If you went into a car showroom and the salesman failed to ask you a few questions – like, “what type of car do you have right now?�, “how many people are there in the family?� – and so on, you would say that he wasn’t doing his job. And if you bought a car and a couple of years later he called to ask “are you thinking of changing it for a new one?�, you wouldn’t be surprised.
However, we seem to be amazed at the fact that retailers are now finding answers to exactly these types of question and responding accordingly. In this article from the Financial Times we enter the debate raised in a new book called “Niche Envy – Marketing Discrimination In The Digital Age� by Joseph Turow. Turow describes how retailers are collecting information on our purchases and responding by profiling their offers in response to our shopping behaviour. Obvious to you and I but the rest of the world seems amazed and is even worried that we may actually be offered something we really want. Read on.
Retailers get inside track on your lifestyle By Jonathan Birchall in New York October 11 2006
I like to think that Amazon.com knows me – but not too well. After all, when I log on, the world’s biggest online retailer erroneously tells me that I might be interested in books on organic household cleaning.
Better Basics for the Home is a pleasant change from the Evangelical Christian Left Behind series it previously recommended, based on my browsing and past purchases.
But Amazon may well know more than I think. The privacy policy notice, reached by clicking on the small print at the very bottom of its web pages, tells me that the retailer “might receive information about you from other sources and add it to our account information”.
Most of Amazon’s customers probably never bother to click on the small print.
Joseph Turow’s Niche Envy relates how a survey by the Annenberg School for Communication, part of the University of Southern California, asked web users whether they would continue to use a site that said it would use their personal information to make money from advertisers. Eighty five per cent said they would reject conditions that most of us unknowingly accept.
Further, most American internet users think, wrongly, that the widespread practices of behavioural targeting and price customisation are illegal.
Niche Envy isn’t primarily about privacy issues but places the question in the context of the revolution in marketing and advertising brought about in the past decade by the onset of the digital age.
The plot is relatively straightforward. Once, elite advertisers used television and newspapers to build national brands in a largely transparent marketplace. Their ads subsidised programming and editorial content. Alongside them, although down a rung or two, the direct marketers laboured away with mailing lists and coupons and two-for-one promotions, trying to persuade the customers to buy.
Now new technology, with its TiVo ad-busting recorders, its online news accumulators and its comparison online shopping sites, has overturned the old order. Customers “are more and more in control of the entire process”, Stephen Quinn, a senior Wal-Mart marketing executive, told AdAge, the trade magazine, this month. “No customer really wants to be treated as part of a mass market any more.”
But for Turow, an academic at the Annenberg school, my lack of awareness of Amazon’s privacy policy is one sign that the customer is not in as much control as the retailers and marketers would have us believe.
For they also have the technology – starting with the computers that have given the industry the ability to collect and analyse vast amounts of data on shopping patterns. Retailers such as Wal-Mart, Tesco and Best Buy can now customise the products in their stores to suit local audiences, with fresh tortillas in Orlando, Florida, a bigger collection of rap music in Chicago and personal shoppers to help soccer moms buy electronics in the suburbs.
Loyalty programmes such as Tesco’s ClubCard offer customers benefits in ex-change for giving up their personal information, allowing the retailer to make decisions about who the best customers are. Special promotions and lower prices can now be directed at customers a retailer wants to retain – a process being accelerated by the internet and the spread of wireless and biometric payment technology. On the web, the trad-itional division between image and direct marketers has eroded.
The goals, writes Turow have been “to learn what emotional and logical bonds would move [customers] to buy the product at their particular points in life, and then to interact with them . . . in ways that would lead to trial and long-term use”.
The marketing industry sees this as good for the consumer. Single males will no longer receive coupons for baby products and shoppers will find more of what they want in their local chain store. “They want their store and experiences to reflect their own values and geog-raphy and needs,” Mr Quinn told AdAge, of the move towards customisation at Wal-Mart.
But, after detailing the changes under way, Turow’s well-written and thought-provoking book raises a number of objections.
The marketers argue that customers are happy to hand over personal information in exchange for price offers or better service. But companies, he argues, have been at best opaque about what they do with that information. Would it not be more honest, he asks, for websites to replace the label “privacy policy” with “using your information”?
“Marketers have been rewarding consumers’ trust in them with an undermining of that trust through the surreptitious ways they use information,” he says.
Futhermore, the customisation of the marketplace and the drive to attract the best customers, he says, will lead to what he calls “niche envy”, with broad social and ethical implications that have barely been raised.
What happens when people find they are being offered different prices from their neighbours because of their past buying history?
And what happens to a society where different social groups are getting customised news and entertainment “aimed primarily at reinforcing their sense of selves so they will buy?”
