The following is an excerpt from an interview with NYU Stern Professor Anindya Ghose and Ben Plomion, CMO of Chango posted on “Business2Community.”
Anindya Ghose spends a lot of time thinking about the intersection of digital marketing and economics. As a Professor of Information, Operations and Management Sciences and a Professor of Marketing at New York University’s Leonard N. Stern School of Business, Anindya conducts numerous research projects that explore the impact of the Internet on markets transformed by its shared technology infrastructure, the economic value of social media, and the impact of digital and mobile marketing. Recently, Professor Ghose spoke with Ben Plomion, CMO of Chango, to discuss use of data and consumer preference in the age of digital advertising.
Ben: When it comes to digital advertising and marketing, you talk about the trade off between consumer privacy and marketer utility. What do you mean by that?
Anindya: Brands have a lot of data about consumers, which enables them to personalize their interactions with their audience. They can, based on what they know about the consumer, customize the product and price offered in interactions.
The tradeoff is that in order for this to be meaningful, consumers must actively or passively disclose substantial information about themselves to the brand. That’s a decision consumers must make.
Ben: What do you mean by “passively disclosing” information? How does a consumer passively disclose information?
Aninyda: Many retailers now have beacons that can recognize when a consumer with an iPhone or smartphone enters the store. Retailers can use that information to target the consumer with messages. Or a store can offer you free access to their WiFi, and if you accept, it will be a source of data about you. These are examples of passive disclosure. To prevent such disclosure, the consumer would need to shut down his or her phone completely, or disable its GPS.
The fact is, the devices we carry with us disclose information to marketers who are set up to retrieve it. This is happening already today.
Ben: Why do consumers want to disclose information about themselves to brands?
Anindya: Because they expect to get something valuable in return, specifically highly personalized interactions, which could be a price, product or customer service experience that’s specific to the consumer.
A lot of consumers – particularly Gen Y, Gen Z and to a certain extent Gen X – are quite open to marketing. They know that in order to use a free app, or to use a particular service, they’ll be exposed to ads. They accept this as a fact of life. But they want those ads to be relevant to them, and they’re willing to disclose information about themselves to ensure that happens.
Read the entire interview here.