Orbitz Controversy: Tip Of Big Data Iceberg
Websites know which PC, phone, and browser you use. But ad networks and social sites today give marketers more information about you than ever before to better target advertising.
By Doug Henschen InformationWeek
June 26, 2012 03:08 PM
When The Wall Street Journal reported on Tuesday that Orbitz shows Mac users costlier travel options than those shown to Windows PC users, it caused a stir, spawning hundreds of follow-on stories, including a video segment on ABC's "Good Morning America."
Marketers usually claim that knowledge of the consumer helps them deliver more relevant and timely offers, but the disturbing factor in this case was that insight into Mac users--like the fact that their household incomes are $20,000 higher, on average, than those of Windows users--was used to steer them toward more expensive travel packages. Some would call that discrimination, but it hardly scratches the surface of the information that marketers can use to target advertising.
The basic information that marketers know about you as a site visitor includes your browser type, operating system, screen size, and monitor resolution. So they can spot a Mac user right away, and research shows that iPad and iPhone users are 17% more likely to purchase than users of other mobile devices.
Marketers also know what country, region, state, and city you live in, what site referred you, whether you used a search term, and whether you clicked on a promoted link on a search engine or another site.
If you've visited a particular commerce or publisher's site before, chances are you've been cookied. The cookie, of course, lets marketers know if you're a return visitor, what you looked at during your last visit, and your level of engagement, as indicated by the time spent on the site. They also know how long it has been since your last visit, how frequently you visit, and how deeply and frequently you've gone into a "conversion" funnel--whether you've actively shopped, subscribed, or whatever the conversion goal might be.
If you're a registered user of a site and you've made a purchase, you've likely shared your name and address. At that point there's a wealth of demographic and lifestyle data marketers can append from third-party marketing databases. Marketers then correlate all that with purchase history to establish and batch you into a finely targeted customer segment.
The basics of segmentation are recency, frequency, and monetary value of purchases. Frequent buyers who spend more than average are best customers. Infrequent buyers who are high spenders get coupons, emails, and other inducements to come back and shop again. Frequent buyers who spend less than average are sent upsell and cross-sell offers. Infrequent buyers who spend little get less attention.
Yahoo's Interclick unit, for example, relies on massive parallel processing of millions of clickstreams each day to spot suitable targets for advertising offers. The more recent and frequent the behavior and the higher the value of the transaction, the more likely you are to see a related advertisement. So if you shopped on a car site yesterday, don't be surprised to see car ads on sports sites, news portals, or other seemingly unrelated sites today.
Facebook is, of course, at the center of consumer privacy debate because it can serve up unprecedented amounts of information, including age, gender, consumer preferences, likes, friends, and behavioral and psychographic information by way of an API. Marketers are actively tapping Facebook and other social networks by inviting you to use social network-enabled mobile applications, encouraging you to log into their site using your Facebook credentials, or otherwise asking permission to access your profile.
Groups like the Direct Marketing Association are quick to point out that marketers use information to deliver more timely and relevant offers that benefit consumers. Should we be surprised when information is used to show consumers premium goods or luxury hotels?
Of course, not everybody is looking for a bargain. After all, those Mac, iPad, and iPhone buyers could have purchased "equivalent" products for as little as one-third the price of their Apple products.
As for Orbitz, you might not be able to delete cookies from your browser to sidestep being identified as a Mac user, but you can click the "sort by price" button if you are price-sensitive.
At the Big Data Analytics interactive InformationWeek Virtual Event, experts and solution providers will offer detailed insight into how to put big data to use in ad hoc analyses, what-if scenario planning, customer sentiment analysis, and the building of highly accurate data models to drive better predictions about fraud, risk, and customer behavior. It happens June 28.