tag:theconversation.com,2011:/au/topics/personalised-advertising-8798/articlesPersonalised advertising – The Conversation2021-04-28T06:49:55Ztag:theconversation.com,2011:article/1599162021-04-28T06:49:55Z2021-04-28T06:49:55ZApple’s new ‘app tracking transparency’ has angered Facebook. How does it work, what’s all the fuss about, and should you use it?<figure><img src="https://images.theconversation.com/files/397507/original/file-20210428-13-k6hkhm.jpg?ixlib=rb-1.1.0&rect=19%2C0%2C2212%2C1473&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Amr Alfiky/AP</span></span></figcaption></figure><p>Apple users across the globe are adopting the <a href="https://techcrunch.com/2021/04/26/ios-14-5-goes-live-with-watch-unlocking-tracking-transparency-and-kissing-emojis/">latest operating system update</a>, called iOS 14.5, featuring the now-obligatory <a href="https://blog.emojipedia.org/first-look-217-new-emojis-in-ios-14-5/">new batch of emojis</a>. </p>
<p>But there’s another change that’s arguably less fun but much more significant for many users: the introduction of “app tracking transparency”. </p>
<p>This feature promises to usher in a new era of user-oriented privacy, and not everyone is happy — most notably Facebook, which relies on tracking web users’ browsing habits to sell targeted advertising. Some commentators have described it as the beginnings of a new <a href="https://www.cnet.com/news/facebook-vs-apple-heres-what-you-need-to-know-about-their-privacy-feud/">privacy feud</a> between the two tech behemoths.</p>
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<h2>So, what is app tracking transparency?</h2>
<p>App tracking transparency is a continuation of Apple’s push to be recognised as the <a href="https://www.apple.com/newsroom/2021/01/data-privacy-day-at-apple-improving-transparency-and-empowering-users/">platform of privacy</a>. The new feature allows apps to display a pop-up notification that explains what data the app wants to collect, and what it proposes to do with it.</p>
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<figcaption><span class="caption">Privacy | App Tracking Transparency | Apple.</span></figcaption>
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<p>There is nothing users need to do to gain access to the new feature, other than install the latest iOS update, which happens automatically on most devices. Once upgraded, apps that use tracking functions will <a href="https://www.forbes.com/sites/kateoflahertyuk/2021/04/24/ios-145-how-this-outstanding-new-feature-will-change-your-iphone-forever/">display a request to opt in or out</a> of this functionality.</p>
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<a href="https://images.theconversation.com/files/397486/original/file-20210428-19-wfqoup.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="iPhone screenshot showing new App Tracking Transparency functionality" src="https://images.theconversation.com/files/397486/original/file-20210428-19-wfqoup.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/397486/original/file-20210428-19-wfqoup.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=840&fit=crop&dpr=1 600w, https://images.theconversation.com/files/397486/original/file-20210428-19-wfqoup.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=840&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/397486/original/file-20210428-19-wfqoup.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=840&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/397486/original/file-20210428-19-wfqoup.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1056&fit=crop&dpr=1 754w, https://images.theconversation.com/files/397486/original/file-20210428-19-wfqoup.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1056&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/397486/original/file-20210428-19-wfqoup.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1056&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">A new App Tracking Transparency feature across iOS, iPadOS, and tvOS will require apps to get the user’s permission before tracking their data across apps or websites owned by other companies.</span>
<span class="attribution"><span class="source">Apple newsroom</span></span>
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<h2>How does it work?</h2>
<p>As Apple has <a href="https://developer.apple.com/documentation/apptrackingtransparency">explained</a>, the app tracking transparency feature is a new “application programming interface”, or API — a suite of programming commands used by developers to interact with the operating system. </p>
<p>The API gives software developers a few pre-canned functions that allow them to do things like “request tracking authorisation” or use the tracking manager to “check the authorisation status” of individual apps. </p>
<p>In more straightforward terms, this gives app developers a uniform way of requesting these tracking permissions from the device user. It also means the operating system has a centralised location for storing and checking what permissions have been granted to which apps.</p>
<p>What is missing from the fine print is that there is no physical mechanism to prevent the tracking of a user. The app tracking transparency framework is merely a pop-up box.</p>
<p>It is also interesting to note the specific wording of the pop-up: “ask app not to track”. If the application is using legitimate “device advertising identifiers”, answering no will result in this <a href="https://developer.apple.com/app-store/user-privacy-and-data-use/">identifier being set to zero</a>. This will reduce the tracking capabilities of apps that honour Apple’s tracking policies.</p>
<p>However, if an app is really determined to track you, there are many techniques that could allow them to make surreptitious user-specific identifiers, which may be <a href="https://www.eff.org/wp/behind-the-one-way-mirror">difficult for Apple to detect or prevent</a>. </p>
<p>For example, while an app might not use Apple’s “device advertising identifier”, it would be easy for the app to generate a little bit of “random data”. This data could then be passed between sites under the guise of normal operations such as retrieving an image with the data embedded in the filename. While this would contravene Apple’s developer rules, detecting this type of secret data could be very difficult.</p>
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Read more:
<a href="https://theconversation.com/your-smartphone-apps-are-tracking-your-every-move-4-essential-reads-108586">Your smartphone apps are tracking your every move – 4 essential reads</a>
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<p>Apple seems prepared to crack down hard on developers who don’t play by the rules. The most recent additions to Apple’s <a href="https://developer.apple.com/app-store/review/guidelines/">App Store guidelines</a> explicitly tells developers:</p>
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<p>You must receive explicit permission from users via the App Tracking Transparency APIs to track their activity.</p>
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<p>It’s unlikely major app developers will want to fall foul of this policy — a ban from the App Store would be costly. But it’s hard to imagine Apple sanctioning a really big player like Facebook or TikTok without some serious behind-the-scenes negotiation.</p>
<h2>Why is Facebook objecting?</h2>
<p>Facebook is fuelled by web users’ data. Inevitably, anything that gets in the way of its gargantuan revenue-generating network is seen as a threat. In 2020, Facebook’s revenue from advertising exceeded <a href="https://investor.fb.com/investor-news/press-release-details/2021/Facebook-Reports-Fourth-Quarter-and-Full-Year-2020-Results/default.aspx">US$84 billion</a> – a 21% rise on 2019.</p>
<p>The issues are deep-rooted and reflect the two tech giants’ very different business models. Apple’s business model is the sale of laptops, computers, phones and watches – with a significant proportion of its income derived from the vast ecosystem of apps and in-app purchases used on these devices. Apple’s app revenue was reported at <a href="https://www.cnbc.com/2021/01/08/apples-app-store-had-gross-sales-around-64-billion-in-2020.html">US$64 billion in 2020</a>.</p>
<p>With a vested interest in ensuring its customers are loyal and happy with its devices, Apple is well positioned to deliver privacy without harming profits.</p>
<h2>Should I use it?</h2>
<p>Ultimately, it is a choice for the consumer. Many apps and services are offered ostensibly for free to users. App developers often cover their costs through subscription models, in-app purchases or in-app advertising. If enough users decide to embrace privacy controls, developers will either change their funding model (perhaps moving to paid apps) or attempt to find other ways to track users to maintain advertising-derived revenue.</p>
