How Online Experience Varies by Purchasing Power

How Online Experience Varies by Purchasing Power

When people discuss issues with data privacy, class ranking is rarely part of the conversation. Even though the internet has been a markedly business-driven project for some years now, the old perception endures that URL life isn’t getting marked by the same dividing lines that mark IRL society. However, this is false. The realization that data privacy gets inextricably tied to economic status is becoming more widely accepted.

Predatory Advertising

As the old technology adage goes: when the product is free, you are the product. Nowhere is this truer than online. Those with less disposable income are prone to having data leveraged in a more aggressive and potentially predatory fashion. Moreso than those who are affluent. Under previous lax data regulation, the robust flow of third-party data meant that advertisers could know with near-certainty the sort of online users that might be vulnerable to risky purchase propositions. In other words, they could target and exploit weak consumers with impunity.

A recent New Republic article highlighted some of the industries that are engaged in predatory online advertising practices. Among the culprits are bookmakers, payday loan companies, and for-profit colleges. It cites author Cathy O’Neil’s claim in the book Weapons of Math Destruction. “A potential student’s first click on a for-profit college website only comes after a vast industrial process has laid the groundwork.”

Advertisers can use anything from Google search history to educational questionnaire data. It data used to target individuals at their moment of peak susceptibility. It’s not that advertisers couldn’t use these techniques to target more affluent consumers. It’s that more affluent consumers are less driven to make such risky purchases, which get often borne from economic desperation. Furthermore, poorer consumers are more likely to have their information washing around ad-targeting databases. It’s because they’re more likely to fork over data for free access. The net result is, in the words of Michael Fertik, “the rich see a different internet than the poor.”

Higher Standards of Privacy

Through this lens, one begins to understand the impact of recent and forthcoming data regulation. It’s not a flat line across classes. It should work to disproportionately decrease the vulnerability of poorer online consumers. Especially because they are the most vulnerable to exploitation in the first place. Governments will continue increasing control over the use of data, and there will be the decreasing ability of companies to license third-party data without consumers’ knowledge. Combine both of those with increased penalties for data processors that violate their rights, and consumers will be less susceptible to predatory advertising and more in control of the data that they hand to companies.

Of course, no one assumes that new data regulation will magically turn profit-seeking enterprises into virtuous pursuers of the highest common good. However, we at Ethyca believe that organizations showing commitment to a higher standard of privacy protection will be rewarded in the long run by increasingly data-savvy consumers. With this in mind, beyond legally-required data practices, we recommend that companies make an effort to spell out all the data processing activities that they undertake on owned properties – to actively educate, in other words. Here at Ethyca, we settled on a “Nutrition Table”-style visualization that we think is crisp and instructive. Got a better idea to keep users informed? Feel free to describe in the comments! 

Published from our Privacy Magazine – To read more, visit privacy .dev

Ethics & Trust in Tech: Thought Leadership

Ethics & Trust in Tech: Thought Leadership

Across the tech sector, there’s widespread consensus that a trust deficit threatens to undermine the current business model of quality, ad-supported content. This mistrust exists between data subjects, data controllers, and data processors (to use GDPR parlance). Users don’t trust that the sites they visit are behaving responsibly with their data. In turn, those sites can’t be sure that the infrastructure which allows them to monetize are doing the same.

A Pain Point / An Opportunity

A recent AdWeek interview with Chetna Bindra, Google Senior Product Manager for User Trust, Privacy, and Transparency, gives fresh insight into how one of the world’s biggest data brokers sees the future of privacy. Bindra’s interview is chock-full of interesting nuggets. To her, data privacy is the most significant pain point. It’s also her biggest opportunity for tech companies in the coming years. She says: “We need to find a way for users to continue to access ad-supported content on the web while also feeling confident their privacy is protected… If transparency is a pain point, it’s also an opportunity.”

