The statistics surrounding online shopping are staggering. The growth of this retail sector has been nothing short of spectacular. Although bricks and mortar retail outlets still rule the roost, the increase in online shopping activity indicates that this form of retail activity is gathering steam – and shows no sign of slowing down. A 2016 TechCrunch report showed that in the U.S. alone 79 percent of shoppers now shop online – that’s up from 22 percent in 2000. The Internet of Things also means that consumers can now shop when and where they want – and this is revolutionizing retail.
However, when consumers do use the Internet for shopping many do not realize that they are not only handing over their hard-earned cash – there’s another transaction that is happening at the same time. Hand over your email address while paying or sign up for that newsletter that informs you of upcoming special deals, visit a website to browse and you are handing over data about your browsing habits, your demographic information, what purchasing preferences you have and a whole variety of other information. The same is true when you use the social media or even enter a simple search query – data about you is being gathered and probably shared with third parties who have an active interest in marketing products and services tailored to your specific needs and interests. This is the essence of online behavioral tracking.
How does online behavioral tracking work?
Every consumer has noticed that whichever website they visit, including social media sites advertising seemingly aimed at their specific interests appears. This is not random chance. Tracking software used in online behavioral tracking allows advertisers to more precisely target audiences with specific products and messaging. The software used processes and leverages data gained from the consumers’ search history, purchasing activity and browsing patterns (cookies on websites supply much of the information to the site owners). Search engines such as Google and Yahoo use this information to provide what they explain as a value-added service – a highly personalized web experience.
Now the issue of online behavioral targeting is becoming even more urgent as consumers make use of multiple interconnected devices. It’s no longer just browsing using a laptop or desktop that exposes the consumer to privacy threats – now data from smartphones and tablets is also being gathered and analyzed – and these devices are for all intents and purposes in constant use. This adds a layer of complexity to the mix – and it means that marketers are building ever more detailed profiles of those who use the Internet for a variety of tasks – shopping being only one of these.
There are two main approaches; ‘deterministic’ tracking and ‘probabilistic’ tracking.
Deterministic tracking leverages the process when a consumer is signing into a service or platform and through that the consumer is linked to all of the devices that they use. Probabilistic tracking uses information including the type of device, IP address and even fonts used to build a ‘digital fingerprint’ that can link that person to a multitude of devices.
So, consumers are now faced with near ubiquitous data gathering and analysis across all the devices that they operate.
What’s the problem with online behavioral tracking?
There are some issues with online behavioral tracking. Retailers are gathering data in such volumes and the algorithms that analyze the data have become so sophisticated that online privacy has all but disappeared. As far back as 2014 Target in the United States was exposed as analyzing data in such depth that it was able to come to conclusions such as whether an online shopper was pregnant – and push appropriately targeted advertising.
Now it is true that the ad industry has recently provided ways to allow consumers to opt out of receiving targeted advertising or block at least some data mining activity. However, with cross-device tracking consumers may not even know that the data mining is happening and may have fewer options when it comes to stopping the activity.
But there are downsides to online behavioral tracking not only for consumers – even those who are doing the data mining may, in some instances fall prey to the limitations of this sort of data mining activity.
A phrase has been coined about the process whereby people become isolated from information that does not agree with their internalized belief system and interests. This is the so-called ‘filter bubble’. The results of data mining mean that consumers received targeted advertising relating to their narrow range of interests as revealed by their browsing habits (among other activities). This means that marketing companies may be missing out on opportunities to reach consumers with products that they may be interested in – but have not been revealed by online behavioral tracking and data analysis.
There is a compact between consumers and companies like Google and Facebook (and other social media sites (as set out in user agreements) regarding data use. In return for ‘free’ use, the companies will be entitled to use data gathered to target advertising and sell to third parties for other uses. However, increasing number of consumers are becoming uncomfortable with not knowing what data is being captured. In fact, this becomes even more problematic when users realize that companies like Amazon, Google and social media sites often allow third-party affiliates to capture data.
One of the biggest concerns remains the security of the data that is being gathered via online behavioral tracking. Data breaches are these days the norm, rather than the exception. Hacking incidents can potentially result in the exposure of highly sensitive data held by those companies employing online behavioral tracking strategies. It was as recently as the end of 2017 that credit reporting agency Equifax was hacked and the data of 143 million customers was at risk. This has been called ‘the worst data breach of the past decade’.
Online behavioral tracking is here to stay
With the U.S. legislation mandating ‘Do Not Track’ functionality on most browsers stuck in limbo, it is becoming apparent that online behavioral tracking is here to stay. The question is – can legislators and marketing agencies and sites such as Google and Facebook and a myriad of online retailers such as Amazon come to an understanding regarding the consumers’ right to privacy? Given the vast and growing advertising revenues from online marketing activity it seems that the question is far from being resolved.