<p>If you don’t want your data to be collected (and potentially sold to unnamed third parties), this feature offers one way to restrict the amount of your data that is trafficked in this way.</p>
<p>But it’s also important to note that tracking of users and devices is a valuable tool for advertising optimisation by building a comprehensive picture of each individual. This increases the relevance of each advert while also reducing advertising costs (by only targeting users who are likely to be interested). Users also arguably benefit, as they see more (relevant) adverts that are contextualised for their interests.</p>
<p>It may slow down the rate at which we receive personalised ads in apps and websites, but this change won’t be an end to intrusive digital advertising. In essence, this is the price we pay for “free” access to these services.</p>
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Read more:
<a href="https://theconversation.com/facebook-data-breach-what-happened-and-why-its-hard-to-know-if-your-data-was-leaked-158417">Facebook data breach: what happened and why it's hard to know if your data was leaked</a>
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<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Apple’s latest iPhone operating system lets you opt out of having your online habits tracked by the apps you use. That’s a big part of Facebook’s business model, but don’t expect a privacy revolution.Paul Haskell-Dowland, Associate Dean (Computing and Security), Edith Cowan UniversityNikolai Hampton, School of Science, Edith Cowan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/632172016-09-09T14:28:42Z2016-09-09T14:28:42ZHow personalisation could be changing your identity online<figure><img src="https://images.theconversation.com/files/137061/original/image-20160908-25257-17npvfa.jpg?ixlib=rb-1.1.0&rect=0%2C5%2C3840%2C2155&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">(Microsoft) Windows to the soul?</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-426990427/stock-photo-close-up-of-beautiful-young-woman-eyes-looking-at-monitor-working-with-computer-laptop-monitor-blue-light-is-reflected-in-her-eyes-evening-woman-freelancer-working-shopping-online-wa.html?src=SA-pWWKqAoiz2qUXMsZIpA-1-11">Youproduction/Shutterstock</a></span></figcaption></figure><p>Wherever you go online, someone is trying to personalise your web experience. Your preferences are pre-empted, your intentions and motivations predicted. That toaster you briefly glanced at three months ago keeps returning to haunt your browsing in tailored advertising sidebars. And it’s not a one-way street. In fact, the quite impersonal mechanics of some personalisation systems may not only influence how we see the world, but how we see ourselves. </p>
<p>It happens every day, to all of us while we’re online. <a href="https://www.facebook.com/help/327131014036297/">Facebook’s News Feed</a> attempts to deliver tailored content that <a href="https://www.facebook.com/help/327131014036297/">“most interests”</a> individual users. Amazon’s recommendation engine uses personal data tracking combined with other users’ browsing habits to suggest <a href="https://www.cs.umd.edu/%7Esamir/498/Amazon-Recommendations.pdf">relevant products</a>. Google <a href="https://googleblog.blogspot.co.uk/2009/12/personalized-search-for-everyone.html">customises search results</a>, and much more: for example, personalisation app <a href="https://www.google.com/intl/en-GB/landing/now/">Google Now</a> seeks to “give you the information you need throughout your day, before you even ask”. Such personalisation systems don’t just aim to provide relevance to users; through targeted marketing strategies, they also generate profit for many free-to-use web services. </p>
<p>Perhaps the best-known critique of this process is the <a href="http://www.penguinrandomhouse.com/books/309214/the-filter-bubble-by-eli-pariser/9780143121237/">“filter bubble”</a> theory. Proposed by internet activist <a href="https://www.opensocietyfoundations.org/people/eli-pariser">Eli Pariser</a>, this theory suggests that personalisation can detrimentally affect web users’ experiences. Instead of being exposed to universal, diverse content, users are algorithmically delivered material that matches their pre-existing, self-affirming viewpoints. The filter bubble therefore poses a problem for democratic engagement: by restricting access to challenging and diverse points of view, users are unable to participate in collective and informed debate. </p>
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<p>Attempts to find evidence of the filter bubble have produced mixed results. <a href="http://arxiv.org/pdf/1405.1486v1.pdf">Some studies</a> have shown that personalisation can indeed lead to a “myopic” view of a topic; <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1321962">other studies</a> have found that in different contexts, personalisation can actually help users discover common and diverse content. My research suggests that personalisation does not just affect how we see the world, but how we view ourselves. What’s more, the influence of personalisation on our identities may not be due to filter bubbles of consumption, but because in some instances online personalisation is not very “personal” at all.</p>
<h2>Data tracking and user pre-emption</h2>
<p>To understand this, it is useful to consider how online personalisation is achieved. Although personalisation systems track our individual web movements, they are not designed to “know” or identify us as individuals. Instead, these systems collate users’ real-time movements and habits into mass data sets, and look for patterns and correlations between users’ movements. The found patterns and correlations are then <a href="http://bds.sagepub.com/content/2/2/2053951715608406">translated back</a> into identity categories that we might recognise (such as age, gender, language and interests) and that we might fit into. By looking for mass patterns in order to deliver personally relevant content, personalisation is in fact based on <a href="http://firstmonday.org/article/view/3344/2766">a rather impersonal process</a>. </p>
<p>When the filter bubble theory first emerged in 2011, Pariser argued that one of the biggest problems with personalisation was that users did not know it was happening. Nowadays, despite objections to data tracking, <a href="https://www.asc.upenn.edu/news-events/publications/tradeoff-fallacy-how-marketers-are-misrepresenting-american-consumers-and">many users are aware</a> that they are being tracked in exchange for use of free services, and that this tracking is used for forms of personalisation. Far less clear, however, are the specifics of what is being personalised for us, how and when. </p>
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<a href="https://images.theconversation.com/files/137068/original/image-20160908-25253-5k2f5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/137068/original/image-20160908-25253-5k2f5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/137068/original/image-20160908-25253-5k2f5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=359&fit=crop&dpr=1 600w, https://images.theconversation.com/files/137068/original/image-20160908-25253-5k2f5j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=359&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/137068/original/image-20160908-25253-5k2f5j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=359&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/137068/original/image-20160908-25253-5k2f5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=451&fit=crop&dpr=1 754w, https://images.theconversation.com/files/137068/original/image-20160908-25253-5k2f5j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=451&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/137068/original/image-20160908-25253-5k2f5j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=451&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Data gathering: less complex than we might think.</span>
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<h2>Finding the ‘personal’</h2>
<p>My research suggests that some users assume their experiences are being personalised to complex degrees. In an in-depth qualitative study of 36 web users, upon seeing advertising for weight loss products on Facebook some female users reported that they assumed that Facebook had profiled them as overweight or fitness-oriented. In fact, these weight loss ads were delivered generically to women aged 24-30. However, because users can be unaware of the impersonal nature of some personalisation systems, such targeted ads can have a detrimental impact on how these users view themselves: to put it crudely, they must be overweight, because Facebook tells them they are. </p>
