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What's Next for Marketing? Reality Mining

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What does your mobile phone usage say about you? Probably a lot more than you think. Mobile phone operators are using advanced analytics to "mine" call detail records hoping to use the information to improve service quality and create more personalized and relevant offers. But that's old hat compared to what's coming next.

Land line and mobile operators–by nature–capture a significant amount of transactional data (call detail records, web visits/transactions, and GPS data just to name a few). To extract value from this data, companies employ data mining techniques.

Data mining is the process of discovering hidden patterns from large data sets. Using sophisticated algorithms, companies in all industries are "mining" mammoth data warehouses to identify useful information (relationships, rules, and sequences) that can help them customize and personalize offers, and optimize business processes.

However, according to a Technology Review article titled "Reality Mining," MIT professor Sandy Pentland thinks mobile operators are poised to take data mining to a whole new level. Dubbed, "reality mining", Dr. Pentland thinks mobile operators have an opportunity to record more than just where you've been or who you have recently called.

The article notes that Pentland "would like to see phones collect even more information about their users, recording everything from their physical activity to their conversational cadences."

In the near future, Dr. Pentland suggests the following can be "learned" from studying data captured from your cell phone:

* Your cadence may reflect your state of mind that day .... are you happy, sad, depressed?
* Through capture of location based data, it will be possible to "predict" places you are more likely to visit
* Your calling patterns can help map your social network
* Your physical activity (or lack thereof) could be monitored by health professionals via your mobile device. Pedometer anyone?

The article continues, "Within the next few years, Pentland predicts, reality mining will become more common, thanks in part to the proliferation and increasing sophistication of cell phones. Many handheld devices now have the processing power of low-end desktop computers, and they can also collect more varied data, thanks to devices such as GPS chips that track location. And researchers such as Pentland are getting better at making sense of all that information."

Of course, there are strong privacy considerations with the advent of these services. How does one opt in/or opt out? What information is shared and how much is shared and with whom?

Arguably, on the marketing side, more detailed information (including location based data), collected and analyzed by your wireless carrier could help them tailor and personalize specific offers–raising marketing effectiveness. And mapping your social network could help you share information more easily (think: favorite five plans–on steroids).
But there is a fine line between "benefit" and "big brother".

  • What do you think of the concept of "reality mining"?

  • Would you be willing to opt-in to potential benefits of reality mining?

  • Where would you "draw the line"?

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Paul Barsch directs services marketing programs for Teradata, the world's largest data warehousing and analytics company. Previously, Paul was marketing director for HP Enterprise Services $1.3 billion healthcare industry and a senior marketing manager at global consultancy, BearingPoint. Paul is a senior contributor to MarketingProfs, a frequent columnist for MarketingProfs DailyFix, and has published over fifteen articles in marketing, management, technology and healthcare publications. Paul earned his Bachelors of Science in Business Administration from California Polytechnic State University, San Luis Obispo. He and his family reside in San Diego, CA.

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  • by Ted Mininni Wed Mar 12, 2008 via blog

    This reminds me about the blog post I put up recently called "The Marketing Mind Meld", Paul. Only in that instance, consumers become willing participants in Nielsen orchestrated surveys. What about in this case, though? Would consumers be unaware they are being monitored to mine mobile phone data?

  • by Paul Barsch Wed Mar 12, 2008 via blog

    Ted, thank you for commenting. The article makes an interesting point that in many instances, technology is moving faster than our legislative functions (in this case - privacy regulations). It would be my assumption this would be an opt-in, however as we've seen from the trial introductions of Beacon, that it will be a give and take process to get it right.

  • by Jon Wed Mar 12, 2008 via blog

    This all sounds too much like corporate big brother to me.

  • by Michael Lombardi Wed Mar 12, 2008 via blog

    Funny, I think that data mining takes some of the art out of marketing. It's much easier to sell ketchup to someone with a hotdog and french fries than to sell a bathing suit to someone in an igloo. To your point about legislation moving more slowly than technology, that's most likely because 1) the government is bogged down with things that aren't worth their time and 2) many times people want to see how the public reacts before taking a position on a topic.

