“Historically, privacy was almost implicit, because it was hard to find and gather information. But in the digital world, whether it’s digital cameras or satellites or just what you click on, we need to have more explicit rules – not just for governments but for private companies,” – Bill Gates “We are really a data agency that sells a few clothes.” These comments from a prospective client recently bore little surprise as another tsunami of change to what we know as retailing is upon us. Why settle for 50 per cent margin on your product when there is potential to earn many more times that by collecting and selling personal data from the customer that bought the product? Not possible that our data could ever be sold? Well perhaps not. By way of example, British ministers are currently looking at changes that will allow HMRC (revenue collection) to sell taxpayers’ data to third parties They are not, however, the first to have this idea or to attempt to take advantage of what the World Economic Forum (WEF), called a new asset type. The WEF report says that 15 billion devices will be connected to the internet by 2015 and 50 billion devices by 2020. The amount of data stored on the internet is predicted to grow exponentially and looks set to be 44 times larger in 2020 than it was in 2009. Internet giants such as Google and Facebook have business models underlined by the use of personal data, but most people would have trouble knowing who exactly has access to the data trail they are generating across the internet. One viewpoint is that such sharing of information helps economies and improves our own experiences online. The internet is a largely free service, and sharing personal data is the price we pay. Equally, it is little surprise that internet revenue has also grown strongly over the last ten years, or that in 2013 it hit $42.8billion in the US, (according to The Guardian, UK data blog), and this has huge ramifications for retailers globally both in existing and future business models. Internet giants such as Google and Facebook have business models underlined by the use of personal data, but most people would have trouble knowing who exactly has access to the data trail they are generating across the internet. It is the value of this data that has driven their capital valuations and makes them poised to be within the top five of our global retailers when and if, they turn their attention to retailing. The data that brands are interested in is roughly divided into three types:
- Volunteered data – content created and shared by individuals, such as their social media profiles
- Observed data – captured by recording the actions of individuals, such as location data from using smartphones
- Inferred data – what brands can work out about you from the first two.
The inferred data is the type with real practical value, and the first two, unsurprisingly, don’t cost much; they just help to build a picture of the third. Add to this the power of neuro marketing (www.rdginisghts.com.au) and we start to see movement into customer predictive analysis. This will increase the value of this data by many more times. Take Facebook as another example, the company has been busily collecting that data for many years, compiling the information that its more than 1.23 billion users freely share about themselves and their desires. Facebook’s value will be determined by whether it can leverage this commodity to attract advertisers, and how deftly the company can handle privacy concerns raised by its users and government regulators worldwide. As the biggest offering of a social networking company their initial IPO is the clearest evidence, yet investors believe there is a lot of money to be made from the social web. Facebook’s dominance in this field has left Google, a web king from an earlier era, less than a decade ago, racing to catch up. Facebook is considered so valuable because it is more than the sum of its users. The world’s largest social network, it is a fast churning data machine that captures and processes every click and interaction on its platform. Every time a person shares a link, listens to a song, clicks ‘like’ , or changes a relationship status, a morsel of data is added to Facebook’s vast library. It is a siren to advertisers hoping to leverage that information to match their ads with the right audience. So we evolve from collecting personal data at the register to the buying and selling of personal data as new retail category or classification. Sir, would you like a segment of customer data in your area of interest, with your new blue jacket? Am I joking? Perhaps and perhaps not. Happy Fit Retailing! First published by Inside Retail August 2014