How Companies Profit and Use Your Personal Data
In 2017 we live in a digital age where more data is being created and captured in every aspect of our daily lives than any other point in history. CBS, like many businesses receives thousands of pieces of personal information from our customers when they register their details with us. While CBS has strict rules on not using that data or selling it for personal or financial gain, other businesses do not have the same respect for personal information. CBS will look at how people all over the world are willingly or unwillingly creating and sharing more personal data than ever before and what that means for businesses and users. From our morning exercise data that we upload via our Fitbit, what we purchase on eBay during our lunch-break, to ordering dinner online in the afternoon, the ownership and use of the massive amount of personal data that an average person produces is becoming a multi-billion-pound industry. Companies use this data to send targeted marketing, make credit and loan evaluation, medical research, and crime analysis for financial benefit. Consumers are now starting to become more aware of the value of their personal data and how it is being abused for financial gain, often against or without their knowledge and consent.
We have all grown accustomed to hanging up or getting angry at the traditional telemarketers calling our house phone, but paradoxically many people accept the sharing of a much larger and more personal data with online companies as a part of using the internet without question. As the intrusion and use of our personal data grows, consumers are changing their online habits by using data blocking software and becoming more careful with whom they share their personal data online. According to a survey from TRUSTe, a privacy management firm, the percentage of US adults deciding to opt out of online behavioural advertising increased from 27% to 50% in 2016 while IAB UK figures reveal that almost a quarter (22%) of UK internet users use ad blocking software. This trend of consumers taking back control of who accesses and controls their data and what they do with it could change the very structure and process of how we use the internet in the future.
The Bigger Picture
With the recent revelations that governments are spying on people through their TVs, phones and smart watches, whether we choose to give up our personal data could become irrelevant. We are slowly slipping into 1984 style state sponsored surveillance by intelligence agencies, where we are all constantly monitored and analysed in secret, making consumers aversion to adverts for shoes seem naive and superficial in comparison.
A Connected World
The widespread adoption and integration into our lives of the internet over the last 20 years, along with our use of smartphones over the last 10 has led to humans producing more recordable data than ever before. Companies like Facebook and Google have become some of the largest and most powerful conglomerates in the world, making untold billions in the process by knowing every aspect of their customers and using and selling that personal data to marketers in order to target a specific audience based on a customer’s personal characteristic. The bulk of spending by brands on digital advertising is largely controlled by the duopoly, with a 75% market share for Facebook and Google in 2015. In 2016, that figure had risen to 85% of every dollar/pound spent on digital being acquired by either Google or Facebook. Customers have simply given over their personal information to these companies without realising the extent of their actions. Think of all the identifiable content you have stored in Facebook that can be used to sell you targeted ads; be it walking shoes after you liked a “Hiking Group” or the opportunity to bet on your favourite football team after liking the “Manchester United Page”. Combined with all the information you pump into Google search on a daily basis, it is reasonable to assume that nearly every aspect of your life is being packaged, used and sold to marketing companies for profit.
Freedom Isn’t Free
In order to continue to receive services like Facebook and Google for no free, the use of our personal data seems to be a price users are forced to pay as companies that do not produce any actual products seek profitability. But are a few targeted ads an acceptable price to pay for access to the largest library of knowledge and communal space in human existence? Without the ability to sell us products and services using our personal information, users would be faced with either being confronted with a scatter-gun approach to advertising or having to pay a fee- as for Netflix- for traditionally free services such as search engines and social media. By using our personal data, companies can argue that they are giving us a better customer experience and keeping the internet largely free at point of entry. The inherent concept of our personal sentiments and interests being used to increase up-selling opportunities is one that many people will find distasteful and would prefer not to participate in, despite the possibility of a change in the way they can make purchases, as they feel their data is being used without their consent and is a violation of privacy. However, it is worth remembering that monetisation of customer data is as old as the grocery store loyalty card and hardly a new invention of the internet; the only difference being that we notice the advertising online as we use it almost constantly, as compared to just once a week at a grocery store.
“Customer information has always been central to any CRM strategy, but the growing wealth of information from digital channels — from social media, location and context-sensitive data collected from mobile, and the Internet of Things (IoT) — radically expands the scope of the 360-degree customer profile,” said Ms. Huang, research director at Gartner.