<p>It’s not just targeted advertising that can have this impact: in an ethnographic and longitudinal study conducted of a handful of 18 and 19-year-old Google Now users, I found that some participants assumed the app was capable of personalisation to an extraordinarily complex extent. Users reported that they believed Google Now showed them stocks information because Google knew their parents were stockholders, or that Google (wrongly) pre-empted a “commute” to “work” because participants had once lied about being over school age on their YouTube accounts. It goes without saying that this small-scale study does not represent the engagements of all Google Now users: but it does suggest that for these individuals, the predictive promises of Google Now were almost infallible. </p>
<p>In fact, <a href="https://www.amazon.co.uk/Sociology-Monsters-Essays-Technology-Domination/dp/0415071399">critiques of user-centred design</a> suggest that the reality of Google’s inferences is much more impersonal: Google Now assumes that its <a href="http://sth.sagepub.com/content/29/1/30.abstract">“ideal user”</a> does – or at least should – have an interest in stocks, and that all users are workers who commute. Such critiques highlight that it is these assumptions which largely structure Google’s personalisation framework (for example through the app’s adherence to <a href="https://www.google.com/search/about/learn-more/now/">predefined “card” categories</a> such as “Sports”, which during my study only allowed users to ‘follow’ men’s rather than women’s UK football clubs). However, rather than questioning the app’s assumptions, my study suggests that participants placed themselves outside the expected norm: they trusted Google to tell them what their personal experiences should look like. </p>
<p>Though these might seem like extreme examples of impersonal algorithmic inference and user assumption, the fact that we cannot be sure what is being personalised, when or how are more common problems. To me, these user testimonies highlight that the tailoring of online content has implications beyond the fact that it might be detrimental for democracy. They suggest that unless we begin to understand that personalisation can at times operate via highly impersonal frameworks, we may be putting too much faith in personalisation to tell us how we should behave, and who we should be, rather than vice versa.</p><img src="https://counter.theconversation.com/content/63217/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tanya Kant received funding from the Arts and Humanities Research Council as part of her Doctoral studies (2012-2015). </span></em></p>Attempts to model your web experience led to fears of an echo chamber effect, but rather than reinforcing your sense of self, the process might be altering it.Tanya Kant, Lecturer in Media and Cultural Studies, University of SussexLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/549832016-03-02T11:21:02Z2016-03-02T11:21:02ZOnline ads know who you are, but can they change you too?<figure><img src="https://images.theconversation.com/files/113451/original/image-20160301-31056-1q6a5m4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Do advertisers know us better than we know ourselves? </span> <span class="attribution"><span class="source">Fingerprint via www.shutterstock.com</span></span></figcaption></figure><p>Do you ever get the sense that advertisements you see online know more about you than you might expect? Have you ever wondered why you’re being shown an ad for a product, only to realize later that you might actually be the kind of person who would want to buy it?</p>
<p>If so, it’s likely that the ads appearing on your screen have been behaviorally targeted.</p>
<p><a href="http://www.marketing-schools.org/types-of-marketing/behavioral-marketing.html">Behavioral targeting</a> uses information about nearly everything you do online – clicks, searches, social media, what you’ve bought and browsed – to select ads that marketers think will appeal to you based on your unique online behavior.</p>
<p>Our recent research shows, however, that these ads do more than reflect your past or future preferences. They can change how you see yourself in fundamental ways.</p>
<h2>What kind of person are you really?</h2>
<p>What makes this practice unique is that it does not involve advertising the exact things you have already shown an interest in, as is the case when ads for the shoes you bought two weeks ago follow you around online. </p>
<p>Instead, behavioral targeting predicts what you might like based on a profile of you that was created by tracking your online actions. To adopt Hollywood parlance, behavioral targeting typecasts you.</p>
<p>For example, if you spend your time online learning about environmental causes or donating to Greenpeace, you might see an ad for an eco-friendly clothing brand on your favorite gossip column. Someone else visiting the same website, but who has instead searched for luxury cars and symphony tickets, might receive an ad for an upscale restaurant. Different people receive different ads, even on the same site, because an algorithm has identified them as a certain type of consumer.</p>
<p>As a marketing practice, behavioral targeting is relatively <a href="http://behavioraltargeting.biz/history-of-behavioral-targeting/">new</a>. In 1999, DoubleClick and Engage were among the first to promote the idea that personal identifiable information collected across a network of websites could be used for ad targeting. </p>
<p>However, uncertainty about who would own consumer data and technological limitations led publishers to question the value of behavioral targeting and delay adopting it. Without a big enough group of publishers willing to share data with one another about what consumers were doing, the practice stalled.</p>
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<span class="caption">Pregnant? Marketers may already know.</span>
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<h2>Predictive power</h2>
<p>Behavioral targeting gained momentum over the following decade, thanks in part to advances in tracking and prediction. A <a href="https://www.google.com/patents/US7809740">patent</a> filed by Yahoo! in 2006 exemplifies how the behavioral targeting process was standardized to produce user profile scores based on recency, frequency and intensity of clicks, which in turn determine ads. </p>
<p>The predictive power of consumer data within marketing was brought into the public spotlight by, fittingly, Target. In 2012, the retailer <a href="http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html">predicted</a> that a customer was pregnant well before the young woman told her father. </p>
<p>Target did so by creating a model that tracked purchase choices and predicted pregnancy status based on specific items (e.g., multivitamins, lotion and cotton balls). While the tracking and advertising described in the article occurred offline, the story highlighted marketers’ ability to collect and use individual-level behavior to deliver marketing messages. </p>
<h2>Identifying behavioral targeting</h2>
<p>How can you tell that an ad has been behaviorally targeted? </p>
<p>Take a close look at some of the ads you see on your favorite websites, like Yahoo or Gawker (unless you have an ad blocker running). When you look at the upper right hand corner of the ad, do you see a little blue triangle? Maybe a tiny “AdChoices” script? If so, BINGO!</p>
<p>The <a href="http://www.youradchoices.com/">AdChoices icon</a> is a symbol affixed to an ad denoting that it was selected for you based on your past online behavior. Although there is no legal mandate to disclose when an ad is behaviorally targeted, the <a href="http://www.aboutads.info/">Digital Advertising Alliance</a> – an industry group that enforces privacy practices – responded to <a href="https://www.ftc.gov/reports/protecting-consumer-privacy-era-rapid-change-recommendations-businesses-policymakers">Federal Trade Commission</a>-issued guidelines by promoting use of the icon among advertisers and by <a href="http://www.youradchoices.com/learn.aspx">trying to educate</a> the public. Both initiatives are aimed at addressing privacy concerns among consumers. </p>
<p>While marketers may like behavioral targeting because it results in <a href="http://research.microsoft.com/apps/pubs/default.aspx?id=80378">higher click-through rates</a> and <a href="http://www.forbes.com/2010/03/24/behavioral-targeted-ads-advertising-ftc-privacy-cmo-network-ads.html">increased conversion to sales</a> compared with ads that aren’t behaviorally targeted, consumer sentiment is less universally positive. </p>
<p><a href="http://thehill.com/policy/technology/265851-poll-most-dont-find-privacy-tradeoff-of-social-media-acceptable">Older consumers</a> tend to be concerned about protecting their privacy and are more likely to view this type of advertising as intrusive. In contrast, younger consumers, including most of the college students that we teach, think it’s great – if they have to see ads, they prefer those that are personally relevant.</p>
