For reasons I many go into another time, I've been doing a deep dive into the area of consumer privacy, data aggregation, and marketing analytics, all recently in the news due to security breaches at places like Choicepoint and CardSystems.
I haven't seen a domain with more zealots since the early crypto market. There are zealous marketers sure they can make their customers more loyal and profitable if only can pool all the known data about them. There are privacy zealots, who often don't seem to believe in marketing at all - or maybe even markets. And there are zealous computer scientists and security experts, sure the whole matter can be resolved with the right algorithms. And now that the press and politicians are coming to the party, we can expect the discourse to become even more informative.
OK, I'm exaggerating, but not tremendously. What's striking is that the various solutions from these camps ('lots', 'none' , and 'perfect') don't seem to bear a lot of resemblance to the actual patterns of angst, irritation, and acquiescence at the consumer level. I'll admit up front that the following is partially anecdotal, and partially inference from observable behavior in existing markets. But it does seem there's a rough pecking order of concerns. With apologies to Maslow, I'm going to call this the:
Hierarchy of Unease
1. Direct Financial Loss, or Threat of Same. Anything from credit card or check theft and fraud, to emptying of bank accounts via EFT, or full-up identity theft. Understandably sensitive, though the press is not helping at all by conflating everything from leakage of credit card swipes to establishment of bogus SSN records into 'identity theft'.
2. Intrusion. It may be controversial to put this so high, but the avid adoption of the do-not-call registry, and just common social experience suggests that when your average consumer complains about 'privacy', at least half the time it's about annoyance. This can range from dinner time phone calls, to spam, to (less commonly) junk mail or pop-ups and interstitials. Unfortunately for marketers, the volks-wisdom has these all largely conflated.
3. Compartment Breach. We all segment our lives to some extent: family, career, friends, hobbies, finance, politics, religion, and so on. The configuration, number, and fervor with which these compartments are defended are highly idiosyncratic. But a third party information transfer that crosses one of these boundaries feels like a larger breach of privacy. One might not have a problem with a bank inferring one's income from direct deposit information, and using that to offer a preferable loan rate, but the reaction would be quite different when the same information ends up in the hands of the salesman at the local car lot, or even the minister at the church.
4. Loss of Information Asymmetry. Consumers usually encounter information asymmetry on the down side: the loan officer, real estate agent, or contractor who knows far more about the market and has much more deal making experience. But the individual has always had a few hidden cards of his or her own - knowing the real details of one's state of health, financial conditions, motivations for a purchase, and so on. Data transfer or analysis that puts those cards face up when consumers must make a deal feels like an affront.
5. Everything Else. A great deal of 'private' information does not seem to be highly valued or defended - grocery store purchase lists, music tastes, web site visit s- so long as the utilization of that information doesn't fall into one of the categories above. It's routinely traded away for everything from modest discounts to suggestions of interesting books or new artists.
If I'm close to right on this, there are pitfalls ahead for all of the zealots. The privacy hardliners and techno-purists are solving problems that a large part of the market doesn't think they have (item 5). On the other hand, the marketing enthusiasts may take that same acquiescence as a go-ahead for projects that will run straight into issues 2 - 4, and be surprised by the blowback. (All parties seem to agree on item 1, though differ on what they're willing to do about it.)
We're also headed into a large scale experiment in human factors. Let's suppose all of the profiling, analytics, targeting, and personalization really works, eventually diagnosing each of our interests, clustering them into the appropriate compartments, and pointing us at the appropriate mainstream or Long Tail products and services. No one has enough money and time to respond positively to all offers. What's it going to feel like if we're bombarded with a steady stream of messages that fall into 'false positive' rather than 'trivial reject'. Will that experience invoke #2 - intrusion? Guess we're going to find out.