What value do businesses get from our personal data?
The ‘free’ service we receive from many companies such as Facebook or Google is not actually free.
From the company perspective, we, the users, willingly decide to give them data about ourselves in exchange for the service they provide.
One thing these companies have in common is that advertising accounts for the much of their revenue.
In order to make profit from advertising, companies need us to spend more time on their platform - even if we’re actually looking at different websites. Once you have logged in on Facebook, Google, or Twitter, if you stay logged in then you can be tracked when you visit another site with a Facebook like button, Google’s +1 button, or Twitter share button. Even if you do not click on those buttons, Facebook, Google, or Twitter get notified so they know which websites you visit. That’s why many ad blockers provide the possibility of disabling social media buttons by default and re-enabling them only if you actually click on them.
Think about the amount of information these companies have about you:
- who your friends are
- what products you like to buy
- which places you have visited and when
- who you contact (message, email) and how frequently
- where you live and which banks you have accounts with.
Any one of these is enough for a so-called ‘market research’ study. When combined, they provide even more information about demographic and geographic preferences and market trends. Organisations specialising in market research make hundreds of millions of dollars each year. You can now imagine the value of all the information we decide to disclose about ourselves online.
Now, consider loyalty cards. If you have one of these cards, you’ll get, say, 10% discount on your purchases from a retailer, such as a supermarket chain. A loyalty card might make us more likely to choose a particular supermarket over others when we decide to buy something, but the real value to the supermarket is that it now has information about our individual buying habits and history regardless of which method of payment we use to make our different purchases.
This purchase history has a value. Let’s say an individual purchase history is worth 5% of the amount of purchases we make at the supermarket. Scaling this up, we can see that this information alone is worth 5% of the turnover of the supermarket chain. Remember, we are not talking about the profit they make, but the total turnover they have.
In both of these cases, we can see that our personal data is of huge value to companies. In return for allowing the companies to have the data, we gain something:
- the convenience of online interactions
- discounts on shopping
- suggestions for purchases that are tailored to our own buying history.
© Newcastle University