ME INC.: GETTING THE GOODS ON CONSUMERS
Marketing Firms Want Basic Data About You and Me, But We're Wising Up to What Those Facts Are Worth
By Paul Farhi
Washington Post Staff Writer
Sunday, February 14, 1999; Page H01
The phone's ringing. We've just sat down for dinner, so of course the phone's ringing.
A youngish male voice greets me, mispronounces my name and immediately swings into his rap: "I'm calling from Acme Associates, and we're conducting some research. We're not trying to sell you anything. We just want to ask you a few questions . . . "
Snappy comebacks race through my head. Should I use Jerry Seinfeld's line on him, about cooperating only if I can have his home phone number, so that I call him back during his dinner?
Instead, conditioned by habit, I respond as tens of millions have responded before me: "Sorry," I say. "Not interested. Goodbye."
Shortly after I've hung up, after I've dug back into my mashed potatoes, it hits me. The proper response wasn't "Sorry. Not interested."
What I should have said was "How much?"
Let's face it: Companies are fascinated by me.
Okay, maybe not me personally, but "me"--the consumer--collectively. I possess something nearly as valuable as spendable cash: information about myself. Before they can get "me" to buy something, they need to know a lot about me: how old I am, how much I make, who I voted for, what I eat, wear, drive, think or do.
Market research is a $6 billion-a-year business, according to Jack Honomichl, who tracks the industry for Marketing News magazine. The shocking thing about that is how one-sided this flow of money is. By that I mean I'm not getting any of it.
The research company that called me up the other day wanted something for nothing; in essence, the researchers wanted to get their hands on my facts. This company was no doubt being paid by another company to learn about me. This second company undoubtedly planned to hand my facts to its marketing department or ad agency, where several well-compensated professionals would create an ad. Then, supported by my own insights into my own behavior, this ad would then be used to persuade me to buy the company's products.
For decades, people have revealed amazing things about themselves, or permitted considerable intrusion in their lives, all in the name of market research, and all for next to nothing.
Consider Nielsen Media Research, perhaps the most famous name in the consumer-research game. Nielsen signs up more than a million households a year to participate in its TV ratings surveys. Most respondents are recruited to fill out a weekly diary detailing what they watch and when. A smaller group is selected for the "metered" sample, wherein Nielsen electronically records what they're watching.
To get this information, the company sends out a technician, who spends several hours connecting an electronic meter to every TV set, cable box and VCR in a respondent's home. Some houses get hooked up with "people meters," which measure not just what's on but also who's actually watching. These boxes demand an extra layer of hassle, requiring members of the household to punch buttons identifying themselves on a special console whenever they start and stop watching. People-meter families have to keep punching in for up to two years.
And what do Nielsen "families" get for all this? Diary participants receive anywhere from $1 to $5 for their week's work; metered families might get $10 a month to cover their electric costs. From time to time, metered families also get a small "token" from Nielsen, such as a pen-and-pencil set.
Why bother? Apparently, the attractions are Nielsen's famous name and the fun, if any, of determining the nation's most popular TV programs. "We depend a lot on the kindness of strangers," says Jack Loftus, Nielsen's chief spokesman. Such kindness, incidentally, helped Nielsen generate $401.9 million in revenue and $94.4 million in operating profit last year.
Let's acknowledge here that consumers benefit from market research, at least in indirect ways. Picking consumers' brains helps companies develop new products and establish competitive prices. This enhances the efficiency and profitability of the company, which in turn helps fuel the larger economy.
Besides, marketers argue, no company wants to waste your time and its money trying to sell you something you don't want. As the grease in the sale process, market research makes everyone's life easier. "Research is part of the way in which consumers take charge of what they get, where they get it from and what they pay for it," says Bill Cook of the Advertising Research Foundation, an organization of ad agencies, media companies and market research organizations.
This argument would be persuasive if it weren't for one inconvenient fact: Collecting personal data has become an end unto itself.
Recently, Conde Nast Publications Inc., publisher of the New Yorker, Vanity Fair and other magazines, asked subscribers to fill out a remarkably detailed survey, with intimate questions about smoking, drinking and personal health. Respondents were told they would become part of a select group that might get product samples.
Conde Nast wasn't interested in this information solely because it wanted to improve its magazines. Instead, it was assembling a massive, exclusive database on its readers that it could resell to drug companies, retailers and other marketers.
The good news--from consumers' perspective, at least--is that the guinea pigs have begun to wise up. They're demanding more for their information.
