What If Consumers Controlled Data?

Start-ups in the consumer data privacy space are beginning to create models for and emergent consumer-data ecosystem, but the lines are still blurry between the ephemeral possible and the technical imperatives of creating a system within which consumer data privacy can coexist with the needs of an advertising industry built on the extrapolation and sale of consumer data.Their varying visions augur an era in which consumers become individual advertising ecosystems, sharing data, requesting customized advertising for viewing, and signaling purchase intent to a market that is as open and value-driven as a village bazaar.

“Rather than a privacy threat I see a personal data opportunity,” said Esther Dyson, a noted technologist who is backing new approaches to digital data. “Instead of ads, we need sponsorship, where a marketer provides a valuable service, often around a consumer data-management application. The new form of marketing shows up only for the person at the right time and place or device.”

This is a vision that has a long history. The promise of the right ad at the right time at the right moment has been kicked around forever. The question, outside of the technological feasibility, remains how to involve consumers in managing their data. Some argue that people have been taught to do this thanks to, of all sources, Facebook, where they need to think rather carefully about what they share and to whom.

Here’s how it would work. Consumers would be able to pull their Website usage data via feed or manually, ranging from purchases to time spend on site, from the individual websites that store their data and archive it offline or online, in a personal data storage tool that would be accessible online. A company which functions like this is Mint, which aggregates a user’s financial data from multiple online sources. That data would provide an in-depth snapshot of a consumer’s interests, purchasing behaviors, and content consumption and compute a variety of scores based on the consumer’s history, like a credit score. Users would be able to barter access to that information, either individually or in aggregate with other consumers, with digital agencies, brands or even retail outlets seeking access to a market which offers detailed information on each potential customer. Purchase intent information would come directly from the consumer, as well as requests to watch a commercial for information on products of interest.

“The idea,” said Mary Hodder, a veteran Silicon Valley information architect and the founder of Dabbler.com, “is that a consumer would issue a personal request for proposals when they are ready to buy to brands which would be able to access parts of the consumers profile and create an offer based on that.”

That request process would create a sort of eBay of personal data, with power groups bartering large discounts based on their personal spending habits and profiles and advertisers creating ads that are high on information and low on fluff to connect with buyers that are watching their ads not because they have to, but because they’ve asked to.

Data is a currency that can be used by consumers as well as brands, digital agencies, Hodder believes, providing universal benefits, provided that the requisite consent remains with the control of the consumer. This movement towards the monetization of consumer-managed data has been recognized globally by researchers and organizations such as the World Bank, said Hodder, and it will continue to gain momentum as the dominant paradigm shifts towards consumer-centric data exchanges irrespective of privacy legislation outcomes.

“The World Economic Forum has gotten involved in defining this class, telcos are involved, digital advertising agencies, even banks,” stated Hodder. “They are saying ‘data is where Google and Facebook are creating all of their value, we have personal data, how are we faring in terms of providing value to consumers based on that data.'”

It sounds like a compelling vision smack dab in the middle of the larger trend in the direction of consumer control. Yet it also conjures up the saying, “Sound good on paper, just like Communism.” The point: the digital advertising system is endlessly complex and previous system to put consumers in control of their data, like Root Markets, failed miserably. Why would things be different now?

Zach Coelius, CEO of trading desk Triggit, doubts that the consumer data ecosystem will do anything but sputter. “While I think that it is important for consumers to have control of their private data,” said Coelius “an individual’s personal online data, is worth pennies. This model will not work, and it’s been tried before and it has no chance unless there are many millions adopting it. Behavioral tracking makes advertising more relevant and is harmless to consumers, said Coelius. The resistance, Coelius believes, is because of consumer misunderstanding of the data collection process and the nature of what matters and what doesn’t about data usage.

“Consumers are still very confused as to what constitutes personal data online and the value exchange for services around information.” CEO Marc Zagorski  of data trading firm Exelate said, “As an industry we haven’t done a great job of letting consumers know what the payoff is and engaging them in the evaluation process. If consumers had a real sense of the benefits they are receiving by participating in the data process, I think their concern level would rapidly diminish.”

Advocates argue this typical industry view misses the forrest for the trees. Consumers are ready to take control of their data, they argue. For one, consumers are now used to handling their own data and using it as a form of currency to get deals via social media and they are now much more aware of the danger of digital interactions which leave a “snail-trail” of data, as Dyson put it. There’s also the undeniable tug of looming privacy legislation. The issue of data and privacy are more discussed now than in previous times. And perhaps more critically, there are now mechanisms in place through the ad exchanges that could theoretically at least provide an outlet for consumers to actually make money of their data thought a system that would scale.

According to Kaliya Hamlin, an expert in user-centric identity management and consumer data privacy, the question isn’t really about the flow of data, but about consumer identity, which includes the aggregation of consumer data that Hamlin believes should remain solely in the provenance of the consumer. Hamlin believes that the rise of a personal data ecosystem is inevitable, and brands and agencies need to come together on a set of privacy and data-usage standards.

“On the one hand, we have industry voices calling for the current personal data ecosystem to be left as it is while there is continuing technological innovation among the proponents of maintaining the regulatory status quo, said Hamlin. “On the other side, advocacy groups are pushing for legislation that would prohibit tracking users who ask not to be tracked. However, making the choice to go this direction means that all the value in the personal data is lost because it is never collected.”

Hamlin believes there is a distinct shift in power from agencies and brands viewing data as their provenance and consumers wanting to take back their digital identities. “I think that’s of interest to brands, to have consumers that are connected to their message because they have chosen to be,” said Hamlin. “Collaborative standards won’t be perfect, but this is a foundation for the future and there is a middle path emerging where users’ interests are balanced with those of industry.”

That’s a radical change from how things work today. Brands and agencies have to be weaned from their addiction to massive amounts of anonymous data and see the value of opt-in data and consumer connections based on true engagement, according to author and social media strategist Mitch Joel. “Although the numbers in a consumer-driven scenario may be less, the value is much more because the consumer is empowered and connected. So I hope that eventually we will have a centralized receptacle where anyone can have all of their data available and usable to them, with their permissions already in there.

Dyson, Hodder and Joel agree that movement towards a standardized consumer data privacy protocol will continue. The idea of open data is decades old, but the three view the present climate as one which makes brand and agency understanding of core issues in consumer data privacy an imperative. Although data vendors and brands may discount the longevity of the movement, the uncertainty of legislative outcomes is a good reason to take a second look at data collection practices and alternate strategies for connecting with consumers in a rapidly changing e-commerce landscape.

“This ecosystem is not going to happen this year,” said Hodder. “This is perhaps a five year process but it is something that brands and agencies will have to deal with post-legislation, or now, before the law is set in stone.”