<p>If people don’t universally love these ads, why are they so common and effective? We hypothesized that when someone receives an ad they realize is behaviorally targeted, they may recognize that the ad carries information about themselves. If so, we wondered, would they then change their self-perceptions to match that information, consistent with what psychologists call <a href="https://en.wikipedia.org/wiki/Labeling_theory">labeling theory</a>?</p>
<h2>Ads as social labels</h2>
<p>Social psychologists have long known that giving people a label can change their behavior. </p>
<p>For example, a <a href="http://www.sciencedirect.com/science/article/pii/0022103173900371">classic study</a> found that being called “charitable” after donating makes someone more likely to make a second donation than someone who isn’t called charitable after donating. We act consistently with who we believe we are, and labels from others can shape our identity.</p>
<p>In a series of studies recently published in the <em><a href="http://jcr.oxfordjournals.org/cgi/reprint/ucw012?ijkey=oVQEbEK11iMqdVu&keytype=ref">Journal of Consumer Research</a>,</em> we found that receiving a behaviorally targeted ad can shift a person’s self-perceptions to match personality traits associated with the product in the ad. </p>
<p>This is because behaviorally targeted ads act as implied social labels. When you receive a behaviorally targeted ad, it is the equivalent of a marketer saying “you are someone who cares about the environment” or “you have sophisticated tastes.”</p>
<p>In our studies, receiving an ad for an eco-friendly product or a sophisticated restaurant led consumers to feel more “green” and more sophisticated, respectively, when they thought the ad was behaviorally targeted, compared with a control condition in which they did not believe the ad was behaviorally targeted. Receiving a behaviorally targeted ad acts like a label because consumers understand that the ad is tied to prior behavior.</p>
<p>Receiving a behaviorally targeted ad can not only change how people see themselves, but also cause them to modify their behavior to be consistent with revised self-perceptions. Most directly, the ad implies that a recipient is someone who would like the product, and believing an ad to be behaviorally targeted increases interest in buying the product. However, this belief also affects additional behaviors. </p>
<p>In one <a href="http://jcr.oxfordjournals.org/cgi/reprint/ucw012?ijkey=oVQEbEK11iMqdVu&keytype=ref">study</a>, we found that receiving an ostensibly behaviorally targeted ad for an environmental product caused people not only to see themselves as “greener” and to be more interested in buying that product, but also to be more interested in donating money to an environmental charity.</p>
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<img alt="" src="https://images.theconversation.com/files/113447/original/image-20160301-31053-1qienm7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/113447/original/image-20160301-31053-1qienm7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/113447/original/image-20160301-31053-1qienm7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/113447/original/image-20160301-31053-1qienm7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/113447/original/image-20160301-31053-1qienm7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/113447/original/image-20160301-31053-1qienm7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/113447/original/image-20160301-31053-1qienm7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Perhaps a sign you wouldn’t be interested in an ad for a sophisticated restaurant.</span>
<span class="attribution"><span class="source">TV dinner via www.shutterstock.com</span></span>
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<h2>Accuracy matters</h2>
<p>Our findings have good news for readers worried that behaviorally targeted ads might make them believe all sorts of things about themselves. The results of our studies reveal that targeting has to be accurate to significantly affect self-perceptions.</p>
<p>If you have never engaged in any behavior online that would suggest that you are interested in upscale dining (maybe you Google “how to microwave dinner” and “fast food restaurants”), an ad for an upscale restaurant isn’t going to make you suddenly feel like someone with extremely sophisticated dining preferences. While you may recognize that the ad is targeting such a person, you are likely to reject it as an irrelevant label because it’s not tied in any way to your behavior.</p>
<p>Because the accuracy of targeting matters, marketing managers hoping to profit from the use of behavioral targeting have a vested interest in making sure their algorithms are good at identifying what kind of person a consumer truly is based on their click-stream data.</p>
<p>For consumers, it means that your particular search patterns and whether you share a computer may determine how much behaviorally targeted ads shape your behavior. If you spend a lot of time seeking information for other people (e.g., buying work supplies, finding information about a partner’s hobby, searching for gifts), your search history may produce less accurate ads. Targeted ads on mobile devices may be more accurate and likely to shape how you see yourself because mobile devices are commonly single-user.</p>
<p>For those concerned about receiving ads based on their tracked behavior, the best solution may be to opt out entirely. As part of the campaign around increasing awareness of the AdChoices icon, the Digital Advertising Alliance has made it easy for people to <a href="http://www.youradchoices.com/control.aspx">opt out</a>. A few quick clicks can get you most of the way back to the age of anonymous (and often irrelevant) online ads.</p>
<h2>The power of advertising</h2>
<p>The bottom line is that behavioral targeting is not only pervasive and effective at increasing click-through rates and purchases but may also be powerful in previously unexpected ways. </p>
<p>The AdChoices logo, instituted in part to help consumers feel more comfortable with behavioral targeting, may be a large driver of these effects, as it’s only when consumers know that an ad has been behaviorally targeted that it has the power to change how they see themselves.</p><img src="https://counter.theconversation.com/content/54983/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>New research shows that behaviorally targeted ads can do more than figure out what kind of person you are – they can also shape how you see yourself.Rebecca Walker Reczek, Associate Professor of Marketing, The Ohio State UniversityChristopher A. Summers, Marketing PhD Candidate, The Ohio State UniversityRobert W. Smith, Assistant Professor of Marketing, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/455192015-08-04T14:19:48Z2015-08-04T14:19:48ZNow advertising billboards can read your emotions … and that’s just the start<figure><img src="https://images.theconversation.com/files/90658/original/image-20150803-6022-1ijhxi3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It's a shame the adverts aren't displaying a real product. Bahio would've won over a mesmerised customer.</span> <span class="attribution"><a class="source" href="http://www.clearchannel.co.uk/mc-saatchi-clear-channel-and-posterscope-unveil-londons-first-artificial-intelligence-poster-campaign/">Clear Channel</a></span></figcaption></figure><p>Advertising giant <a href="http://mcsaatchi.com">M&C Saatchi</a> is currently testing advertising billboards with hidden Microsoft Kinect cameras that read viewers’ emotions and react according to whether a person’s facial expression is happy, sad or neutral. </p>
<p>The <a href="http://www.theguardian.com/media-network/2015/jul/27/artificial-intelligence-future-advertising-saatchi-clearchannel">test adverts</a> – which feature a fictitious coffee brand named <a href="http://bahio.coffee/">Bahio</a> – have already appeared on Oxford Street and Clapham Common in London. So we now have adverts that can read the reactions of those that view them and adapt accordingly, cycling through different images, designs, fonts and colours. With partners <a href="http://www.clearchannel.co.uk">Clear Channel</a> and <a href="http://www.posterscope.com">Posterscope</a>, Saatchi has made advertising history. When future media historians look back they will see 2015 as a landmark year.</p>
<p>There are three key things we should recognise: adverts can read our behaviour, this is based on our emotions rather than website browsing history, and that adverts use this to improve themselves.</p>