  • by Claire Ratushny Wed Mar 12, 2008 via blog

    Even if we assume consumers can opt in, Paul, I think if most people find out how invasive this is, there won't be many participants. That leads me to wonder whether there will be "full disclosure" to mobile phone users in order to get them to sign up for this. This is pretty invasive and many of us are increasingly concerned about intrusions into our privacy. Good post as usual, Paul.

  • by Paul Barsch Wed Mar 12, 2008 via blog

    Jon and Claire, your concerns are valid. The good news is that reality mining is a near future opportunity, and that gives consumers, companies and legislative bodies time to shape the future.

  • by Paul Barsch Wed Mar 12, 2008 via blog

    Michael, data mining adds science to marketing and takes out some of the guess work. If I was a company with a lot of transactional data, I'd hate to be without the capability.

  • by Sebastian Wed Mar 12, 2008 via blog

    I personally believe it will bring more benefits for the end user. I am also not so worried about the mobile operators /advertisers but more concerned of who other than them will have access to the data.

  • by Cam Beck Wed Mar 12, 2008 via blog

    If there is disclosure, then think of the benefits a carrier might get by disclosing that they do NOT use such tactics. Were ran a mobile carrier, I'd find a way to incorporate the fact that my company respects my customers' privacy in my tagline and all of my advertising.

  • by Claire Ratushny Wed Mar 12, 2008 via blog

    "If there is disclosure, then think of the benefits a carrier might get by disclosing that they do NOT use such tactics." Exactly what I'm thinking, Cam. This is a well- articulated idea. Thank you.

  • by NWGuy Wed Mar 12, 2008 via blog

    This is very familiar territory for me. The carriers aren't really geared to do the mining as well as you stated, but they are working on that. In terms of the marketing they are deathly afraid of mobile spam. They have already had a few bad experiences with this but it is a rising issue. The industry is attempting to self-regulate; with all major carriers participating in the MMA (Mobile Marketing Association) which has a code of ethics. That said; this is all new ground and a little of the wildness of the initial web environment. Only time will tell. I'd be happy to discuss further with anybody interested.

  • by Lewis Green Wed Mar 12, 2008 via blog

    No thanks. Dear company, whoever you are and whatever you do, I formally opt out. It is none of your business, who I am beyond name and contact information, what I do, why I do it or where I do it.

  • by Paul Barsch Wed Mar 12, 2008 via blog

    Sebastian, I tend to agree. In a carefully controlled environment, with privacy settings "set" and respected, there can be strong benefit to both consumer and company. If you read the article, there are also interesting implications for society - i.e. shedding light on workplace dynamics and projecting the course of disease outbreaks.

  • by Paul Barsch Wed Mar 12, 2008 via blog

    NW Guy, your point about self regulation is spot on. I like to believe that market forces will tend to take care of such issues (i.e consumer outrage -and subsequent changes in policies when Beacon was first introduced).

  • by Michael Lombardi Wed Mar 12, 2008 via blog

    Paul, You say data mining "adds science." As a scientist, I would say science may increase efficiency, but also adds a veneer of hackneyed drivel. The "Mc-ification" of America, if you will. I appreciate efficiency more than the next person, but I do believe the beauty in effective marketing is in its art. Maybe since I come to marketing from the world of science, I am more impressed by the art of marketing that traditional marketers take for granted. While, I'm not certain that makes me wrong, I'm sure it means I'm at least a contrarian.

  • by Paul Barsch Wed Mar 12, 2008 via blog

    Michael, we've come a long way in the 16 years I've been in the marketing profession. I'm sure others can speak to marketing's evolution even moreso than I can. To me, the clear trend is towards a "left brain" and data driven bottom up approach to marketing. I'm also hopeful then we'll be able to meet the traditional top down approach at least half-way because effective marketing is both "about the numbers" and also "the big picture".

