Paying for Personal Data

Most of us don’t know it, but the most valuable thing we own is our own information.

Think about it… no matter what happens to you in the analog world, the one thing that you will always have are those vital stats we marketers crave so intently. Your age, sex, weight, height, purchasing history, credit card numbers, email address, shoe size… all that stuff that makes up the “data that is you” is yours alone.

Sort of. As many of us know, as we surf the Net, buying, selling, registering, reading, and browsing our way around, we leave little bits of ourselves that are collected, mined, and used to fine-tune marketing messages. All this data says a lot about you and is pretty darn valuable to other marketers. It’s made even more valuable when you’ve given your permission to be marketed to.

In most cases, this permission was given explicitly to a specific site that you know and love (Amazon.com’s personalization information, for example) because both you and the site recognize the value of your information for improving your customer experience.

Until recently.

It turns out that our data is not only valuable to the dot-coms we visit… in many cases, it may be one of their only tangible assets. With the recent downturn in the dot-com sector and the plethora of sites going under (visit FuckedCompany.com for a good scare), several companies have decided to sell their customer data as a way of making a little cash to stave off creditors.

Toysmart.com is one of the most well-known examples, explicitly violating its privacy policy until the FTC stepped in and put the kibosh on the deal. Even so, it still faces some serious issues with online child privacy laws. The saga continues…

What does this mean to you and me? It means that as more stories surface about violations of online privacy (including government violations with the recent Carnivore revelations), consumers are going to become only more cynical.

I think we’ve all come to realize by now that the big gap between browsers and buyers is the lack of trust many consumers have in online transactions. And it’s not going to get any better: Experts at the 10th Annual Computers, Freedom, and Privacy Conference back in April predicted that privacy will soon be as big an issue as environmental concerns.

But this doesn’t mean that consumers aren’t willing to give out their information. Cyber Dialogue’s “Privacy Vs. Personalization” report found that 80 percent of respondents were willing to cough up personal data in return for better personalization, but (and this is particularly relevant to the Toysmart.com case) 49 percent felt that a site sharing their information without their permission was a violation of their privacy.

Lost trust is very difficult to get back. As more dot-coms go under or get swallowed up in consolidations, consumers are bound to start getting even more concerned about their privacy and where their data will eventually end up. This may result in fewer and fewer consumers volunteering to give their information to the most legitimate of sites.

Sure, we can continue to gather information via cookies or other means, but if Microsoft’s recent decision to put more stringent cookie controls into Internet Explorer is any indication, it’s going to get tougher to track customers as customers gain more control of their data.

So what can we as marketers do? Is the future going to be filled with an ever-declining pool of real customer information? Will people cease registering unless compelled to because they’re actually making a financial transaction? Will the (so-far-unrealized) dream of one-to-one marketing dissolve in a quagmire of bogus customer information from consumers too skittish to tell us anything about themselves?

If we keep going the way we’re going, the answer may be a loud “yes!” That is, unless we look for new models of marketing, models more in sync with consumer control, privacy, and protection, models that respect consumers and reward them for the value their information can bring.

What’s the answer? We may not know yet, but WinWin offers an intriguing example of a model that may offer the solution. Basically, WinWin pays customers for their information and allows them to manage who gets access to their personal data and when they get access to it.

It’s an elegant, balanced system. Consumers create anonymous profiles for themselves and are then served ads that match their data. Whenever an advertiser uses the information provided by a consumer in the program, the consumer is paid what essentially amounts to a licensing fee or royalty. Royalties are also based on the quality and amount of information provided by the consumer more questions answered in the profile mean more money for the consumer.

For advertisers, the benefits are great. Not only are consumers more willing to interact with ads they know they’re getting paid for, but it becomes much, much easier to micro-target ads based on profiles. In addition, advertisers pay only for the performance of their campaign… not gross CPM. Finally, because WinWin is truly an opt-in program, the consumers targeted by the messages are probably more likely prospects.

For me, the most interesting thing about the whole WinWin system isn’t the opt-in feature that’s not all that different from a lot of the permission marketing going on all over the place at the moment. No, the coolest thing about WinWin’s system is that the consumer maintains control over the whole process, saying just how much information goes out and to whom… and for how much.

WinWin (and other systems to follow) tip the privacy-control scales to the side of the consumer, something that’s becoming increasingly important. (See my previous article on the subject here.)

In effect, by placing the control firmly in the hands of the consumer, WinWin ends up putting personal data into a global marketplace that improves the transaction for everyone. “You want my data?” asks the consumer of the future, “Here’s how much it’s gonna cost.” Consumers gain control over their most valuable asset, and the marketers get better prospects and razor-sharp targeting. Sounds like a win-win situation to me.

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