What our devices reveal about us

As our mobile devices become more advance and ubiquitous, marketers are developing more targeted ways of reaching consumers. From GPS tracking to price customization, marketers are using data science to track consumer movement and behavior, raising more concerns about privacy.

TRANSCRIPT

As our mobile devices become more advanced and ubiquitous, marketers are developing more targeted ways of reaching consumers.

From GPS tracking to price customization, marketers are using data science to track consumer movement and behavior, raising more concerns about privacy.

Anindya Ghose, Professor of Information, Operations, and Management Sciences at New York University's Stern School of Business, joins me now via Google Hangout with some insights.

First, thanks for joining us.

Sure.

Thanks for having me.

You study mobile ads in a way that -- while most of us find advertising annoying, you go out of your way to go find it and see if it's working or not.

So, you know, as we see advertisements evolve from television, newspapers, to websites, and now to mobile phones, why are mobile ads working?

Right.

I mean, so let me start by saying, you know, you raised the question that advertising is annoying, and let me briefly explain why so.

The reason it's annoying is because we are basically being bombarded by, you know, highly frequent and irrelevant ads, right?

And the reason that's happening is because, even -- This might seem astonishing, but marketers, even today, actually don't have sufficient information about our preferences.

So the solution to this problem of us being, you know, overwhelmed and inundated with ads is not consumers holding back more information about themselves but, rather, them coming forward and sharing more information.

And when that happens, what we see is that marketers then have more precise information, so they reduce the frequency of the communication and increase the relevancy of the ads.

Is this a matter of people sharing more information and that information actually being used?

Because there's a lot of information about me, my search habits, where I visit that's already out there, and I still feel like, 'You know what?

I have a house with hardwood floors, and I still see ads for carpets,' right?

It doesn't make -- or carpet-cleaning services, so it doesn't make much sense.

So it seems that there needs to be a little bit of an industry understanding that, 'Let's figure out how to get those relevant ads in front of him.'

Yeah. No, I think you raise a great point.

So, first of all, what's going on is, even though, like you said, there's a lot of information about you out there, but the ad-tech ecosystem is very fragmented.

So, sitting between the publishers and the advertisers are sitting, you know, 100-plus intermediaries.

You've got ad exchanges, demand-side platforms, supply-side platforms, all these highly, sort of, niche players, and somebody has to essentially do the job of stitching the data together and get a more precise profile of the consumer.

The most powerful ammunition in the hands mobile advertisers is your context.

Context means, you know, information about your current location, the time of the day, the weather in the proximity of where you are, so I -- And I have a book that's coming out in the next few weeks that I talk about the nine forces that are shaping the mobile economy.

And each of these forces are essentially, you know, super powerful on their own, but when you combine them all, it becomes, you know, tremendously sort of strong.

And so what happens in this context is location data combines with context, time, weather, and some other factors, and that's not something that marketers on, let's say, a desktop or in the offline world have easy access to.

But your mobile device becomes sort of the database of all of these forces that marketers have real-time access to, and that's what they're able to leverage and harness.

With that, all of those pieces of information, our smartphones are giving out a ton of information about us, which I'm wondering whether there's a generational gap, whether I'm the last generation of old fuddy-duddy that cares that a store knows all of this information about me, and maybe the generations after me, not so much.

I have studied this phenomenon, not just in the U.S.

but also in the Far East, in China, and South Korea, and in Germany, in India and so on, and one of the things I've seen is that there's actually, like you said, not so much of a cultural difference, not so much of a regional difference, but much more of a generation difference.

So Millennials, you know, Gen Z's, Gen Y's, and, to some extent, even Gen X's are more comfortable sharing data, but here's what's really going on.

And one of the things I keep hearing from them is, 'We really care about the privacy of our data.'

Okay?

'But we are willing to use our data as a currency in return for a concrete, valuable product or a service.'

If you are getting something for free, how do you empower people to say, 'Hey. You know what?

You're walking around with something of value, and here's how you can leverage that to get these things that you seem to be interested in.'

So, we've done, for example, a bunch of studies in shopping malls, you know, large shopping malls, where what we are saying is, 'Look.

If you come forward and partake in this two-way relationship between, you know, marketers and consumers, then the mobile phone can be used as your concierge, as your butler and not as a stalker.'

Okay?

And so people are like, 'Okay.

So this means that you're going to put money in our pocket,' and we're like, 'Yes.

Our marketers want to put money in your pocket.

They're not going to take money out of your pocket.'

And so I think these, you know, small, steady but powerful use cases are sort of the first steps towards this meeting of the minds.

There also seems to be, besides the mobile platform which we talked about a lot, there also seems to be now concerns about active versus passive sharing of information.

I mean, there are examples of Alexa and Google Home being devices that are listening for a key word, but you could also think, one day perhaps, they could listen and say, 'Now, these people talk a lot about bicycles.

Maybe a relevant ad to serve them would to be something about bicycles.'

Absolutely.

So, I envision a world here where, you know, let's say Saturday night, it's 2:00 a.m.

You've come back after a good time with your friends, and you just switch on your Apple TV.

You have your Apple smartwatch, and you have your Apple smartphone.

The ad that you will see on Apple TV should not be for a Grey Goose vodka because you just come back with having a great time.

It should be something that they should soothe you down.

Now, how would they know it?

Well, the Apple smartwatch is using the Wi-Fi in your home to transmit your biometric data, your heart rate, your pulse rate, you know, your walking patterns back to the TV, and the TV is saying, 'Let me show him an ad for this nice, you know, pristine beach in the Caribbean islands that's going to put him back to sleep.'

Or, perhaps, it says, 'Well, his heart rate is beating so hard.

Maybe he needs to have a hangover-cure ad for tomorrow morning, too,' right?

[ Laughs ] Yeah. That will also work.

Anindya Ghose from NYU's Stern School of Business, thanks so much for joining us.

Thank you so much for having me, Hari.

And thank you for joining us.

To learn more, check out Anindya's new book 'Tap: Unlocking the Mobile Economy.'