<p>What are we to make of this? Is it a bit creepy? The answer is both yes and no. What the campaign represents is an attempt to get closer to us, something that’s a defining characteristic of the advertising and audience research industries. They want to know us more intimately so as to be able to craft messages that will affect and resonate with us. It’s an example of what I call “empathic media” because, through reading facial expressions, adverts are able to bypass the guesswork and make direct use of our emotions. </p>
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<h2>Evolution of the ad</h2>
<p>While uncanny and creative, Saatchi’s adverts are not a threat to privacy. After all, unlike our PCs, phones and tablets, these posters neither know nor care who we are. The adverts’ creators say they do not store images or data, and there is little reason to disagree. All their adverts do is react to facial shapes – the truly creepy stuff is online and in the mobile phone apps tracking our habits. For example, <a href="http://arxiv.org/pdf/1504.06093v2.pdf">one study</a> records the Eurosport Player app as having 810 data trackers collecting hardware and software information, but also navigation (where a person visits online), behaviour, visit times, visitor actions and geolocation (where a person is located in real space).</p>
<p>The real genius of the new advert is in using our facial expressions to learn and alter the design of the advert. Through responding to our expressions the adverts have purpose – an evolutionary urge to improve and become more effective. </p>
<p>This idea of adaptable advertising was foreseen around 100 years ago by advertising luminaries such as <a href="http://adage.com/article/special-report-the-advertising-century/daniel-starch/140263/">Daniel Starch</a> and <a href="http://adage.com/article/special-report-the-advertising-century/claude-c-hopkins/140207/">Claude Hopkins</a>. They insisted advertising should be treated as a science based on collecting information, analysing it and using these insights to improve campaigns. Starch and Hopkins both sought to understand which techniques do and don’t work in order to make the business of advertising subject to laws of cause and effect. The grandfathers of advertising would be very pleased with today’s progeny. </p>
<p>Although the logic is old, processing feedback to self-correct in real-time is new. For years, Google has masterfully led the way in how adverts are automatically served based on our interests; self-improving adverts in the physical world are another step forward. </p>
<h2>Connecting with the subject</h2>
<p>Much of the media coverage surrounding M&C Saatchi’s adverts lauds it as an <a href="http://www.campaignlive.co.uk/article/watch-m-c-saatchi-launches-artificially-intelligent-outdoor-campaign/1357413">artificially intelligent campaign</a>. While this is true to an extent, the advert is actually quite mechanical: the advertiser has no understanding of why we are smiling, grimacing or straight-faced, or of what these expressions imply. They simply match the shapes, and react.</p>
<p>So what would intelligent advertising look like? It would have to be able to engage with the context of our lives, in real time. What that consists of is a somewhat philosophical question, but it might encompass our individual life histories, our natural spoken language, human values, politics, current affairs, popular culture, and aesthetic trends – all topics that human ad creatives consider when putting campaigns together. </p>
<p>Clearly, these adverts don’t – but others in the advertising business may have the technological muscle to do so. For an insight into tomorrow’s artificially intelligent advertising, have a look at <a href="http://deepmind.com">Google’s Deepmind</a> that promises to “combine the best techniques from machine learning and systems neuroscience to build powerful general‑purpose learning algorithms”. When we remember that Google is first and foremost an advertising company, Deepmind is one to watch.</p>
<p>Then there are the sensors. We will soon wear and carry more sensors and we will have more sensors around us. Empathic media will grant advertisers even more insight into our emotions through how we speak to our mobile devices, more granular facial recognition and emotional insights derived from our heart rates, respiration patterns and how our skin responds to stimuli. And if that sounds far-fetched, remember you’ve just read a true story about adverts that recognise your emotions.</p><img src="https://counter.theconversation.com/content/45519/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew McStay receives funding from ESRC and AHRC. He is affiliated with Open Rights Group.</span></em></p>M&C Saatchi’s new development signifies the dawn of a new age of real-time responsive advertisingAndrew McStay, Senior Lecturer in Media Culture, Bangor UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/304262014-08-13T05:19:53Z2014-08-13T05:19:53ZIs anyone immune to the social media echo chamber?<figure><img src="https://images.theconversation.com/files/56306/original/hfpgmtd6-1407851275.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">We're all singing from the same hymn sheet and that's not a good thing.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/infomofo/154882387/in/photolist-7WpU5w-22xZKg-8KeM39-cJoaE-3cJyMt-eFP8Z-yax5d-hxCxmB-gpamf-eQ1EkQ-8M3njw-7tUrj-2mjzX-Qniz-9JQCh2-7e8TmG-af6rhg-XrhV-aoE7kK-8fjZXb-4HFibx-4WD2UT-7bMXRa-ekYXb5-dfPrbt-7CStzn-c2WDkY-5LmSwm-hjxsmo-jgzaKV-jdp1o-dAdhWh-Nfvon-793TJH-inpF5D-kKaEYD-aoaRun-Qc82H-aoaTBy-7LWSV9-75nDsN-kGpa35-k6f2A9-ojHRcA-45isY-2Sj9Ss-mowmw-91XFUc-dQbXW2-4mJPVw">InfoMofo</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>It’s becoming increasingly obvious that as we spend more time communicating via social media, we are disappearing into <a href="https://theconversation.com/from-the-art-world-to-fashion-to-twitter-were-all-living-in-bubbles-21812">bubbles</a>. We receive information from the same sources and witness the views of the same people in our personalised newsfeeds every day. But it also seems like living in our bubble is having an effect on our own opinions and how we formulate them.</p>
<p>An interesting statistical regularity has been documented about group deliberation. This phenomenon has been called group or attitude polarisation, or just polarisation for short. It’s something that has been intensively studied by <a href="http://www.law.uchicago.edu/files/files/91.CRS_.Polarization.pdf">Cass Sunstein</a>, a Harvard law professor and former Administrator of the White House Office of Information and Regulatory Affairs.</p>
<p>Sunstein says that deliberation appears to move groups of people of accord opinion “toward a more extreme point in the direction indicated by their own pre-deliberation judgments”.</p>
<p>Polarisation explains why it might not always be an advantage to be in the company of like-minded people, or people sharing the same view, no matter how comfortable it may seem. If we’re already in agreement about something, we only grow to agree even more by discussing the matter.</p>
<p>The mere discussion of, or deliberation over, a certain matter or opinion in a group may shift the position of the entire group in a more radical direction. The point of view of each group member may even shift to a more extreme version of the viewpoint they entertained before deliberating.</p>
<p>Take for example Monica, a 14-year-old zealous fan of social media. She not only uses Facebook, Instagram, and Twitter but has also joined Spring.me, one of the most recent additions to the pool of virtual interpersonal devices. The site invites users to “Share your perspective on anything”, newcomers are told as they sign up to the network. And unfortunately, they really do.</p>
<p>An anonymous derisive comment recently surfaced on the site aimed at a classmate who Monica doesn’t particularly care for. Now the classmate erroneously believes that Monica is responsible for the slanderous message. The classmate responds on a wall that everyone can see with “Thanks a bunch Monica, I’ll see you on Monday”. It doesn’t take long before comments of sympathy for the classmate begin to appear along with messages about how terrible and mean Monica really is.</p>
<p>A courageous few try to argue differently, or suggest that perhaps Monica isn’t the culprit but soon enough these scarce voices fall silent and the remaining incoming commentaries almost exclusively come from friends and allies of the classmate. The more the messages bounce back and forth and participants deliberate over the matter, the meaner Monica apparently becomes in the eyes of the group. People polarise. It gets to the point where Monica decides to both delete her profile and not go to school on Monday, fearing further reprisals.</p>
