Perks vs. Privacy: Users Opt-in For Deals
on the defensive, other startups are cashing in by offering kickbacks for users willing to share their
information. Foursquare and GoWalla first began building buzz with their partnerships with big name companies
like Pepsi and Starbucks, who offer users perks and discounts if they check-in nearby. Even non-commercial
ventures are cashing in on location-based mobile marketing. For example, VisitPA, the tourism board for
Pennsylvania, is enticing tourists to historical sites with custom Foursquare badges for check-ins at
places like Gettysburg ("PA 4 Score & 7") and regional restaurants ("PA Shooflyer").
Investment from institutions and nationwide advertisers broadcasts an interesting bet on how closely
consumers guard their personal data. The theory: consumers will gladly give up their data as long as
there is something in it for them (i.e. discounts and free stuff) and the sponsor relationships and
harvesting methods are transparent. Privacy issues have been a public relations disaster for companies
like Facebook because of the perceived lack of these qualifiers. A recent leaked chat log from six
years ago reveals Facebook Founder Mark Zuckerberg flippantly mocking the trust that Facebook users
placed in his hands did not help the social media giant's image. Even Google, which sprung its
controversial Buzz web application on an unsuspecting public earlier this year, has received significant
backlash from users concerned about personal privacy.
With such public outcry over privacy, it seems that networks such as Mint, an online budgeting service, and
WeShop, a platform which anonymously shares purchase information with vendors and merchants, would be doomed
to similar stigma. But they aren't. The difference is transparency. Mint analyzes your financial data--including
credit card statements, savings accounts and even home mortgages--and suggests "ways to save" which includes
products from sponsored banks as well as non-sponsored banks. As a sign of good faith, Mint points out the
ones that they have relationships with and lists competitors at the top if they have better offers. Since
this arrangement was made clear from the beginning, very few users feel violated by the harvesting of
information. Similarly, WeShop, which is still in beta, is completely up front about the way it works and
offers mutual benefits to both shoppers and vendors by giving (theoretically) impeccable product recommendations,
much like Amazon and Netflix do now.
The success of these social media marketing initiatives remains to be seen. But one thing is clear: users are
feeding more types of information into the vast aggregable web in greater and greater volumes. Where we once
submitted only vague television watching data from random samples via those mysterious and thinly-scattered
Nielsen boxes, we now willfully submit information regarding our spending, eating, investing and social habits
with startling detail. For companies who've historically spent billions of dollars on market research, this a
gold mine waiting to be gutted. As we've learned from Facebook and Google, doing so in ethically without alienating
key audiences will be instrumental to the success of recovering this latent value.
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