By 2020 there will be an estimated 50 billion devices connected to the internet, largely thanks to the Internet of Things (IoT) that aims to electronically connect everything from your mobile phone, exercise band and computer, to your kettle, fridge and thermostat. With so many devices connected to the IoT, the data being stored and recorded is expected to grow exponentially, eventually being 44 times larger in 2020 than it was in 2009. The IoT also presents another, darker danger for users than targeted advertising. ForeScout analysis has highlighted the dangers posed by these devices and how most can be hacked in under 3 minutes and provide simple points of entry to personal and business networks.
What Exactly is Personal Data?
Personal data can be broken up into three distinct categories:
Volunteered data: Content which is created and shared by individuals, including their social media profile data, such as what music and movies they like, football teams they support and general interests.
Observed data: This information is captured by recording the actions of the consumer/individual, such as where they live, their socio-economic status and if they are married or single.
Inferred data: This category is the one with the most practical value. Using the first two types of data brands can work out your sex, age, sexual orientation, interests, employment status, hobbies etc. Using this information allows them to pre-empt your interests and offer you goods and services that would fit in the “box” of the specific person that they are targeting.
As much as consumers may want to opt-out of this type of data-mining and targeted marketing, many do not know or even realise what and when data is being collected about them, or by whom. The truth is that the internet as we know it has been built on this agreement between user and provider and should either exploit and retract their position too much, the whole infrastructure could come tumbling down.
A Wealth of Riches
Despite the delicate balance between consumers and companies, the sheer value and scope of the data available will force change in the near future. In a 2011 World Economic Forum, it was theorised that personal data will become a new “asset class” and would become one of the most valuable resources on the planet. The big companies that control this data will become so powerful and so rich that they will be forced to protect and build on their resources, locking customers into their services by any means possible in order to maintain their position.
How Much is My Personal Data Actually Worth?
With trillions of pieces of information being generated, there comes another issue; that being for the most part, the information is not vetted. Big data and targeted marketing work on low cost and high reward. The cost of vetting would remove much, if not all of the profit margin that creates the vast amount of company profits and revenue for companies like Facebook and Google. Given the lack of vetting it is quite common for a 30-year-old single man with no children to suddenly have adverts for push-chairs, schools, nappies and cribs follow him around the internet after researching and purchasing a baby themed item for his sister’s new baby. These kind of errors are all too common and will be familiar with many people who have ever used the internet.
But despite these problems, big data and targeted marketing continue to grow and thrive. Data is now a $300 billion-a-year industry and employs 3 million people in the USA alone while in the UK £10 billion a year is generated in digital advertising income for publishers and content creators. As consumers use of the internet continues to grow and evolve from a useful tool to an essential part of everyone’s lives, businesses will evolve along with it and will market and sell to us more and more on us as individuals, rather than spending fortunes on big all-encompassing advertising projects.
The Future of the Internet
We are now in the cross-over period in the history of the internet. Up to now it has largely been free to use and relied on people either being happy to give over their personal information or not caring or knowing enough about it to prevent it. With the increasing business costs and potential money to be made, it’s likely that in the near future things could be somewhat different. In the future, data will power everything and be the most valuable commodity in the world. As such, governments are going to get involved and regulate and control every aspect of the world wide web completely, including companies’ ability to harvest it and use it for their own financial gain. The situation will either see personal data being treated as confidential information that cannot be accessed by outside agencies (such as personal medical data is now) or Governments will demand a sizable cut, forcing big internet companies to diversify their revenue stream in order to increase profiles: i.e. charging for “free” services.
This could then present a class system of internet users, with the best and most useful websites only available to those with who can afford them. This will leave the poor and less advanced societies unable to access the “A-Grade web” and forced to root around in bargain basement webpages and access questionable and hacked content that could be full of bugs and viruses.
Hints of the potential for digital catastrophe are peppered around the world already. As the New York Times noted, a recent Pew Research report on the likely nature of the internet a decade from now contained the word “threat” more than four times as often as the word “hope”. Whatever the future of the internet and the use and exploitation of personal data holds for both consumers and companies, the next 10-15 years will likely see a big change in many different aspects, from encroaching personal targeted data advertising, to a segregated internet that gives different levels of service to those who can afford it.
At CBS we will never sell or abuse the personal data we receive such as emails addresses, company information and financial status that is provided to us by clients. We believe in providing a confidential and secure service that benefits everyone involved and will continue to maintain the highest standards in keeping personal data out of the hands of those who would exploit it.
For further information on background screening, please contact our team who will be able to help guide you through the process of conducting background checks.
Tel: 01443 799 900
website: http://CBScreening.co.ukback to news
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