Under Scrutiny

The growth in ever more sophisticated ways of collating information on consumers’ behaviour has renewed fears that the marketing industry is becoming an all-seeing and all-powerful Big Brother.

Aerial photography and the compilation of information from electoral, Royal Mail and other databases are two methods that have sparked doom-filled prophesies of centralised control over data and the prospect of marketers snooping into individuals’ private lives.

Consumer marketing stands at a cross-roads. It’s in a transitional period between the mass-market methods of scatter-gun television advertising and a brave new world of one-to-one personalised marketing.

While most people in the industry are clear that the 30-second TV commercial will wane as the principal method for marketing to consumers, many are unsure of what the personalised future has in store. Fear of the unknown feeds the worst paranoid fantasies about corporations capturing information on individuals and penetrating the wall of privacy to drive their message into the minds of consumers.

That may come to pass but, as it stands, the industry is groping around for information before it has learned what it is going to do with it.

Information innovation

Last week, Data Discoveries launched its Fastrac software system which combines data from a variety of sources, including Experian and Claritas as well as the Electoral Register. This software prompted a dire warning from the Government data watchdog, the Information Commissioner, that our privacy is under threat.

Assistant commissioner Phil Jones says technology that brings together such a wealth of public sector data can only lead to the public raising concerns regarding their privacy. He warns that software companies are close to developing a system that combines the electoral role with mapping and aerial photographs, allowing real time consumer surveillance.

Jones explains that this would result in too much information becoming too easily accessible, a development that was unforeseen a few years ago.

He says: “We feel there is a need, in the light of these developments, to revisit the usage of these public records. If you are required to be on the electoral role, with the risk of being fined if you are not, why should you then be targeted by businesses? Why should one follow the other?”

Increased vulnerability

It is one thing, says Jones, to allow information on, for example, company directors to be publicly available. If people take the time and effort to search for information on company directors, they generally have a good reason for doing so. He believes that it is quite another thing if that information is too readily available, making consumers easy prey to unscrupulous marketing tactics.

Data Discoveries says that Fastrac is totally compliant with the Data Protection Act, but the Information Commissioner clearly feels that the industry is just a few steps away from being able to track consumers’ every move.

Data Discoveries claims that all of the data sources used in the software are publicly available. The company acknowledges that it would face stiff resistance from the Government if it were to take the next step and develop software with the ability to track people’s every move in real time for commercial purposes.

Fastrac enables you to search by name and address against nine different data sources. It is not only of commercial value as a marketing tool; the software has also received interest as a resource for police and collection agencies. But many believe that sophisticated “real time surveillance” techniques offer little true value for marketers.

Phil Andrews, managing partner of direct marketing agency Partners Andrews Aldrich, underlines how far brands have to go before they can make economic use of the data they have collected. He cites the example of retailers that launch store loyalty cards to obtain information about who their customers are, where they live and how they shop. Yet for add-on loyalty promotions such as extra points, he says the retailers resort to TV advertising – even though they could write to shoppers directly at home. He points out that sending promotions directly to people’s homes is far too expensive.

Of some of the more innovative forms of data collection, Andrews says: “A lot of that type of data is more valuable for general research, but will it be used for targeting? Mapping and data is useful for retailers, for seeing where customers are in relation to the store, and aerial photography could add flavour to it creatively. But I can’t see any point where it would be interesting to know what the consumer does every day that is Big Brother gone mad.”

The gravest danger for the future of data capture may revolve not around the individuals who become guinea pigs in a global market research game, but around the brand owners themselves.

They risk the cost being lumbered with countless gigabytes of data they have neither the tenacity nor the resources to exploit. Big Brother may be watching you, but he hasn’t really got a clue why, or how to make money out of it.

Data overload has reached a critical point. Companies have collected so much information that, according to academics at the Cranfield School of Management, they risk “drowning in information”.

Professor Andy Neely, director of Cranfield’s Centre for Business Performance, says: “We are drowning in measurement, with customer satisfaction data owned by the marketing department, employee data owned by human resources and financial data owned by the finance department. But they don’t talk to each other.

“We have got to get smarter about how we use the data,” he says. “That seems to be the fundamental problem in many organisations. We should start with the issue of what we should track. It should be ‘what do we want to know?’.”

Misguided motivation

Neely says many companies have amassed information on consumers in the belief that they will process it once they have the relevant tools to do so, at a later date. But this raises the question of why the companies sought the information in the first place.

He suggests that once technology had created an opportunity for data to be collected, companies set about compiling the information just because they could and as a result ended up tracking things without really knowing why.

Such effective use of data control comes from experience says Littlewoods brand and strategy director Phil Anderson. But it is not only the companies that are becoming more sophisticated according to Anderson; consumers themselves expect companies to target them correctly.

Anderson says: “Clearly our point of view is you only want to put an offer to customers if they want it. It is not only about building the efficiency of the business but about targeting with the relevant offer. I believe it will be a major challenge to the more traditional retailers because customers will expect to be targeted with relevant products.

“It is in the customers interest to make sure you always adhere to the Data Protection Act. One advantage of being an integrated retailer is we have significant experience in this area.”

But all these fears may be somewhat misplaced according to research from business intelligence agency Business Objects, which shows that 61 per cent of marketing directors questioned did not even have basic personal data on their customers.

Business Objects product marketing manager Richard Baines says: “What this shows is that despite the hype about a lot of spending on customer relationship management (CRM) and data collection, we still have a long way to go to get a complete view of our customers. There is a large untapped potential in the UK for CRM to become an integrated part of marketing.

“Everybody is wary of offering too much personal information because they expect a deluge of mail, but the end result is in fact direct mail aimed specifically at the customer.

“People know if you constantly get the wrong product offer you will give a negative response. Effective CRM means, instead of blanket mailings, there are more targeted campaigns, which save money and improve response rates.”

The development of sophisticated consumer tracking software maybe the answer to some marketers’ prayers, but for the foreseeable future consumers still have rights under the Data Protection Act 1998 to help fend off Big Brother.