  • by Gary Wed Mar 12, 2008 via blog

    From a marketing standpoint this is awesome. We can take all this data and do more behavioral targeted campaigns. For me I'm fine with it as long as I knew in advance that this studding was going on, I knew none of my personal data was being compromised, and there was a clear way to opt out. But the question is does everyone else feel the same way. As Marketers, since we all know mass media is dead I feel this is the route we are going to have to take marketing to the next level, and market to that niche group that will actually find value in our message.

  • by Paul Barsch Wed Mar 12, 2008 via blog

    Gary, I'm inclined to agree. Behavioral segmentation and targeting isn't widely practiced currently, but that is going to change. We need to get away from the "1-2% response rate is OK" mentality.

  • by Lewis Green Wed Mar 12, 2008 via blog

    I, too, am a marketer and agree that old ways may not work as well as we wished. Here are my questions: 1) Why should I have to opt out? No one should gather data on another's activities without first asking. 2) How do you know personal data isn't being collected? Our cells phones, unless disposable, are easily tracked back to the user. 3) Why should we as marketers assume this data will be used? To date, I don't see most marketers using data to do a better job of engaging customers based on those customer's wants and needs. Currently, there are a number of good, non-invasive techniques we marketers can use. They may not be easier than electronic eavesdropping but they produce permission-based results. Is marketing getting better? I don't often here that argument being made by consumers or even we marketers. At the end of the day, good marketing happens because of the quality of the marketer not the tools he or she uses. P.S. By the way, governments have always used the same argument. If we just knew more about you, we could serve/protect you better. It's a false premise. More data does not directly relate to a better customer or a safe and happy citizen experience.

  • by Michael Lombardi Wed Mar 12, 2008 via blog

    "P.S. By the way, governments have always used the same argument. If we just knew more about you, we could serve/protect you better. It's a false premise. More data does not directly relate to a better customer or a safe and happy citizen experience." Excellent point Lewis. It's funny that Amazon constantly tries to suggest new products and I don't know that I've ever bought from one of their suggestions. Yes Netflix also gathers lots of data and suggests movies. I do try some of the movies (not most, but some). Of course the difference is it costs next to nothing to experiment with a Netflix suggestion, but I have to pay for an Amazon suggestion. At the same time, unless the cable company was offering packages directly built for my usage or the same with the phone company, I don't think the infrastructure companies could offer me anything I'd want. Certainly the same with the government.

  • by Paul Barsch Wed Mar 12, 2008 via blog

    Lewis, you wrote "At the end of the day, good marketing happens because of the quality of the marketer not the tools he or she uses." While there is a strong correlation between quality outcomes and marketing talent, I couldn't disagree more that good marketing isn't a result of tools. One of my key premises--and I bang on this drum quite a bit-- is that marketers don't use the tools available to them for myriad reasons -but they should. I've seen study after study from tier one research firms and analysts that suggests that if marketers made better use of the tools and technologies available to them response rates would increase 3-5X.

  • by Paul Barsch Wed Mar 12, 2008 via blog

    Michael, while I'll agree predictive modeling and analytics sometimes leaves much to be desired, there has been drastic improvement in the quality of "affinity" or classification algorithms over the past five years. I'll point you towards an article in Wired Magazine 2/25/08 "This Psychologist Might Outsmart the Math Brains Competing for the Netflix Prize" as an example.

  • by Increase Sales Coach Cheryl Wed Mar 12, 2008 via blog

    From a personal perspective this is scary and kind of creepy. From the perspective of a marketing this is phenomenal. This is actually an extension of what Google is already doing. If you have a Google email account you may notice that the ads you see when you log in connect with the content of the messages you receive.

