When Evan Hartman, 11, logs into World of Warcraft, a popular online video game played by millions, Blizzard, the game's maker, records his location, what kind of computer he's using and information about his playing behavior.
When Eric Hartman and his wife, Nia, go grocery shopping, he uses an iPhone application called CardStar that stores digital versions of loyalty cards for a dozen retail stores. Instead of carrying around plastic cards for Ralphs, PetCo, BestBuy or Footlocker, he can use his iPhone to show a barcode for the loyalty program to the checkout clerk.
Loyalty cards allow those chains to capture years of data about what each customer is buying — data they farm out to companies that specialize in scrutinizing the information for buying trends. The stores can then better target certain customers for promotions, or cluster products that are more likely to be bought together.
"We've found grocery retail to be a rich and fertile vein," said Matt Keylock, an executive at Dunnhumby, which processes data for dozens of retail chains worldwide, including Home Depot, Best Buy and Ralphs owner Kroger Co. Whether the data tell them a customer is an adventurous, frugal, healthy or family-focused consumer, he said, "you can bring to life who a customer is based on the kinds of things they buy."
Building a behavioral profile of a customer becomes even easier in the world of social networks, where the first thing consumers do is create a detailed self-portrait.
When Spencer Hartman, 16, reaches for his iPod Touch to check Facebook, he is mostly interested in seeing what his friends are talking about.
"I usually check it to see if anyone is saying anything funny," he said. "Usually they're not."
When Spencer clicks on friends' profiles or photographs, or leaves messages on their walls, he may forget what and who he clicked on that day, but Facebook, one of the largest data harvesters in the world, does not.
On a Web page describing Facebook's ability to provide "precise targeting," the social network says that each of its 750 million users "fills out a profile where he or she shares information such as: what they're doing at the moment, their birthday, occupation, all-time-favorite band, movies, TV shows and other interests."
The tendency of social network users to declare their interests to friends has become a boon to online marketers. On Facebook, advertisers can target their pitches to thousands of sub-categories that users have identified with, whether that's "gay marriage," "World War II history" or "insects." (There are 6,600 U.S. Facebook users who have declared an interest in "insects," according to an advertising tool on the site.)
Facebook has frequently faced criticism over the way it handles users' private data. In one of the most recent instances, the security firm Symantec said a flaw in the social network for years left the personal information of hundreds of millions of users exposed to advertisers.
Indeed, consumers who spend hours each day using free Web search and social networking services from companies such as Yahoo, Google and Facebook may not always remember that the firms closely monitor users' online habits in order to generate detailed profiles about their behaviors, preferences and buying patterns.
"By watching transactions and clicks we have a massive telescope into human behavior at a scale we've never had before," said Prabhakar Raghavan, the head of Yahoo Labs, a division of the Web giant that invents many of its most powerful computing algorithms. Yahoo, which was the nation's second-most-trafficked website in August with more than 177 million unique visitors, makes nearly all of its $6 billion in annual revenue from online advertising.
That same level of data gathering is now ramping up in the living room. When the Hartmans sit down in the evening to watch TV together, their TV providers are watching back. When they flip through the channels, their cable box records their viewing choices, while their Apple TV and Nintendo Wii devices relay their movie and TV rentals back to Apple and Netflix, respectively.
TV ratings have traditionally been estimated using large groups of volunteers who actively log the shows they watch, often by clicking a remote control to indicate they haven't left the room. But set-top boxes are now thought to be a far better way to capture viewing data, without the need to involve the viewer. Boxes like those from TiVo, Time Warner Cable and Verizon can monitor what consumers are watching at any given second. Set-top-box data can include whether viewers have changed the channel, fast forwarded through commercials or muted the volume.