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It's easy to ignore the spies in our midst

Those daily deal coupons seem fun and harmless, but experts say marketing firms are in an 'arms race' to collect data about who we are and how we live. Right now, there are few limits on what they can do.

August 13, 2011|Sandy Banks
  • Groupon, LivingSocial and other online marketers are part of the burgeoning "arms race" among advertisers hoping to target specific audiences.
Groupon, LivingSocial and other online marketers are part of the burgeoning… (Tim Boyle / Bloomberg )

My daughter thinks they are spying on us.

The "74% Off Haircut Package" offer arrived from Groupon just as she was putting away her credit card, after paying the bill at her beauty salon.

Amazon's "Half Off Carpet Cleaning" coupon showed up on her cellphone moments after a friend's text message about getting the carpets cleaned at his house.

Daily Deal's "Laser Vision Correction" discount landed in my inbox while I was walking out of my optometrist's office, with a new pair of eyeglasses in my purse.

Conspiracy or coincidence?

Are these online marketing firms really tracking our travels, reading our texts, checking our credit card receipts?

Not quite, according to the experts. Not yet.

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We've surrendered so much of our privacy to operatives in cyberspace that "online behavioral marketing" — using personal data to target ad pitches — seems like a logical next step.

"That's where everything is trying to go," said Christopher Heine, a reporter who's been covering digital marketing since its infancy.

By everything, he means not just marketing sites like LivingSocial and Groupon, but major players like Facebook and Google, with access to our browsing history and details of our friends' lives; and new geosocial sites like Foursquare and Gowalla, which track and link users by location.

"It's an arms race" among the hundreds of websites trying to cash in on the daily deal game, Heine said. "There are too many players, the competition is too fierce." He expects many to drop out over the next year.

But for now, we can expect to be drowning in deals.

Heine writes for ClickZ News, an interactive marketing website whose conference in San Francisco next week is expected to draw 6,000 people — from established ad agency reps to upstart entrepreneurs — who want to profit from the bonanza made possible by techno-targeting advances.

"The days of everybody getting that same Brazilian bikini wax offer online are numbered," he said.

Companies are relying more on "email segmentation," using knowledge of an individual's "purchases, behaviors and location" to target primary marketing deals.

In fact, the fastest growing business niche online is the collection, packaging and sale of personal information that companies can use to profile consumers. The more detailed the individual profiles, the more a merchant will pay for the chance to precisely target its products.

I was surprised to find out how pervasive the spying has become.

That visit I just paid to Dictionary.com? I learned how to spell "ubiquitous." But dozens of hidden advertising networks may have learned far more about me, including my health and financial status, through "cookies" the linked networks use for tracking.

In a study by the Wall Street Journal, Dictionary.com ranked worst among the nation's most popular websites for exposing its users to potentially aggressive surveillance tactics.

Privacy risks, it turns out, are embedded everywhere. If you're playing Farmville, sharing recipe tips on a message board, browsing online for a headache fix … chances are somebody is tracking your key strokes and parsing the data for clues about who you are and how you live.

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I like a half-price hot stone massage as much as the next person. But it seems more creepy than convenient when the offer is generated via secret sleuthing.

The problem is not just "coupon companies offering the deal-of-the-moment," contends Susan Grant, director of consumer protection for the Consumer Federation of America. "It is way, way broader than that."

Online privacy concerns have been the subject of debate in Congress. Consumer groups are pushing for new laws that would regulate online tracking. And the Federal Trade Commission — in a 122-page report — has called on companies to offer simple, transparent privacy policies and straightforward opt-out choices.

"It's not like if you go on Amazon and they know what you're interested in because of what you've bought before and they make recommendations based on that," Grant explained. "That's something you kind of get. You've done business with them; you understand.

"What you don't know is about the third-party companies, collecting information about you behind the scenes, splicing and dicing that, and then selling it for various purposes. That's something that's not visible to you."

California is in the regulatory forefront, with legislation in the pipeline that would make it the first state to guarantee consumers a simple way of opting out of data collection systems.

But if the public knows little about what's going on, lawmakers might know even less, Heine said.

"The government is always about five steps behind the online marketing community, which is on the side of collecting more and more data. … And that's not going to change."

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