Two esteemed professors at an Ivy League school say that while those in the marketing world continue to struggle with how to handle all the data they are accumulating, they may in fact be wasting their time and more than likely need to go on what they refer to as a "data diet."
The amount of data brands collect today from all the various channels: social media, email, mobile, digital, direct and on and on is enormous. Over the past year or so I've written three different articles about Big Data including one in January 2012 entitled Why CMOs Need To Get Real About The Policy Implications Of Big Data.
In that particular piece I made reference to a study done by IBM the year before of more than 1,700 CMOs from around the world who were asked to identify their four biggest challenges and at the top of the list was Big Data. Also in that same article I interviewed an attorney who has worked with many Fortune 1000 companies advising them on issues related to cyber security, privacy and data breaches.
However, according to the aforementioned professors, all the talk about Big Data and privacy may be, as they put it, "a tempest in a teapot."
Do Not Track Legislation
Back in February of this year I read an article from the New York Times Senator Seeks More Data Rights for Online Consumers. The article dealt with the fact that Senator John D. Rockefeller IV of West Virginia wants to "give American consumers more meaningful control over personal data collected about them online."
So I decided to reach out to Eric Bradlow and Peter Fader, Professors of Marketing and Co-Directors of the Wharton Customer Analytics Initiative who have studied the problem of data-privacy from an empirical perspective. Their research shows that brands and companies who are on a "data diet" don't necessarily lose that much customer insights because limited customer data in conjunction with aggregate information (less privacy sensitive) can still provide precise insights.
And when it comes to personal data, Fader says bluntly that "most sensitive data is worthless and firms are often making mistakes to try to use it (or even collect it)." And adds that "when you build a really good model, there isn't a whole lot to be gained by bringing in personal data. "
The concept of a "data diet" is nothing new for Bradlow and Fader. In a March 2009 interview with Knowledge @Wharton, the online business journal of the Wharton School, they spoke of something they referred to as "data minimization" or "data diet." The concept behind this is relatively simple: Brands should keep the data they need to stay competitive and ditch everything else. In the interview Bradlow spoke of a trepidation among brands to discard ANY piece of data.
"I think there is a fear and paranoia among companies that ... if they don't keep every little piece of information on a customer, they can't function," said Bradlow. "Companies continue to squirrel away data for a rainy day. We're not saying throw data away meaninglessly, but use what you need for forecasting and get rid of the rest."
Click here to read the full interview with professors Bradlow and Fader.
Big Brands, Big Decisions
In addition to reaching out to the professors I also wanted to get the perspective of someone from the brand perspective to see how a brand - in this case a very large brand, is dealing with and handling the topic of the pending Do Not Track legislation and how they are currently handling the issue itself on their end.
She told me from Xerox's point of view they believe there are two issues that need to be addressed: First, is there value for the public to have the option to receive targeted advertising? And, second should the public make their own choice about this, or should governments/companies do it for them?
"Xerox selectively engages in behavioral targeting, and finds it to be effective," she said. However, she added that Xerox is a long-standing supporter of giving consumers' choice on whether they want to receive more targeted communications from brands. "We were an early adopter of AdChoices," she continued. "And we began implementing the AdChoices' icon on our corporate ad units in 2011."
One telling statistic she shared me with was the fact across of their corporate units they had just one person elect to opt-out. She questioned whether this lack of action (opting out) was due to a lack of understanding or simply because the consumer chose to opt out. "It's likely a combination of both," she told me.
The need, or better still the benefit of coming clean and being as open and honest with consumers has never been more paramount than it is right now. The digital age affords no place to hide - be it figuratively or literally. Brands must be right up front with consumers and Carone is in full agreement.
"As an advertiser, we believe the industry can do a better job of being transparent about this issue -- driving consistent practices, systems and policies and helping to educate the public," she told me. She took it one step further saying Xerox believes consumers should have a choice about whether behavioral targeting benefits their purchasing process.
So, regardless of just how much a given brand stores and uses, the bottom line is there is an inherent responsibility for brands of all shapes and sizes to tell consumers what it is they're doing, why they're doing it and how it can and will benefit them.