You Will Be Tracked. And You’ll Like It.

In the new world of retail marketing, consumers are watched not by overhead cameras that track their every move, but by the cellphones they carry in their pockets, which track even more.

NearBuy Systems helps stores provide their shoppers with free WiFi, in exchange for collecting detailed online behavior analytics.

At an Under the Radar conference last week, I met with the CEOs of two companies that are bringing necessary, brilliant, and frightening technologies to retail operators. The good news for privacy watchers is that consumers can opt out of (or, to be clear, simply not opt in to) these services. But, according to these companies’ chiefs, they’re not. Consumers are signing up willingly to be tracked. Marketers are the big winners: They’re getting amazing analytics. All in exchange for handing out arguably unnecessary free services, or what amounts to token benefits.

Company #1: NearBuy Systems. This is a WiFi service operator for retail establishments. Once a consumer connects to a WiFi network in NearBuy-managed location, the company is able to extract incredibly valuable data from these users’ smartphone behaviors, which it then collates and sends back to the store owner. NearBuy generates reports on what commerce sites users go to, if they are making purchases online at competing sites while they’re in a store, and what their social network activity looks like.

NearBuy also offers precision in-store smartphone location services, and it can correlate this data to, for example, tell a big-box store owner that its television aisle is especially vulnerable to Amazon.

The service records device MAC addresses as well, so it can identify repeat visitors and report on their behaviors.

The opt-out is simple: Don’t use store-provided free WiFi. CEO Bryan Wargo says Nearbuy does provide a clear notice to users before they get access via a “captive WiFi portal,” but I believe that even a great TOS is unlikely to be read by most users who just want to get on the free network.

When consumers install the Placed app, they have all their real-world movements tracked.

Company #2: Placed. This business has a service that will track consumers through the physical world after they leave a store. Retailers use the data of where their customers are to understand better their habits and preferences. This can lead to better targeting of products, and especially advertising.

Being tracked by Placed is completely voluntary and requires multiple opt-in steps. Still, a lot of people willingly sign up. The deal is that, if you agree to have the Placed app on your smartphone (which reports on where you are at all times), after some period of using it you get a nice bonus: A $10 gift card for the store that signed you up, or maybe a thousand miles if it’s an airline running the panel. Something like that.

CEO David Shim assured me that absolutely no personally identifiable information is transmitted to the client subscribers of the service. However, clients still get amazing and actionable information beyond the obvious demographic profiling. Placed can tell store owners where clients shop or eat before they come to their store. This info can make for much more effectively-placed advertising, for one thing.

I will be honest that I find both these companies terrifying. A data breach at either could have serious consequences. But as this is the Opportunity Note column, not Doomsday Watch, I’ll close instead by repeating the observation at the top of this story. Users, by and large, worry less about potential privacy breaches than (I hope) you do. They’ll give you a lot of data for very little in return. You can use that to improve your business, your customer service, and ultimately customer satisfaction.

I will also remind you that when you embark on such a program you have both a business and a moral responsibility to safeguard your data as you would a little child left in your care. Please don’t forget that, either.

-Rafe

Related:
Reclaiming Brick and Mortar (Opportuntity Note)

Audio of this column:

A message from Evernote

Try our beautiful app for remembering people: Evernote Hello