|
Page 1 of 2
Database Marketing: Who's in Charge?
Behavioral targeting and price discrimination are poorly understood by consumers, but embraced by marketers who want to customize their offerings and services for their best customers. Here's what CIOs need to know about the issue.
Also See:
Alarming Jump In Data Loss Reports
1 In 3 IT Staff Snoops On Colleagues: Survey
By Ellen Pearlman
Strategic Thinker:
Joseph Turow
Credentials:
Turow is the Robert Lewis Shayon Professor and Associate Dean for Graduate Studies at the Annenberg School for Communication, University of Pennsylvania. He has been called by The New York Times "probably the reigning academic expert on media fragmentation," is the author of several books and the editor of The Wired Homestead.
Big Idea:
Behavioral targeting and price discrimination are poorly understood by consumers, but embraced by marketers who want to customize their offerings and services for their best customers.
Book:
Niche Envy: Marketing Discrimination in the Digital Age, paperback edition published by The MIT Press, April 2008 (originally published in 2006)
After reading Joseph Turow's Niche Envy, I came away with a sense that a battle's taking place between consumers and marketers. Consumers are using technology to find the best deals online or to avoid annoying ads. Marketers are using technology and tools such as behavioral targeting and price discrimination to scope out their best customers and reward them. But I also came away with a concern that far too many consumers have no clue how their personal information is tracked, extracted, analyzed, manipulated, shared and sold. While the majority of consumers believe that marketers can track their activity across the Web, they don't understand how sophisticated that tracking has become and how it's being combined with information from third parties to create sophisticated customer profiles that allow marketers to segment customers into desirable and undesirable categories.
This segmentation allows marketers to treat their prized customers very differently from the ones that are not worth keeping. A 2005 Annenberg Public Policy Center survey found that 64 percent of respondents did not know that it is legal for an online store to charge different people different prices at the same time of day and 71 percent didn't know it was legal for offline stores to do that too. When asked about some of these targeting and pricing policies directly, consumers have negative responses. Says Turow, "People are wary of firms' collecting information about them without their knowing it, and they want openness in their dealings with companies."
Turow said that studies paint a picture of consumers as nervous and confused and open to "exploitation by merchants who decide what products to show and possibly what prices to offer informed by sophisticated storehouses of behavioral, demographic, and psychographics data." Marketing executives paint a different picture of consumers as "knowing and aggressive" and see them with their concerns about privacy as a "powerful force."
advertisement
So which picture is accurate? Turow suggests they are not necessarily mutually exclusive. Both may indeed be true as American consumers shop for the best deals and American marketers shop for the best customers to pursue with customized pricing deals.
Marketers are hoping that consumers will vie to become one of these desirable customers, receiving special treatment, special offers and special pricing all in exchange for giving up personal information that will allow marketers to place each customer in his or her niche and customize the entire shopping experience. Turow notes that individuals "may try to improve their profiles with advertisers and media firms by establishing buying patterns and lifestyle tracks that make them look good-or by taking actions to make others look bad." And while there may be resistance to such a scenario, Turow says that the "competitive factors shaping database marketing and the media technologies connected to it are so strong that social criticisms will not derail them."
Next: The Ethical Concerns
|
