We’ve discussed targeted behavioral advertising before in the context of online and offline data collection and tracking of the habits of consumers. There have been numerous news stories about this surveillance issue. For example, after the Wall Street Journal reported several months ago that credit-card companies Visa and MasterCard “are pushing into a new business: using what they know about people’s credit-card purchases for targeting them with ads online,” Sen. Jay Rockefeller (D-W. Va.), chairman of the Senate Commerce Committee, wrote to both MasterCard and Visa asking about the report.
And regulatory agencies such as the Federal Trade Commission are watching companies’ actions. Also, consumers have become interested in opt-out and Do-Not-Track remedies, including browser tools. (Read more about targeted behavioral advertising and privacy issues connected with it in a previous post.)
Companies can also buy information on individuals from data collectors. I’ve written before about how the data a person has posted online can come back to haunt him — the data can be used as evidence in trials against jurors and defendants, in divorce cases, against employees (which can lead to lawsuits from affected individuals), applicants to colleges and graduate schools, politicians and high school students. There’s also the issue of other kinds of data being used against a person — sometimes when that data is wrong. Data brokers’ files have been proved to be filled with errors. For example, when a news reporter looked up his file on data broker Intellius.com, he found the record said he was charged with child molestation (he wasn’t) and that he had a close male relative who was convicted of manslaughter (the reporter had never heard of the man).
Now, the New York Times takes an in-depth look at “How Companies Learn Your Secrets.”
Andrew Pole had just started working as a statistician for Target in 2002, when two colleagues from the marketing department stopped by his desk to ask an odd question: “If we wanted to figure out if a customer is pregnant, even if she didn’t want us to know, can you do that?” […]
As the marketers explained to Pole — and as Pole later explained to me, back when we were still speaking and before Target told him to stop — new parents are a retailer’s holy grail. […]
But as Target’s marketers explained to Pole, timing is everything. Because birth records are usually public, the moment a couple have a new baby, they are almost instantaneously barraged with offers and incentives and advertisements from all sorts of companies. Which means that the key is to reach them earlier, before any other retailers know a baby is on the way. Specifically, the marketers said they wanted to send specially designed ads to women in their second trimester, which is when most expectant mothers begin buying all sorts of new things, like prenatal vitamins and maternity clothing. “Can you give us a list?” the marketers asked. […]
The desire to collect information on customers is not new for Target or any other large retailer, of course. For decades, Target has collected vast amounts of data on every person who regularly walks into one of its stores. Whenever possible, Target assigns each shopper a unique code — known internally as the Guest ID number — that keeps tabs on everything they buy. […]
Also linked to your Guest ID is demographic information like your age, whether you are married and have kids, which part of town you live in, how long it takes you to drive to the store, your estimated salary, whether you’ve moved recently, what credit cards you carry in your wallet and what Web sites you visit. Target can buy data about your ethnicity, job history, the magazines you read, if you’ve ever declared bankruptcy or got divorced, the year you bought (or lost) your house, where you went to college, what kinds of topics you talk about online, whether you prefer certain brands of coffee, paper towels, cereal or applesauce, your political leanings, reading habits, charitable giving and the number of cars you own. (In a statement, Target declined to identify what demographic information it collects or purchases.) […]
As Pole’s computers crawled through the data, he was able to identify about 25 products that, when analyzed together, allowed him to assign each shopper a “pregnancy prediction” score. More important, he could also estimate her due date to within a small window, so Target could send coupons timed to very specific stages of her pregnancy.
One part of the story shows how an individual’s privacy can be violated with this data collection and profile creation:
About a year after Pole created his pregnancy-prediction model, a man walked into a Target outside Minneapolis and demanded to see the manager. He was clutching coupons that had been sent to his daughter, and he was angry, according to an employee who participated in the conversation.
“My daughter got this in the mail!” he said. “She’s still in high school, and you’re sending her coupons for baby clothes and cribs? Are you trying to encourage her to get pregnant?”
The manager didn’t have any idea what the man was talking about. He looked at the mailer. Sure enough, it was addressed to the man’s daughter and contained advertisements for maternity clothing, nursery furniture and pictures of smiling infants. The manager apologized and then called a few days later to apologize again.
On the phone, though, the father was somewhat abashed. “I had a talk with my daughter,” he said. “It turns out there’s been some activities in my house I haven’t been completely aware of. She’s due in August. I owe you an apology.”
Read the full story to learn about how Target tested its pregnacy-prediction and advertisement model — including how the company learned that if it didn’t show women it knew they were pregnant, the ads worked. “And we found out that as long as a pregnant woman thinks she hasn’t been spied on, she’ll use the coupons,” said one Target executive.