The Way We Live Now: Data Economy

December 4, 2013

Data_Inline

The data economy can be summed up as follows: the acquisition and exploitation of personal information on behalf of the marketing and commercial profiling industries. This includes practices such as lead generation which encompasses things like online surveys and cold calling, market research, signing up to a company’s mailing list, viral marketing, liking a page on facebook, online behavioural advertising (OBA) and tracking technology – receiving any sort of communication from brands trying to sell you something, or an organisation that wishes to know more about your consumer habits. Companies do this through a variety of channels: telephone, SMS, email, direct mail, social media, and fax.

Naomi Klein’s ‘No Logo’ offered a good analysis on the advertising industry’s transition from the manufactured product to the creation of a “brand essence” as part of the new experiential communications industry. But advertising is undergoing another development – a technological revolution – in the form of lifestyle research and “shared endorsements”, whereby the onus to advertise a product is firmly placed on consumers. This beefed-up brand essence strategy has added greater value to companies, not simply in terms of sales revenue but in the form of data, and we create a lot of it.

Companies like Facebook can be worth billions without possessing many physical assets, making it hard for investors to realistically price companies. The social network, for example, has ascended to a $100bn valuation in five years, despite the assets on its balance sheet amounting to a reported $6.3bn. Business is starting to appreciate the amount of money to be made in the data world; data is a massive driver of growth for many big companies, but remains elusive when it comes to examining its real value.

Given this difficulty in measuring value, the data economy risks becoming another asset bubble: its worth is not accountable in any meaningful way, it can be overpriced, it lacks sufficient regulation and oversight, it can depreciate, and predicting a return on investment is, more often than not, guess work as it relies on modelling behavioural, social, knowledge and relationship capital. How do you determine what a phone number or email address is worth, or what it will be worth in the future? Market research into consumer behaviour, however, can be monetised and this is what we are seeing now as market researchers and lead generators are put to work by brands to analyse and predict your behaviour.

The systematic banality of everyday activities that can see your personal information added to commercial databases, incestuously shared with third parties, enhanced and appended to a data-set, filtered through analytics, tracked, monetised and sold off to a brand for profit (or spammed to high hell), lends itself nicely to Hannah Arendt’s work, Eichmann in Jerusalem. These commercial practices are not planned and conducted by sociopaths, but by labourers (and users) under the guidance of capitalists who accept the desires and needs of production capitalism. Personal information is commodified and sold to others for a profit, part of which is reinvested and used to expand the venture by acquiring more data and the latest software. Users sign up and freely share their data in the hope that they’ll get a bargain, money back under payment protection insurance, or help managing their debts that the system created.

The unique aspect of this process at this particular link of the chain under industrial capitalism is that information (your name, contact details, gender, lifestyle choices, financial history – the list goes on) is in itself the commodity being sold to, and valued by, brands. Brands can then, in turn, increase their campaigns to a wider pool of “warm data” who are more likely to buy into brand identities and increase the brand’s profits.

The information regulator, the ICO, will tell you that most of these marketing and data practices are legitimate, but what one company purports to do in its privacy policy is not always what they do in practice. Moreover, people will often ignore the fine print as it is purposefully obscured by voluminous and difficult to read small print which, if the spirit or even the letter of the Data Protection Act 1998 (DPA) is to be followed, lacks the principles of transparency and fairness under the first data protection principle.

Although a new data protection regulation is working its way through Europe (to replace the outdated DPA and take account of the Snowden leaks), the DPA and the Privacy and Electronic Communications Regulations 2003 (PECR), which provides additional rules to help protect ‘subscribers’ from unsolicited marketing, are still good law for the purposes of electronic communications in the UK. Privacy policies aside, the main rules for marketing and data collection by companies can be summed up as follows:

  • Email – companies must have your prior consent, unless you are a ‘corporate subscriber’ (i.e. they are emailing your business email address) and they are only contacting you with goods and services that you would be likely to purchase in a professional capacity. You must also have been given the opportunity to opt-out. The requirement for prior consent can be nullified where you are an existing customer of the brand (as long as a few other criteria are met).
  • Automated Telemarketing, SMS and Fax marketing – again companies need prior consent.
  • Non-automated Telemarketing – this is a huge area in the marketing and data world. More often than not, telemarketing operations are outsourced to a call centre packed full of young agents in boiler room type buildings on industrial parks in the north of the country, swiftly replacing the manufacturing factories with desks, phones and dialling equipment to create and trade in lifestyle information. The rule here is that you can cold call people in their homes at certain times, unless they have previously notified the brand (or the third party call centre) that they object and/or are registered with the Telephone Preference Service (TPS – our ‘do not call’ list). However, being on the TPS file does not take precedence, so if you opt-in to being called by a brand, they can and will call you. Even where you have given over your personal data via a data capture form, neglected to tick the opt-out box and are registered on the TPS, you can still expect a call.

