Frenemies Read online

  In addition, Foursquare has data on those who see an ad on television and then visit a store. They can tell whether you’ve visited Shake Shack or a bar once or twice that week, and can target you as a likely hamburger eater or beer drinker, which advertisers will pay for. They can compute the wait times at checkout counters, which stores seeking a competitive advantage will eagerly pay for. By wirelessly communicating with in-store Bluetooth radio transmitters known as beacons, stores can transmit a discount coupon to a mobile phone, directing the consumer to a bargain counter. Being able to predict foot traffic is an enticement for retail clients to flock to Foursquare, as Target, Home Depot, and Whole Foods have done.

  When Michael Kassan is asked about privacy, he skates over the surface of the question, acknowledging that there is “a delicate balance. We all like to get Amazon recommendations for this book or that book. We like it because it makes our life more efficient. In part, we think it’s great that people can predict where we want to go and lead us to places we’re interested in. But the delicate balance is that you don’t want it to be scary. . . . You start to get worried as an individual when they know too much, whoever they are.” Like his brethren in the marketing business, however, Kassan doesn’t see “a delicate balance” when it comes to requiring companies to have consumers opt in. “I don’t think we’ve figured out a good way to have an opt in really work, because nobody reads the fine print. We still live in a world where as a lawyer I would say that if you shop for a hotel and you go online and it says, ‘Agree,’ have you ever read what you agree to? I don’t think people read the language.” Translation: Companies and advertisers would be denied valuable marketing data because confused consumers would not opt in. Kassan is a true-blue marketing man. His first instinct is to protect marketers.

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  Marketers are awash in data. Think of Irwin Gotlieb’s secret sauce and many of the 40,000 personally identifiable attributes it plans to retain on 200 million adult Americans, each assigned a digital identifier. Of the 130 billion daily ad pages displayed on the Internet each day, a senior executive at WPP’s Xaxis says they can follow about 40 percent of all online ads, allowing them to better understand what advertising results in sales. This is small potatoes, he suggests, noting that over time Carolyn Everson’s Facebook sees trillions of online ads. But by tracking what users search and watch and do online, GroupM’s Brian Lesser says, hopefully exaggerating, “We know what you want even before you know you want it.”

  Among its two billion worldwide users, Facebook assembles about a hundred personally identifiable attributes and purchases, including personal information from many of the five thousand data brokers around the globe who gather pharmacy records, store loyalty cards, voter registration, mortgages, pay stubs, and other data, according to author Sue Halpern, a scholar-in-residence at Middlebury College.* ProPublica, which has ferociously chewed on the privacy issue like a dog on a bone, wrote, “Facebook offers advertisers more than 1,300 categories for ad targeting . . . Every time a Facebook member likes a post, tags a photo, updates their favorite movies in their profile, posts a comment about a politician,” browses the Web, or taps WhatsApp and Instagram on a mobile phone, “Facebook logs it.”*

  Google has merged all the data it collects from its 3.5 billion daily searches and from YouTube and other services, and it introduced a Google About Me page, offering advertisers your date of birth, phone number, where you work, mailing address, education level, where you’ve traveled, your nickname, photo, and e-mail address.* Airbnb then-CMO Jonathan Mildenhall says of the many millions of people who rent homes, “We know everything about our hosts. Likewise with our guests,” though it’s a bit less specific for the latter. As for Amazon, since it is the world’s largest store and knows what individuals have actually purchased, its data is unrivaled.

  With Amazon’s Alexa in the home, the company can gather more: Alexa is an agent that not only knows what you purchased but when you wake up, what you actually watch, read, listen to, ask for, and eat. In addition to posing a potential threat to privacy, Amazon poses a threat to Google. By 2017, roughly half of all product searches were being done on Amazon, not Google. And in challenging Amazon and Google’s digital assistants, Apple tried to use the privacy issue against them, vowing not to sell your private information to advertisers. When 2017 ended, Apple announced that it would place its Siri digital assistant in a new HomePod that will be “less creepy” than Amazon or Google because it would deny advertisers the data they desire.

  Many other companies are also awash in data. Bank of America has comprehensive information on its 50 million customers. This data-rich customer base is replicated by every bank, Wall Street investment firm, and credit card company. Comcast, the nation’s largest cable company with 22 million subscribers, has stored in its set-top boxes a wealth of personal information, from credit cards to most-watched programs, and can combine this with third-party data to compare ads viewed with purchases made. Comcast and other cable companies that span the United States collect actual viewing numbers on millions of citizens. Verizon and AT&T each had over 100 million wireless subscribers in 2016, with a mind-numbing array of personal information. Telephone and cable broadband providers retain data about what TV you watch, what banks you use, what Web sites and apps you visit, what newspapers and magazines you subscribe to, what you purchase online, what stores and restaurants you favor. Those who sweep up data can chart what drugs a consumer purchases, and “inferences about your health can be used,” warns Joseph Turow, a professor of communications at the Annenberg School at the University of Pennsylvania.