  • by Dusan Vrban Thu Mar 13, 2008 via blog

    This and other technology is leading to the death of the marketing as we know it? I see more and more posts about technology and personal data being networked and as Lewis pointed out excelently - the benefits are unclear. We might think that we will do a better job for someone. But will we? Who wants to be a hero and judge my behavior in a way to "help me"? I'm a very open person and giving out a lot of my data (I think that's the best way of protecting for now). Yet some of the things that science sees as progress, kinda scare me. :-)

  • by Paul Barsch Thu Mar 13, 2008 via blog

    Dusan, thank you for commenting. Your sentiments are shared by many people. A data driven approach to marketing allows us - from bottom up - to learn more about our customers through our daily interactions and transactions. With the available technologies and systems today, we can capture and learn more about our customers than ever before. The key, as you point out, is what we do with this information. Do we use it to make a better customer experience, improve operational efficiences and increase our profitability? I certainly hope so.

  • by John Calkins Mon Mar 17, 2008 via blog

    Sounds like privacy invasion to the max. Patterns will be set by the mining group that will categorize the information. Your grouping may hurt you with insurance, medical services and credit.

  • by Paul Barsch Mon Mar 17, 2008 via blog

    John, thank you for your comment. It has been real interesting to read Tier one business publications over the past 1-3 years regarding data privacy issues. This issue is rising to the top of considerations that all governments and citizens will have to address. There will always be a careful balance between benefit and big brother. Some companies cross the line unsuccessfully and have to retreat - others such as Google (Gmail and other apps) seem to navigate the territory more successfully. Going forward - I am sure you (and others) will stay involved in the discussion - and that's a good thing!

  • by Tim Wilson Mon Mar 17, 2008 via blog

    The question with opt-in is often "how deep in the clauses is it buried?" I began installing a piece of software yesterday, but had a gut feel it might be sending data about me and my useage. I began reading the legal-speak EULA, and after 10 minutes I gave up and decided the benefit of the software just wasn't worth any more of my time reading the legal garbage to find out if it was going to spy on me. I'd definitely go with companies that make it clear they respect my privacy. Sometimes when a site wants to "customise advertising to my preferences" I tick all the boxes. How does limiting the scope of what I'm exposed to benefit me? How does distracting me with the same advertising over and over benefit me? I'm not a marketer - I read this site to find out what unscrupulous marketers are going to try and hit us with next. I have no problem with ethical marketing - I'll be in your focus groups and take part in your legitimate U&A surveys, and I'll even often agree to data collection if you're up front about what you collect, what you'll do with it, and make it easy for me to change my mind later. Just don't invade my privacy or bury what you do with my data in the 31rd paragraph of a policy.

  • by Paul Barsch Tue Mar 18, 2008 via blog

    Tim, you make a good point about transparency. Obfuscation and chicanery doesn't win friends and it most certainly doesn't win repeat business. A good customer relationship, much like a friendship is based on trust. Marketers who intentionally break that trust are setting themselves up for a reputation busting and brand killing "YouTube" moment.

  • by jim Tue Mar 18, 2008 via blog

    Anybody familiar withthe concept of database driven marketing here? For years every interactionthe average American has with their bank,credit card purchases, taxes, cara nd home purchases, births, most major retailers and every pharma company including perscription info has been recorded, tracked, mined, analyzed and used to target marketing and advertising. All without your opt in. (I was VP at one such company) So now the cell phone companies are going to be doing the same thing with your cell phone - and people are surprised? For the last year I was involved in using eexactly this type of carrier data to target mobile ads - advertisers loved it and consumers had no complaints - not a single one. Anybody want to learn more about what all this means, how to use it correctly and what the carriers will and won't do with such data give me a call - I've been doing it.

  • by Paul Barsch Tue Mar 18, 2008 via blog

    Jim, thanks for commenting. You are correct in that companies of all sizes have mined their databases for hidden nuggets -for quite some time actually. What is potentially new, however, is a deeper mining of the data - reality mining - as described above. It could be of huge benefit to both customer and company.

  • by Paul Barsch Mon Apr 28, 2008 via blog

    For future readers of this post, also see this article on reality mining...

  • by Ovidiu Galatanu Sun Aug 3, 2008 via blog

    Dear all, I happened upon this particular link while doing a bit of research on reality mining - so excuse my intruding from outside the marketing profession. Thought you'd like to see/read Watchbird - bit of food for thought about privacy issues and Big Brother-like control...

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