I view the jump from cookies to re-targeting as an important distinction in the mind of the consumer. At this moment, the activity crosses over to active surveillance, from which, up until this point, was far more passive. Consumers recognize this almost instantly. There are 90k search results for “retargeting creepy” and many explain that anger can be a natural response from consumers when you overuse this tactic.
All that said, there are over 9M results for just looking up how to use retargeting ads, because they are effective. Following a potential customer to re-introduce your product or service has been proven to work, but it can get out of hand quickly. Should you follow your potential customer (or in the case of Casper Mattresses, your current customers) long after they have visited your site?
Location-Based Marketing Data
This brings us to the point on our drawn chart where we jump from retargeting to real-time, location-based tracking. And, while the chart isn’t to scale, I’d say this is a huge leap upwards on the y-axis of “creepy.”
To most people, being followed in the physical world is not acceptable. It crosses so many lines and is an over-reach of our technology. Take this even farther where this tracking is happening with kids. Go re-read that New York Times article about all the location pings coming from your kids’ devices while they are at school, it is terrifying and unacceptable.
Now, many in the location data space say, “Wait, we only use anonymous data.” Unfortunately, this is also not accurate. Saying data is anonymous is not the same as saying that it can’t be identified easily. Just because they use a unique identifier and not someone’s actual name in their systems does not mean this is anonymous. In fact, with location-based data, this couldn’t be further from the truth.
People have patterns. Where you wake up, where you commute from, where you get your morning coffee, where you work. Usually 5 days a week, you rise and set in the same location, and every app that tracks your location knows this. With simple public record property or address information from the GPS coordinates pinged back from your phone, companies can identify the exact address and owner of that address. Additionally, if you commute to the same business office or place of work most days, this additionally can confirm your identity. Knowing a home address and a company address is often more than enough to “re-identify” anyone in a location-based database.
Wait, How Do You Even Have My Location?
Recently, “Hypertrending” was a new app launched from Foursquare:
This heat map is designed to show you and share information from people using their apps or leveraging their location services tools. You can see where the hot spots are and where it might be better not to go if you are an introvert while in Austin at SXSW. The maps leverage the Foursquare panel data, which is another way to say, it doesn’t necessarily have every person’s location, more it leverages a group of opted-in users to extrapolate trends in the data. Without going into the issues with this approach mathematically, the main issue is that Foursquare fully understands that there are privacy questions here and is using this app as a way to have a dialogue with their customers.
An initial response from an industry professional shows the concern perfectly:
What many people still don’t understand is that the SDK, or Software Development Kits, that companies like Foursquare provide to other applications allow them access to your location data. In other words, you may not use an application built by Foursquare or branded as Foursquare, but you most certainly still have their code running in the background of some of your favorite apps. This is in no way a knock on Foursquare, either. They’ve built an excellent framework to embed location-aware functionality, the question is really about who knows this and for what purpose is it being used?
Questions abound:
What platforms use Foursquare data and location services?
Who does Foursquare then sell this data to?
What are other platforms that provide these location services to apps, and how can I opt out?
The realization for many is that Foursquare is testing the waters, but also subtly revealing that their SDK or location services platform is running in the background of more than just their own apps. As they state, “A mix of data from our own apps or other apps that use our technology.”
The reality is that the “creepy” map view they have exposed to the world is part of every location-based tracking system. Foursquare is just one of the first to let the world actually see (and use) what they have had as a backend view of their data for years. When platforms that deal in location data try to raise money or ‘wow’ investors or partners, they typically will show this type of map with real-time or near-real-time location tracking of users. I’ve seen countless “cool” map views from location services platforms that show human swarming effects by leveraging location pings from cellphones or Wi-Fi hotspot signal tracking.
Harm?
The real question on all of this is “what’s the harm?” Realistically, Foursquare is showing this and stating that all of this data is totally anonymized and, therefore, okay or acceptable in its use. That may or may not be true. For example, I certainly think some of the studies we have seen in urban planning and emergency evacuation or other civil exercises is worth the opportunity. Even traffic patterns have been drastically changed by leveraging real-time location statistics to route vehicles in smarter patterns (or, not so smart too).
The harm we see is not necessarily an anonymized map of hot spots at SXSW. The harm is that this is never where it stops. The harm is that apps are not anonymizing the individuals by accessing their location data, but specifically targeting those individuals with ads and other offers based on their location. While Foursquare doesn’t appear to share the list of every App that uses their location services, you can absolutely count on the fact that they are using location data to target ads specifically to those people that are moving in and out of certain location radius points or polygons.
The bottom line is that you really need to think about these activities and whether the ROI is worth the potential anger or concern of your (target) audience. There is a ton of ROI to be gained just by optimizing the blue shaded area on the chart above. Most of these activities are accepted by your audience as “classic” marketing activities and even logical.
Data privacy is continuing to evolve and in the States, advertising groups are rallying together to lobby Congress to enact a national approach to privacy. While their efforts are to help companies avoid a patchwork of privacy regulations from state to state, marketers must accept that there are lines they have crossed when it comes to chasing ROI. Data privacy is about understanding the fundamental rights of humans and location-based data is a critical inflection point.
In future posts, we will tackle consent and the value proposition exchange around consent. To be clear, when a consumer actively permits and knowingly engages your company with tracking their physical location, this is not a problem. In fact, it can be a great partnership between the user and your company. I’m just willing to bet that the value exchange, the equation of what the user gets from your company for sharing their real-time location data is currently wrong. If they really knew you were tracking that data, they’d likely demand a piece of your advertising revenue or some other similar value. That fact that they aren’t asking just highlights that they don’t know what you are doing with that data.
Again, if your marketing tactics in the great search for ROI, are crossing into “creepy” territory, we strongly suggest you opt-out.