The point Bindra makes is a crucial concern for us here at Ethyca as well. We believe that previous lax standards around data privacy were a bug, not a feature of the internet era. Now that legislation like the GDPR and CCPA are coming into effect, companies are compelled to focus on operating at a higher standard of transparency around data management, and ultimately –though it may be a short-term challenge to implement. We believe that’s a win for everybody.

Bindra lays out of a vision of how an online ecosystem should work when she says: “Users need to feel like they’re getting value [in exchange for their data] and advertisers need to be able to reach people interested in what they have to offer.”

From Outdated Process to High Standards

This point is an argument I make to data regulation skeptics frequently. The fact remains – current ad targeting practices, mainly as large corporations and SMEs increasingly rely on programmatic buys, isn’t anywhere near the platonic ideal of “reaching the motivated consumer when they are likely to purchase.” Moreover, one of the main reasons for that is that a non-regulated data ecosystem that allows for the buying and selling of second- and third-party data sets without users’ affirmative consent is never going to yield as precise targeting models as well-curated, owned, responsibly managed consumer data. The old programming adage GIGO – “Garbage In Garbage Out” – springs to mind.

So, Bindra isn’t utopian. When she speaks this way about the future state of online data privacy, she’s talking about the impact on advertising. The world she describes should be a natural consequence of companies moving from outdated processes of data management. A world where companies are running to the highest globally compliant standard. There’s no need for SMEs feeling intimidated by this prospect. It should be clear that in the long run, better data practice will be good for business.

Published from our Privacy Magazine – To read more, visit privacy .dev

Inefficiency in Data Privacy for Online Advertising

Inefficiency in Data Privacy for Online Advertising

Google and Facebook dominate the data-driven online advertising market and have created an ecosystem with network effects challenging to break. Tech giants accumulate user data; their targeting becomes more refined; vain user impressions reduce. Their business models build on foundational inefficiencies and give rise to the precarious externality of data privacy invasion.

Data Privacy Swept Under the Rug

Online advertising has finally brought traceability to an industry that has long been unsure of its real impact. However, click and conversion rates give away the amount of traffic an ad generates. Therefore, advertisers can precisely measure if their ads are prompting the desired behavior. 

As a result, advertisers are poised to increase shares of their advertising spend towards placing and creating digital ads. In turn, social media platforms and search engines reap higher revenues through highly effective targeting. This drives them towards the collection and analysis of user data. This optimization mechanism, however, sweeps concerns over privacy under the rug. It also hides the underlying ineffectiveness and inefficiency of the data-driven online advertising model.

Under the current paradigm, online publishers provide an indirect link to advertisers’ products and services. Instead, it should optimize their value proposition towards users. In theory, a rational user willingly spends more on Google and Facebook products. A rational user is more willing to pay for the goods/services purchased as a consequence of being targeted by platform advertisers The user ultimately finances the middleman, the digital advertising industry. 

Eliminating the Middlemen

We’re one to eliminate this entire trade of intermediaries. It starts by deploying a pay to play model similar to Netflix or Spotify. Google and Facebook could cash in on the full value consumers perceive their services to be worth. Meanwhile, the incentive of the two advertising giants would shift from getting to know their users to the maximum extent through big data and AI towards providing the highest perceived value to users. 

One could, of course, argue that the customization, enabled through the study of user behavior and preferences, would still be valuable to users. It would, however, become difficult to rationalize the level of private data collected on users. In practice, Facebook and Google have opted to offer their services for free, to foster quick and widespread adoption. Nonetheless, the average revenue generated per user for Google and Facebook (around two dollars per month), begs to ask the question of whether users would prefer to pay directly for their internet search activity and social media usage.

A New Revenue Model

Users’ concerns are enhancing as they gain more education on current ad targeting practices. Thus, we may well reach a turning point where Google and Facebook see their incentive structure altered to favor a new revenue model. Regulators would be well served to nudge the data giants towards pay for play models to enhance the probability of this outcome. Still, users have to do their part in upping the bar on their willingness to purchase internet services to protect their data.

Published from our Privacy Magazine – To learn more, visit privacy .dev