<p>It no longer matters that Monica hasn’t actually done anything wrong. The damage is already done and there is no winning strategy that she can take. If she shows up for school on Monday she has to protest her innocence against a narrative that has already been established and grown sufficiently robust among her schoolmates, friends and foes and if she stays home, she is guilty by the associative action of not showing up. Either way, Monica is in trouble.</p>
<p>Polarisation happens when information is filtered to such an extent that we are only exposed to the voices we are already willing to listen to, the sources we are willing to read and the people we are willing to talk to. If you think about who you follow on Twitter, how many are people who you absolutely disagree with?</p>
<h2>Commercial polarisation</h2>
<p>If Sunstein is right, your opinion may be shifting, just as happened to Monica’s group. And if Sunstein has noticed it, you can bet others have too, including those who might use the phenomenon to sell you something. This sort of filtering could be automated and used for selling products, political agendas or anything else. It can be used to sell you things you like and, as we have seen, things you don’t. You may just find yourself in the eye of an <a href="http://www.springer.com/medicine/book/978-3-319-03831-5">infostorm</a>.</p>
<p>Wired journalist Matt Honan recently carried out an <a href="http://www.wired.com/2014/08/i-liked-everything-i-saw-on-facebook-for-two-days-heres-what-it-did-to-me/?mbid=social_fb">experiment</a> in which he liked everything he saw on Facebook over a period of 48 hours. As we know, Facebook algorithms tailor what you see according to your activity. Honan reported that his newsfeed “took on an entirely new character in a surprisingly short amount of time”.</p>
<p>Within about an hour, Honan found his feed entirely bereft of other humans. All he was seeing was ad after ad, brand after brand. In his two-day experiment, Honan ended up in an echo-chamber of marketing. There was no space for disagreement, debate, discussion, exchanges or enlightenment. Gone were the very features that social networks were supposed to facilitate. Even worse, as the feeds became available to friends, the brands and political products started spreading outwards. “Eventually, I would hear from someone who worked at Facebook, who had noticed my activity and wanted to connect me with the company’s PR department,” Honan wrote.</p>
<p>The polarisation mechanism is as old as we are – but the speed with which this information may spread has taken on proportions never seen before – and the social media may just turn prime vehicles for polarisation in the information age. All this is not necessarily conducive to human interaction, interpersonal understanding, debate, constructive disagreement, reason and rationality. </p><img src="https://counter.theconversation.com/content/30426/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Vincent F Hendricks does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It’s becoming increasingly obvious that as we spend more time communicating via social media, we are disappearing into bubbles. We receive information from the same sources and witness the views of the…Vincent F Hendricks, Professor of Formal Philosophy, University of CopenhagenLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/250762014-04-20T21:28:21Z2014-04-20T21:28:21ZBig Data and personalised pricing: consider yourself gamed<figure><img src="https://images.theconversation.com/files/46347/original/yr5ttfdr-1397459035.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Chances are your every shopping move is being tracked.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/clanlife/6369804665/in/photolist-9wZWSx-7Dg1rL-aGSV1n-b2NN32-eghTGo-6prZBn-dgah17-dKM4XF-h7ZepJ-aGSRsr-5seCHN-8pJWJV-fHr5pX-2U2bT-D3NJb-fQrcw3-dMrBxA-dgagZ1-9mg3Zz-aGSRaM-abAkkK-aoCJ5H-abWqzo-9J3cLv-9J66R3-msi14x-bJSXb4-9sVnJf-9GJuq1-abAkiv-a54c4y-ae1cnm-abAknP-9J3aDi-9J3aKz-9J3b84-9J3csZ-9J3cAc-9J3dfv-9J3dqi-9J3exP-9J3eFZ-9J3eQB-9J3f1T-9J3faM-9J3fen-9J3fo6-9J3fwc-9J3fQK-9J3gdx">Phil Campbell/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Imagine yourself the CEO of a company that mainly sells one product. One of your goals is to maximise profits. You know you can charge a flat price, or modestly raise profits by using quantity discounts or by group pricing, for example with seniors discounts.</p>
<p>But you feel frustrated. If you could somehow adjust prices to match your customers’ valuations, you could raise profits further. You suspect some consumers would be willing to pay much more for your product. Wouldn’t it be great if you could identify them and charge just those consumers a higher price? </p>
<p>You also know some people won’t purchase at the current price but would be willing to pay slightly less. You wish you could charge just those consumers a lower price. So much is left on the table.</p>
<p>Now cast yourself as a consumer. You don’t want to pay more than others, or more than you have to, for the product. So clearly you are not going to volunteer the information - that you have a high value for the item, to encourage retailers to charge you a higher price. To get a lower price, you would happily say you have a lower valuation, whether or not that is true.</p>
<p>Now suppose the firm is sneakier, offering different prices over time, and learning how much you will pay. There are companies that help you be so sneaky. <a href="http://www.catalinamarketing.com/">Catalina Marketing Corp</a> has used this strategy with moderate success, installing printers at store checkouts that produce coupons tailored to the purchases of each customer who uses a store card.</p>
<p>Such methods, while apparently effective, have their limits. If you, the consumer, follow one simple heuristic – “don’t buy at high prices,” the firm will infer you have little value for the product, and will offer you lower prices in the future. As a result you might want to forgo instant gratification to get lower prices later. <a href="http://pubsonline.informs.org/doi/abs/10.1287/mksc.1040.0103">Research</a> <a href="http://scholar.harvard.edu/fudenberg/publications/behavior-based-price-discrimination-and-customer-recognition">confirms</a> that when consumers are forward looking, many will do just that, making such pricing unprofitable.</p>
<p>Historically, this reluctance of consumers to reveal their willingness to pay, knowing it will be exploited, has been all that is needed to limit the effectiveness of person-specific pricing. But is the effectiveness limited anymore?</p>
<h2>A market of one</h2>
<p>What if you could learn more about consumers by hiring one private investigator per consumer, and tracking everything they do all day every day? Do they read celebrity gossip? Do they attend auto shows? These types of behaviours, and thousands of others, might reveal information that helps personalise prices for movie tickets or luxury cars.</p>
<p>But surely it would be ridiculously expensive to hire one private investigator per consumer?</p>
<p>Not anymore. Relevant behaviours can be acquired cheaply without a private investigator, for example by purchasing web-browsing histories from ISPs, browsers, individual websites, or third party advertisers. Then, the firm can observe whether a consumer visits celebrity gossip websites, or watches YouTube videos featuring sports cars, etc.</p>
<p>Moreover, location by time of day can be obtained from smartphones or <a href="http://juliaangwin.com/books/">cameras which automatically read license plates</a>. Or, automatic facial recognition could allow cameras to track consumers. Facebook can already track users to some extent, through the time and geo-location data contained in uploaded photos and <a href="http://online.wsj.com/news/articles/SB10001424052702304778304576373730948200592">facial recognition software</a> and tagged photos.</p>
<h2>Where does it stop?</h2>
<p>Firms could be more creative. For example, take <a href="https://nest.com/">Nest</a>, a thermostat which over time learns owners’ habits, and reduces energy usage when the home is likely vacant. Nest could “ping” homes by raising the temperature remotely via the internet. If the homeowner is there, they would presumably adjust the thermostat, confirming their location. Maybe this is why <a href="http://www.forbes.com/sites/greatspeculations/2014/01/17/googles-strategy-behind-the-3-2-billion-acquisition-of-nest-labs/">Google recently paid US$3.2 billion for Nest</a>.</p>
<p>By 2020, <a href="https://www.cisco.com/web/about/ac79/docs/innov/IoT_IBSG_0411FINAL.pdf">Cisco’s research</a> estimates there will be about 50 billion internet connected devices, or 6.58 per person. In principle, all such devices can collect data on individuals, and report back to centralised databases. Is the idea of following each consumer around, learning their habits and preferences such a crazy idea anymore?</p>
<p>In the coming years, if personalised pricing becomes common, will it be possible for a consumer to avoid being charged high prices for the products they love most?</p>