  Data can be weaponized by marketers to target messages and ultimately to create what’s called addressable advertising. Prowling his London office in jeans and royal blue socks, Keith Weed of Unilever grows excited as he describes how mobile phones have elevated data as a marketing tool. “When I started in marketing we were using secondhand data which was three months old. Now with the good old mobile, I have individualized data on people. You don’t need to know their names. . . . You know their telephone number. You know where they live because it’s the same location as their PC [and the IP address this data yields].” They know what times of the day you usually browse, watch videos, do e-mail, travel to the office or dinner, and what routes you take. “From your mobile I know whether you stay in four-star or two-star hotels, whether you go to train stations or airports. I use these insights along with what you’re browsing on your PC. I know whether you’re interested in horses or holidays in the Caribbean.” By using programmatic computers to buy ads targeting these individuals, he says, Unilever can “create a hundred thousand permutations of the same ad,” as they recently did with a thirty-second TV ad for Axe toiletries aimed at young men in Brazil. If they knew the target was fond of cars, or sci-fi movies, a particular soccer team or type of music, each ad could be personally tailored.

  Tapping new technologies that can compute the emotional reactions of consumers reduces the guessing done by marketers. In recent years a number of companies have emerged to create a database of thousands of different facial expressions, and software translates these into algorithms that describe their meaning. Using Webcams and security cameras, marketers monitor the facial expressions of consumers as they shop, decide to exit a store, watch ads, or video chat. Apple’s iPhone X, introduced in late 2017, recognizes faces, not just the owner’s: Obviously, the same technology can help detect whether a child is in pain after an operation or an alleged terrorist is lying.

  If big data was one of the flavors of the year in late 2015 and into 2016, targeting and addressable messages was an accompanying flavor. It was a flavor sampled all over the world. In 2015 and early 2016, Tencent’s Online Media Goup in China entered partnership agreements with WPP, Dentsu, and Omnicom to access Tencent’s consumer database of about 800 million monthly users. Together, they set out to develop models to trace the online be
havior of Tencent’s consumers. Tencent was trading its valuable data for the marketing dollars of agency clients. A new slew of start-ups emerged, hoping to either partner with or nudge aside agencies to help brands identify targeted customers.

  SocialCode is one of these start-ups. Its CEO is Laura O’Shaughnessy, and it is funded by her dad, former Washington Post owner Donald Graham. After graduating from business school and working in digital start-ups, O’Shaughnessy believes that a “complete transformation” is coming in the way “brands can connect to consumers. Back in the days when my grandmother ran the Washington Post, there were four or five channels to reach people in Washington, D.C. There were two newspapers and three television stations. Period.” Today platforms have proliferated, as have the marketing messages hurled at consumers. “Marketing became offensive. I was seeing messages that were irrelevant to me, that I didn’t care about. It was a waste of my time.”

  Like those at Foursquare, to her way of thinking SocialCode and its 230 employees, half of them engineers, were serving consumers, not just making money on clients such as Macy’s and Budweiser. By targeting individuals on social media, by sometimes creating the ads, and then using programmatic buying to deliver individualized messages, they were offering ads “that are relevant to me, that are useful to me. And I can tell when I serve the ad whether that person made a purchase and checked it out in a retail store.” The way it works, she explains, is they decide on a target group, say those who drink a particular beer brand. Their client, another beer brand, pays for ads that are created by her company or the ad agency. These ads are relevant, she thinks, because they are aimed at persuading a group of beer drinkers to switch. They serve up the ads, track whether the individuals saw the ads, and then, relying on store data assembled by Oracle’s Datalogix from its many store clients, they track whether “user 123 who was served an ad” switched beer brands.

  They are no longer doing what she thinks “advertising has been doing for a long time, which is guessing.” She dubs this her “customer-centric model.” They chart for clients: What messages worked? What doesn’t work? Who comes to the store? Who doesn’t come to the store? It becomes, she believes, “a game changer.” Using this data, the brand can make changes to improve the customer experience and convenience, as Warby Parker has done for eyeglasses and Uber and Lyft have done for transit. Unless big agencies learn to shed old habits, to move faster, she believes they are in danger of plunging down the same rabbit hole as most newspapers.

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  Big data excites Laura O’Shaughnessy, as it does Irwin Gotlieb, Martin Sorrell, Carolyn Everson, Michael Kassan, and the entire marketing industry and its clients. It alarms Nate Cardozo, senior staff attorney and one of eighteen lawyers who work for the Electronic Frontier Foundation, a nonprofit based in San Francisco, whose mission is to repel privacy threats. “I want companies to be honest with what they’re collecting and what they do with it, and right now that information is really difficult to figure out. The companies don’t need to make that information public, and they do their best not to.” Under the long, densely written contracts most consumers “sign” when joining an app or buying a product or service, the “terms of service” that we agree to empower a Tesla or Ford to track where we drive and stop, or allows DMVs, credit card companies, Facebook, or Google to sell data to secretive data-collecting companies like Palantir in Silicon Valley or Acxiom in Arkansas, who in turn can sell it to marketers. Google, Cardozo continues, “tracks every YouTube video you watch, every search term you enter, every result you click on. All of that data is tracked. And they’re still using it. . . . We just don’t know how they use it. They say they use it to improve products and services. What does that mean?” Even if marketers don’t know your name, he says, as long as they have your IP address—the Internet Protocol number assigned to every computer—they can in most cases locate your building.