Some companies have begun to reverse the old paradigm of something for nothing and have been dangling "rewards" in front of those who give up personal details.
To maintain customer loyalty, for example, marketers created frequent-flier and frequent-shopper programs. A chief aim of these loyalty, or "relationship," programs is to collect consumer information that can be used to induce customers to buy more, or to persuade customers to change their buying patterns with coupons, "exclusive" deals, discounts, or just more responsive and personal service.
You might call this pay-per-you. Some recent examples:
* Thanks to new technology, online companies can track how long participating customers linger at a particular Web site. One of the leaders in this is Amazon.com Inc., the online bookseller, which records what customers buy and then offers them suggestions about related titles and products, based on patterns its computers discern.
* A company called BroadPoint Communications Inc. will give you free long-distance phone service if you agree to tell the company such things as your income, shopping habits and so forth. BroadPoint uses this information to attract advertisers, who run commercials preceding your "free" long-distance call, commercials they say will be tailored to your specific, personal facts. Want a longer call? Just listen to another commercial.
* A new service called Free-PC last week began offering free Compaq personal computers and Internet hookups to 10,000 selected consumers. The trade-off: You have to fill out a questionnaire that, among other things, asks for the sex and age of your children, your total household income, your hobbies and interests, and the make and model of the cars you own. Free-PC says it won't sell the information, but it will, like BroadPoint, use it to attract advertisers. In fact, that's why Free-PC is giving away PCs--so advertisers can blitz the company's "qualified" customers as they surf the Web. (Don't get too interested in this deal. The 10,000 PCs went fast.)
* Del Laboratories Inc., maker of the astringent cleanser Propa pH, is offering free phone cards in exchange for information about your skin care.
Privacy advocates suggest all kinds of potential abuses from giving away too many of your facts (or, worse, having them taken from you without your consent). They say these kinds of programs enable profiteers to forever peek over your shoulder, following you across the Internet or "watching" you as you shop.
Indeed, this is exactly what companies such as Catalina Marketing Corp. of St. Petersburg, Fla., do. Using shopper-club data supplied by supermarket chains, Catalina then singles out families for specific marketing pitches from consumer goods manufacturers. The company claims it has shopping histories on 30 million families.
To which I say, so what?
The real problem with this, I'd suggest, is not that someone might know which brand of peanut butter you prefer. The problem is that they won't compensate you adequately for this fact.
A number of legal and economic researchers say many consumers don't get discounts or products worth anything close to what their information is worth. These researchers are studying how to place a price tag on such information.
Paul M. Schwartz, a legal scholar at Brooklyn Law School, says few people are even aware of how their information is used by a company, or resold or rented out. And so they can't properly price their data.
The grocery store may give you a deal on peanut butter, for instance, but the store may be reaping much larger discounts from food manufacturers who pay to send out direct mail. Similarly, consumers who fill out a survey at a music store may get a free CD, but the company may sell the information at a great profit to another marketer. Consumers "are getting ripped off," Schwartz concludes. "They don't realize the true value" of their facts.
Management consultants John Hagel and Marc Singer argue in a forthcoming book that the balance of power between marketers and consumers has begun to shift--so much so that in a few years consumers will have a personal information intermediary, or "infomediary," to negotiate on their behalf with information seekers.
In "Net Worth: Shaping Markets When Customers Make the Rules," Hagel and Singer suggest that consumers may someday coalesce into a kind of massive co-op, a marketing HMO. Taking information from many consumers, the infomediary would use their combined market power to extract lower prices and other perks from groups of marketers.
Frankly, I don't mind having some frivolous piece of my identity bandied about among strangers. I'm not even sure I mind disclosing important facts about myself to marketers. But I do mind not getting enough in return.
And so, I place myself up for bid.
What do I hear for a male, age 40, who . . . well, that's just a taste. Want to know more? Then let me ask you a question: What's it worth to you?
Staff writers Robert O'Harrow and Fred Barbash contributed to this report.
Where the Marketing Money Goes
Nearly a third of market research is spent on consumer nondurable
goods, which includes packaged items such as food.
Consumer nondurables: 32.7%
Media advertising: 18.7%
Pharmaceutical, health care 17.2%
Government 6.0%
Other 5.7%
Telecom. 4.6%
Cons. durables 4.4%
Automotive 3.6%
Financial servs. 3.4%
Retailers 1.4%
Travel, tourism 1.1%
Entertainment 1.0%
Political 0.2%
31.4% |