<p>Suppose a consumer avoids all products with networked sensors, thinking that if they aren’t tracked they can’t be charged more. This strategy can easily be overcome by firms – charge astronomical prices to anyone for whom data is sparse.</p>
<p>Instead, suppose a consumer tries modifying behaviour to get lower prices. Would they really want to? They might have to change thousands of behaviours just to get a low price on one product. Moreover, they might not be able to, if they don’t know which subtle behaviours determine prices. What’s worse, those same behaviours could cause them to pay more for other products.</p>
<p>In fact, many companies today are using personalised prices. <a href="http://www.staples.com/">Staples Inc.</a>, for example, <a href="http://dl.acm.org/citation.cfm?id=2390245">was observed charging lower prices</a> to consumers living near a brick and mortar competitor. <a href="https://www.freshplum.com/">Freshplum Inc.</a>, a venture-funded startup, implements personalised discounts for many companies using a proprietary algorithm.</p>
<p>In <a href="http://benjaminshiller.com/images/First_Degree_PD_Using_Big_Data_Apr_8,_2014.pdf">my research</a>, I investigated the impact of personalised pricing based on web browsing behaviour. For feasibility, I focused on Netflix, asking what would happen had it personalised prices. The answer was a 12% increase in profits. Good news for Netflix, but less so for some consumers who would be left paying roughly double the prices others do for the exact same product.</p><img src="https://counter.theconversation.com/content/25076/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Benjamin Shiller does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Imagine yourself the CEO of a company that mainly sells one product. One of your goals is to maximise profits. You know you can charge a flat price, or modestly raise profits by using quantity discounts…Benjamin Shiller, Assistant Professor of Economics, Brandeis UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/236342014-02-25T12:00:41Z2014-02-25T12:00:41ZMobile operators needn’t fear big spender Zuckerberg<figure><img src="https://images.theconversation.com/files/42385/original/nvjxjyqz-1393265718.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Hi I'm Mark and I'm new here, but I want to shake things up.</span> <span class="attribution"><a class="source" href="http://www.flickr.com/photos/prospere/2927965108/sizes/o/">Ludovic Toinel</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>With Facebook eyeing mobile internet, it is no accident that Mark Zuckerberg is making a much-publicised appearance at the <a href="http://mashable.com/2014/02/23/watch-mark-zuckerberg-keynote/">Mobile World Congress</a> in Barcelona this week.</p>
<p>In attendance are executives from mobile operators and these conference regulars are likely to greet the newcomer with some trepidation. They should consider themselves lucky though. Their business model monetises services directly, while Facebook’s struggles to do so indirectly through advertising.</p>
<h2>Defending the home turf</h2>
<p>In Europe, operators are trying to come to terms with the convergence of mobile, landline, and cable-TV industries and an increasingly pan-European market. Both make for intensified competition and a trend towards <a href="https://theconversation.com/vodafone-misses-opportunity-to-reinvest-verizon-proceeds-17758">consolidation</a>.</p>
<p>Operators essentially provide internet connections and have little control over what is provided through them. Some of the new mobile functions such as internet messaging through the likes of WhatsApp, and voice-over-IP telephony, known to you and I as Skype (and soon <a href="http://www.ft.com/cms/s/0/2922c9d0-9d65-11e3-a599-00144feab7de.html#axzz2u9Vcbu9U">WhatsApp</a> too) <a href="http://www.bloomberg.com/news/2014-02-21/whatsapp-shows-how-phone-carriers-lost-out-on-33-billion.html">chip away</a> at their traditional revenue sources and make it harder to recoup investments made in technology so as to provide faster connectivity for consumers.</p>
<p>In advanced markets, data packages are now increasingly the only thing consumers pay for. It is becoming harder and harder to justify other charges, be it for calls or texts, because consumers now have so many internet-based alternatives.</p>
<p>So it is understandable that operators are concerned about Facebook gaining so much clout that it feels it can challenge their last remaining source of income. Only a few weeks ago, Vodafone <a href="http://www.ft.com/cms/s/0/7e8cd20c-92a3-11e3-8018-00144feab7de.html#axzz2u9Vcbu9U">rebuffed</a> a Facebook request to waive data charges for its app. Some are less steadfast: T-Mobile’s <a href="http://www.digitaltrends.com/mobile/free-facebook-phone-users-without-data-plans">GoSmart</a> brand in the US is already trying to attract customers with free Facebook usage. And several other operators have started down this slippery slope by providing access to a stripped-down version of Facebook, <a href="http://www.facebook.com/notes/facebook/fast-and-free-facebook-mobile-access-with-0facebookcom/391295167130">0.facebook.com</a>, without charging for it through their standard data fees.</p>
<p>Now Facebook has bought <a href="https://theconversation.com/youve-been-framed-putting-you-in-the-picture-with-the-instagram-deal-11432">Instagram</a> and, more recently, WhatsApp, it has amassed even more mobile users. One could imagine a situation in which Facebook (or Google, for that matter) is so powerful that it can force operators to waive data charges for its services or accept unpalatable consequences. If WhatsApp, Instagram, and the Facebook App were cheaper to use on some networks, consumers would switch to those. Charging for connectivity would become much harder for operators.</p>
<h2>He who laughs last</h2>
<p>Regulators might come to the rescue if Facebook were to use its market power in this way, but it might not come to that. Facebook is less of a threat to operators than it may seem. Its presence on mobile phones is more tenuous than on computer screens; the fact that it felt compelled to pay an incredible $19 billion to buy WhatsApp is testament to how much help it needs to get a foothold.</p>
<p>For Facebook to stomach such a price tag, it must expect a significant boost to its ability to make money in the mobile sector. Just being big in terms of user numbers doesn’t deliver profits, even if Facebook manages to push operators into keeping its data free of charge.</p>
<p>If WhatsApp rolled out its $1-per-year charge to all users, its revenues would still only be <a href="http://www.forbes.com/sites/hollymagister/2014/02/21/whatsapp-19-billion-secret-formula">$500 million</a> a year. At that rate, Facebook wouldn’t get its money back for decades. And even if WhatsApp continues to grow further and doubles its revenue per user through Skype-like telephony, clever network lock-ins, and <a href="http://articles.economictimes.indiatimes.com/2014-02-21/news/47559615_1_whatsapp-jan-koum-brian-acton">value-added services</a>, recouping the acquisition would still take what would feel like an eternity in the fast-moving and unpredictable tech world.</p>
<p>So the strategic motivation for paying an exorbitant price must be rooted in something else. Something that makes WhatsApp worth more as part of Facebook. Google integrating with Youtube drove traffic to the video site while allowing Google to place more advertising. Both were better off as a result. Facebook is likely to aim for a similar result with WhatsApp.</p>
<p>Akin to Google, Facebook’s interest is in mining consumer data and placing targeted advertising. Unfortunately, WhatsApp’s managers are fundamentally opposed to snooping and advertising on the messaging platform. Facebook duly promised it would do no such thing.</p>
<p>But advertising is crucial to Facebook’s business model and not being able to monetise WhatsApp’s user base negates the strategic rationale for the takeover. If Facebook really wasn’t interested in advertising, and instead wanted only to diversify its income streams, it needn’t have bought an expensive messaging app. A cement production company, say, or a waste removal firm would do.</p>
<p>Mobile users seem quite aware of this cognitive dissonance and are reacting already. Alternative messaging platform <a href="http://techcrunch.com/2014/02/21/bye-bye-whatsapp-germans-switch-to-threema-for-privacy-reasons">Threema</a> saw usage numbers double over night when it was announced that WhatsApp users would soon be Facebook users. <a href="http://www.theguardian.com/technology/2014/feb/24/telegram-messaging-app-whatsapp-down-facebook">Telegram</a> reported an even bigger surge. Google Hangouts, ICQ, Line, SnapChat, Viber, WeChat, Wickr, and others are also competing to absorb any customers migrating from WhatsApp.</p>