One of the many problems with telemarketing (despite the fact that we live in a culture that demands its existence), and why it is the cause of much distress and frustration by many, is that many brands and their call centres do not strictly follow the letter of the law. Some companies will devise a multitude of devilish strategies which can include buying the TPS file as a fresh list of data to spam (instead of using it to meet their data protection obligations, such as screening before a telemarketing campaign to knock off the names and numbers that cannot be called).

Others will collect personal information under the guise of conducting market research (which does not require TPS screening) and instead use it for marketing purposes (known as ‘sugging’ and ‘dugging’). This purposefully creates complexity around obtaining consent so that lead generators can try to increase their data pool, warm up leads and make a cash cow out of you. Some call centre agents won’t even provide you with their name or the brand on whose behalf they are calling, which makes it incredibly difficult to find out who holds your data, where it came from and what they intend to do with it. Once you are lost in the profiling and marketing world, sometimes it’s tempting to simply disconnect your landline and get rid of your mobile number to escape the neverending spiral of behind-the-scenes data sharing between companies, and to avoid harassment.

Telemarketing is a huge area in the commercial data world, but the ICO and Ofcom are ill-equipped to actually monitor and challenge these types of practices which are commonplace amongst lead generators and brand marketing departments. List brokerage by companies such as Acxiom and Experian, compounds the problem as your data is rented or sold (often without you knowing), to other brands and list brokers. Although suppliers are meant to protect their lists containing personal information through the use of contracts and seeding methods, among other things, lists still get misused in the quest to generate more revenue.

Many people understand the amount of money to be made in this area, so they set up fly-by-night operations in the hope of collecting huge volumes of data (of a questionable quality), spam it and send on the details of unwitting ‘consumers’ who don’t hang up, have not asked to be removed from their lists, or are not registered with TPS. It should be noted that TPS registration is not a perfect solution – if the new data protection regulation comes into effect in the UK as it currently stands, telemarketing may become opt-in like email. Lobbying by various big name brands has already watered down many of the more ‘consumer-friendly’ provisions of the regulation, and it is likely that the telemarketing sector will plead the tiresome ‘economic growth and more jobs’ card.

Consent issues also arose over cookies technology back in 2012 when the PECR was amended in 2011 providing that users give explicit consent to having their browsing habits tracked. At the eleventh hour, and after much commercial pressure, the requirement to check a box when opening a new browsing session was downgraded to ‘informed consent’ i.e. providing information on the website that cookies are used and the type of cookies. For session cookies which, for example, allow you to browse a webpage and save items in a shopping cart, this is a practical decision, but for third party cookies which are described as persistent i.e. information is dropped on your computer between browsing sessions to monitor your browsing patterns, and third party cookies such as Omniture and Google Analytics, they were shoved under the session cookies requirement for informed consent. Internet users who don’t have knowledge of these online practices (or how to install decent software to limit the effects) are still at risk of having their browsing habits (aggregate or personally identifiable information) tracked by different companies for the purpose of monitoring and marketing (lest we forget OBA).

It is becoming increasingly difficult to escape tracking and commercial practice. Gone are the days when adverts scattered only the physical realm of newspapers, billboards and town centres. Marketing and branding is digital. This is the way we live now. Various tools to combat different aspects of the hostile terrain do exist, from Ghostery and Adblock, to changing your own browser setting, coupled with updating your privacy settings on the social media platforms you use. But again, you will only find these tools if you know what to look for. Hopefully, the dragnet surveillance programs and the far-reaching welfare reforms (in particular Universal Credit which is due to be fully rolled out this October), will put people on notice and allow activists the world over to start experimenting and implementing alternative spaces on the web, where you can still browse and access what you want, free from commercial and state interference. Watch this space.

By Sarah Osbourne | @CamCateron

 

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