  Cardozo says he has two nightmares. One is the danger “of identity theft on a massive scale. It’s only a matter of time before there’s a breach.” (That nightmare occurred in 2017 when there was a massive theft of personal data from consumer credit reporting agency, Equifax.) Second, “If the data is there, advertisers, civil litigants, government agencies, you name it, are going to ask for it. What if you could subpoena someone’s entire behavioral profile? What if you have a knee replacement that failed and you sue the manufacturer and the manufacturer goes to Acxiom and subpoenas your behavioral history to show you viewed ads about canoeing? Does that mean you went canoeing? It means you’re interested in canoeing.” Advertisers would be keen on having access to medical records so they could market pharmaceutical products.

  The accumulation of data to predict future behavior has been labeled surveillance capitalism by Shoshana Zuboff, a professor of business administration at Harvard Business School. Its pioneers have been digital companies like Google and Facebook that derive their marketing power from shadowing citizens and using data to become fortune-tellers.

  “The game,” Zuboff wrote, “is no longer about sending you a mail-order catalogue or even about targeting online advertising. The game is selling access to the real-time flow of your daily life—your reality—in order to directly influence and modify your behavior for profit. This is the gateway to a new universe of monetization opportunities: Restaurants who want to be your destination. Service vendors who want to fix your brake pads. Shops who will lure you like the fabled Sirens.” Success at this “game” flows to those with the “ability to predict the future—specifically the future of behavior.”*

  Success is more likely to come to marketers who harness this data to make it more personal, more useful to citizens annoyed by interruptive ad messages but who welcome messages about their hobbies, pets, or favorite vacation spots. Michael Hussey is the CEO of StatSocial, a data company that has constructed consumer profiles of 600 million citizens from around the world based on their public activities on Twitter, Facebook, Instagram, YouTube, blogs, along with the e-mail addresses of 170 million citizens purchased from data companies he says he is not contractually free to identify. In a separate partnership with IBM’s Watson, its artificial intelligence arm, Hussey says they have identified 50 million citizens and segmented each into “the fifty-two personality types” Watson tracks, such as adventurous, conservative, liberal, conscientious, or open to change. In work they do with Irwin Gotlieb’s GroupM for Ford, they track consumers seeking to buy a new car. “The personality type that is ‘conscientious,’” Hussey says, “should get a different message—maybe the eco-friendly car—than the ‘adventurous’ person. . . . Everything is about personalization, microtargeting your audience with different messages.”

  To an engineer, data is virtuous. It offers clues to the mysteries of human behavior, suggests efficiencies, offers answers that will better serve consumers. Data yields facts, advances engineers’ quest to be more scientific. But as first Google, and then Facebook, discovered, that data made it possible to attract advertising dollars. “The more data it has on offer, the more value it creates for advertisers,” Sandy Parakilas, who was Facebook’s operations manager on the Platform Team from 2011 to 2012, wrote in a scathing November 2017 New York Times op-ed page commentary. “That means it has no incentive to police the collection or use of that data—except when negative press or regulators are involved.”* The mix of genuine engineering curiosity and business greed inevitably relegated privacy issues to the nose-bleed bleachers.

  The privacy issue draws too little attention, says Christian Sandvig, associate professor of communication studies at the University of Michigan, because corporate America and the marketing universe have succeeded in submerging it. “The key thing we see in privacy is that companies have made a decision to privatize privacy.” Companies insist that citizens make the choice whether something is private when they go to their settings or they click on opt in or opt out. He disagrees. “We’ve seen
the privacy debate pushed into settings. The point of that feature is to inoculate the platform from criticism.”

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  People don’t march in one direction when it comes to privacy. Advertisers assert that targeted ads serve consumers information they desire, and this would be impossible without personalized data. The Interactive Advertising Bureau warns that strict privacy regulations will slow economic growth because they “threaten to hamper the data-driven growth of the Internet economy.” Without ads, content companies would die. Since there is no single universally accepted definition of privacy, contentious debates will persist. In his attempt to wrestle this ambiguous term to the ground, the great Louis Brandeis defined privacy as the “right to be left alone.” But where to draw the line? If I view advertising as intrusive yet it subsidizes my free television, is it really violating my privacy? If I physically bump into someone, I am certainly not leaving that person alone, but am I violating his or her privacy?

  Some, like Ricky Van Veen, cofounder of CollegeHumor, the still popular user-generated Web site, who in late 2016 joined Facebook as its head of global creative strategy, thinks “privacy is overrated.” In the early days of CollegeHumor, “college kids would send in photos of themselves with a beard at a party,” and years later when they were looking for a job they’d write in to ask if CollegeHumor would please take it down. “Today, everyone has a photo of them with a beard at a party. It’s the new normal. About forty percent of all Instagram photos are deleted within the first ten seconds.” Why? Not because of privacy concerns but because “it won’t get enough likes. People still care about how they’re perceived, but the idea of privacy counts much less. Everybody is broadcasting themselves constantly!”