<h2>Riding out the storm</h2>
<p>Zuckerberg may have billions to splash but mobile executives should take heart. The desperation Facebook revealed through the purchase price reveals how tricky it is to build a business model on advertising alone. Few companies achieve it – the dotcom bubble and bust serve as a reminder of this.</p>
<p>Although providing connectivity is seldom associated with the sexiness of social media and mobile apps, the telecoms industry business model is at least built on robust foundations. It goes without saying that now is not the time to rest on their laurels as the market is entering a shake-out phase, but in the end there will always be a need for connectivity provision.</p>
<p>Operators that achieve European scale and manage to differentiate their offering through speed, reliability, and ubiquity will have a future. Less so the many companies struggling for attention and the advertising revenues that they hope will go with it.</p><img src="https://counter.theconversation.com/content/23634/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ronald Klingebiel researches and advises companies in the telecommunications and high-tech industries. His work attracts support from both corporate and government funding sources.</span></em></p>With Facebook eyeing mobile internet, it is no accident that Mark Zuckerberg is making a much-publicised appearance at the Mobile World Congress in Barcelona this week. In attendance are executives from…Ronald Klingebiel, Assistant Professor of Strategy, University of WarwickLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/225472014-01-31T13:37:19Z2014-01-31T13:37:19ZAdvertisers look with empathy into your front room<figure><img src="https://images.theconversation.com/files/40294/original/wwnf3xwn-1391166956.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Someone's about to get sold a Lucozade.</span> <span class="attribution"><span class="source">adwriter</span></span></figcaption></figure><p>Technology is under development to enable advertisers to target products not just at a broad group of people that might be watching a certain type of programme but at specific households and even individuals.</p>
<p>By gathering information about what you watch and do in your front room, they can decide which adverts will have the most traction. It’s an advertisers dream to broadcast to an audience of one and we are ever closer to this becoming reality.</p>
<p>In the UK, the charge is being led by <a href="http://corporate.sky.com/media/press_releases/2014/sky_adsmart_launch">Sky</a>, which says that Tesco, the Royal Bank of Scotland, Littlewoods, American Airlines, Audi, Citroen and Dial-A-Flight will all use its AdSmart services.</p>
<h2>A window on your world</h2>
<p>Their efforts are, in part, made possible by the fact that there are now many more ways to watch televisual content than on televisions, such as online via Netflix or catch-up services. The cookies we leave behind when we watch all help those providing the programmes build up a picture of what you like and what you watch. That’s pure gold for advertisers.</p>
<p>But we also connect our TVs to different devices, such as Xboxes, which will offer a window into our world like never before. An Xbox enables advertisers to target content at you based on your subscriber information, such as your age, gender and address. </p>
<p>These devices can also see into your living room. Sensors in an Xbox make it possible to play games without a controller in your hand because they can scan the content of the room and identify how many people are in it. That, in turn, means advertisers can gather the information and deliver even more <a href="http://www.wired.co.uk/magazine/archive/2013/12/wired-world-2014/tv-ads-that-know-you-intimately">refined advertising</a>. Spooked yet? Well, there’s more.</p>
<h2>Verizon’s big play</h2>
<p>If you have time to spare, it can be illuminating to search for the patent applications of technology companies. I did, and found a fascinating application by telecommunications company Verizon to the US patents office, titled <a href="http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=1&f=G&l=50&co1=AND&d=PG01&s1=20120304206&OS=20120304206&RS=20120304206">Methods and Systems for Presenting an Advertisement Associated with an Ambient Action of a Use</a>. This shows that the company has patented a suite of technologies that would trigger tailored advertisements based on whether viewers are eating, playing, cuddling, laughing, singing, fighting, talking or gesturing in front of their sets. Cuddling, for example, might trigger advertisements for a trip to Paris.</p>
<p>It might seem like an incredible leap but the ability to make assessments about you comes from technologies that we are gradually becoming accustomed to already. Motion capture and analysis technologies, gesture recognition technologies, facial recognition technologies, voice recognition technologies and acoustic source localisation technologies all combine to build an accurate picture of who you are and what you are doing. </p>
<p>It’s not just the fact that you are moving or speaking but the gestures you make and the mannerisms you display. It’s your physical attributes and the tone and inflection of your voice. It’s the language you speak or the accent you have and it’s your proximity to others.</p>
<p>And, it’s not just people. Pets, products, brands, decorative style, objects such as pictures and photographs can also be scanned and profiled. If your TV picks up a small furry shape moving around your feet, it may start pushing cat food at you.</p>
<p>Verizon’s set-top box will determine which people present are adults by linking what information it has in its user profiles with variables such as physical appearance and voice attributes. Once it knows the tone of your voice and your mannerisms it could even guess your mood. This is yet more valuable information for advertisers, who can suggest a holiday when you’re feeling down or a DIY store when you’re full of energy.</p>
<p>If you’re humming a tune, Verizon plans to use a signal processing heuristic to identify the name and genre of the song. Very handy when music labels ask it to sell their latest releases.</p>
<p>And of course, if your TV can gather all this information about you before it shows you an ad, it can monitor your response to that ad once you’ve seen it.</p>
<p>Then it can communicate with the mobile device or tablet you are using as you watch, sending ads to you while you browse and taking cookies back for future reference.</p>
<h2>Empathy: the future of advertising</h2>
<p>This all takes the idea of behavioural advertising quite literally. What’s more, the TV, the advertising and the devices could even be said to be displaying a whole new characteristic: empathy.</p>
<p>And if they can empathise, we might have to revise how we think about the media.</p>
<p>It’s important to note that empathy is quite distinct from sympathy. Empathy is a form of reading social cues and responding appropriately. It’s about understanding others by watching, listening, sensing and making inferences about actions or inaction. </p>
<p>We do this without thinking as we assess how others are getting on, check people’s current behaviour against past behaviour, and revise our actions toward others if we get an unwanted reaction. These are all actions being performed by this type of advertising system.</p>
<p>The question is not one of intelligence or whether machines might act like people, but that people and machines (arguably along with animals) empathise in similar ways through responses to public behaviour. After all, when we humans empathise, we do not literally feel into the skulls of others, we read and respond to public signals. That’s what empathic media is increasingly doing too.</p>
<p>As this technology edges towards the market, what people say, do and feel in the domestic sphere become increasingly public. The boundaries are being tested and the meaning of personal privacy redefined and, at least for now, it’s the advertisers that are calling the shots.</p><img src="https://counter.theconversation.com/content/22547/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>ANDREW MCSTAY lectures at Bangor University and is author of Digital Advertising; The Mood of Information: A Critique of Online Behavioural Advertising; Creativity and Advertising: Affect, Events and Process; and the forthcoming book Privacy and Philosophy: New Media and Affective Norms.</span></em></p>Technology is under development to enable advertisers to target products not just at a broad group of people that might be watching a certain type of programme but at specific households and even individuals…Andrew McStay, Lecturer in Media Culture, Bangor UniversityLicensed as Creative Commons – attribution, no derivatives.