The Rise of Surveillance Commerce

Is it good for brands?

The Rise of Surveillance Commerce

By John Bajorek

A good friend considers it amusing if bordering on disconcerting. He and his wife have been endlessly discussing the pros and cons of a color refresh to their brick Colonial. Coincidentally, or maybe not, he’s now seeing nothing but Benjamin Moore ads online. Has something, or someone, somewhere been listening? Or did he search Houzz for ideas and simply forget he had, inadvertently tipping off the paint sellers of the world. Another friend has suddenly been bombarded with direct-mail diaper ads, despite being childless and most certainly not pregnant. Again, amusing. But she has also spent the last few months talking almost daily on her mobile to an expectant sister three states away. Who tipped off the diaper pushers? Although maybe she might send them on to her sister, so there’s one plus. Only later does it occur to her to ask, Is my mobile listening?

Is my mobile listening?

Technically, yes, it is. Only 45 days after the worst terrorist attacks in American history, George W. Bush signed the Patriot Act into law, granting unprecedented authority to the US government to spy on the digital and phone communications of American citizens. Almost two decades later, and over five years after the Snowden disclosures revealed the pervasiveness of a vast state surveillance apparatus, the broader American public remains, for the most part, unfazed.

Today, almost 50 million households have a 'smart speaker.'

In fact, only a few years later, millions of Americans further shrugged off any lagging reservations about widespread surveillance of digital and phone communications, so much so, they spent their own hard-earned money to put a 24/7 listening device right inside their homes. Today, almost 50 million households have a “smart speaker.”1 The Amazon Echo dominates the market, with more than 20 million devices sold.2 What one might argue is the commercialized version of totalitarian, deep state wiretapping has been softened with Orwellian branding—a must-have of the smart set, who can now afford “digital assistants.” A smart speaker is owned by a smart shopper, right? And casing a place to spot the smart speakers doesn’t exactly create the same urgency or outrage as sweeping a house for bugs. As technology always does, the smart speakers will evolve. As recently reported in The New York Times, Google and Amazon have filed patent applications that would allow the devices to monitor more of what users say and do.

We now live in an inescapable era of surveillance commerce

We didn’t realize it as it happened, but years ago, we entered a new era. We simply haven’t named it yet. We now live in an inescapable era of surveillance commerce. This era has been made possible by three converging trends: one, rapid advances in mobile tech and location tracking; two, the dominance of ad networks tracking consumers across any digital device and shopping channel; and the ubiquitous, inescapable algorithms governing almost every aspect of daily commerce. That’s to say nothing yet of what AI might soon unleash. We’ve witnessed the almost wholesale reordering of economic and commercial life, and anything this far-reaching unlikely leads to unintended consequences. What’s clear is as both citizens and consumers, we have not yet fully grasped what it all means.

Retailers could lose one-fifth of their customer base after a data breach

As a recent Pew Research Center study suggests, it’s all been just too much, with many Americans struggling to understand the nature and scope of data collected about them. Only half of those surveyed by Pew said they felt confident they understood how their information would be used, but 47% said they were not, with many feeling confused, discouraged or impatient when trying to make decisions about sharing their personal information with companies.3 More definitively, the survey showed 91% of adults agree or strongly agree that consumers have lost control of how personal information is collected and used by companies.

This shouldn’t come as a surprise, especially considering how many retailers have had massive data breaches, some more than a decade ago, including Framingham, Mass.-based TJX, operator of the T.J.Maxx and Marshalls store banners, and more recently, Target Stores and Home Depot. Just this month, there were more, including Sears and Saks Fifth Avenue and Lord & Taylor. The commonplace occurrence of such breaches belies how seriously consumers take them. One recent study suggests retailers could lose one-fifth of their customer base after a data breach, and that nearly one-third would stop shopping a retailer for an extended period. How can consumers remain so nonplussed then? It’s not exactly pitchforks-in-the-streets time, after all.

Retailers could lose one-fifth of their customer base after a data breach

Despite all that has happened, the option to opt-out is no longer an option. Yet the reluctant acceptance of the privacy is dead mantra by shoppers may not be a viable, long-term state of affairs. It’s time for brands to listen better to consumer misgivings. After nearly two decades of citizen apathy and short-lived outrage over government and corporate overreach, we may have hit a tipping point. Over the last few weeks, it has slowly been revealed that the data of as many as 87 million Facebook users have been compromised in an unauthorized release to the UK political firm, Cambridge Analytica.4

Are we on the verge of a radical shift in the zeitgeist? “Delete Facebook” has become a common reframe. Perhaps, the suppressed outrage and temporary paralysis will subside, too. After all, for now, it’s only the possibility of revolt that feels real. Millions are still posting status updates on Facebook. But this latest scandal is influencing major business decisions—and business models. For example, Facebook was on the brink of launching hardware products, including a line of connected speakers to compete with the Amazon Echo and Google Home. It’s now delaying the release, perhaps indefinitely.

For now, Facebook is the one under fire, but the breach indicts the entire system of surveillance commerce. The business models of almost every retailer, and consumer product, now relies intently on probing an infinite wealth of data on shoppers. But what has this delivered to brands in the end? Frustrated consumers that trust brands less and get weirded out by narrowly placed ads. Widespread fears about identity theft. An ad environment so cluttered and deluged with messages that consumers get bombarded with advertising everywhere they go. It’s harder and harder to break through. Maybe it’s time to rethink the basic premises baked into the model of surveillance commerce. Just because technology allows us to reach anyone, anytime and anyplace we want, doesn’t mean it’s going to build a brand for the long-term. Quite the opposite.

John Bajorek
John Bajorek
Executive Vice President, Strategic Growth & Innovation
WD Partners

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