How Tech Is Driving A Future of Personalized Everything - Including Prices

Personalized everything sounds great in principle: until you start counting the cost in personal and financial terms of what is being surrendered to get it. 

But as the following article suggests, convenience and the promise of a deal have been winning consumers over since the dawn of the digital era - and there is no reason to think that will change. JL

Kaveh Waddell reports in The Atlantic:

It changes the whole idea of what a person’s money is worth. It used to be that a dollar was a dollar no matter who had it. Now, that’s not the case. Your dollar’s different from mine. You might be getting different commercials based on what they think of you. (People) want the best discounts, the most personalized activities, and they want it at the time they want it, and they’d put stuff in their body to help. People in the industry believe there is no limit.

You just wanted to shop for a birthday gift in peace—instead, you got ads that follow you around the internet, and coupons in your email that remember exactly which products you clicked on. So you shut down your computer, stick your hands into your pockets, and walk to the store. Here, among the throngs of shoppers, you may feel more anonymous than you do behind a screen unburdened by cookies and tracking pixels, and you can browse in peace.

Except not really. If you brought your smartphone, its GPS probably tattled on you before you even walked through the doors. Take your phone out and it might start picking up inaudible sounds broadcast throughout the store to pinpoint your location and send you targeted ads. Surveillance cameras hidden in light fixtures track your movement through the aisles, and could even be using facial-recognition software to understand your preferences and habits and attach them to your personal profile.

For the past five years or so, brick-and-mortar retail stores have been trying to catch up with their online counterparts in tracking and personalization. Joseph Turow, a professor of communication at the University of Pennsylvania, has been studying the marketing and advertising industries for decades. He chronicled the most recent developments in retail surveillance for his forthcoming book, The Aisles Have Eyes, which will be released by Yale University Press in January.

I spoke to Turow about these transformations, the technologies that we might one day soon carry on or even inside our bodies that will make it easier to track us, and the retail industry’s predictions and pipe dreams for the future. A transcript of our conversation, lightly edited for concision and clarity, follows.

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Kaveh Waddell: You kick off your book with the classic frog-in-boiling-water metaphor, to explain the slow increase in the amount of tracking we experience—but it came

event where retail executives used it to describe their own industry. Do you think that’s an apt metaphor? Would you describe it the same way?

Joseph Turow: Yes, I do think it’s an apt metaphor. The general thrust, I think, is emblematic of the industry—and this is not just retailing, this is the advertising and marketing industry writ large. Their sense is that they have to get people used to this new reality. They’re bringing people into a new world and they have to do it in ways where people don’t revolt.

Waddell: Have there ever been instances where the frog—the consumer—started noticing that the water’s getting pretty hot? Any missteps where the temperature was dialed up a little too fast?

Turow: Yeah, there have been. There was a case in Nordstrom where the company put signs around the store saying that people were being watched with cameras. There was a kind of mini-revolt. Nordstrom had to pull back on it.

People get very nervous about this stuff. What I think stores are beginning to realize now is that the way to make them more comfortable is to do much of the work through the mobile device. Because phones are so close to us—and this is going to happen more with wearables, down the line—that the closer we are emotionally as well as physically to

our devices, and the more relevant or targeted or personalized the messages are, the less people will see this as a scarily or creepily intrusive. That’s the idea, anyway.

Waddell: Is there also a sense that we’re used to, or more comfortable with, being watched through our phones than, say, through a surveillance-camera system?

Turow: I think that’s right. But I think the reason we’re used to it is that companies have gotten us used to it. A phone today is essentially a marketing device. Android or Apple, it’s built to be a marketing device, and the rest of the stuff is by the by. Frankly, I was just looking at my plan yesterday, and I pay far more for data than I do for the literal ability to talk and even text. By far. This is the way the world is moving.

“What happened with Amazon was brilliant, but it scared the pants off the retail industry.”

Waddell: In the past, has the retail industry waited for technologies like mobile phones to become integrated into people’s lives, and for people to get used to the way they’re watched and tracked with them, or are they sometimes early adopters?

Turow: It’s an interesting question. The answer with online retailing is that in fits and starts, it grew up with the commercial internet, going back to the mid-’90s. In terms of physical retailing, which still makes up 90 percent of all purchases—people don’t realize that—stores have held back. At one point in time in the late ’90s, Macy’s went out of its way to say, “The Macy’s internet site is designed for people who don’t like to go into the Macy’s store.”

In the beginning, they saw this as a separate world, and they were really very nervous about it. Stores didn’t really want much to do with it. That was still true with supermarkets far after the department and chain stores got into it: Kroger’s was resisting the idea until just last year that people would buy stuff online. They saw the online environment as basically a way that people could bring coupons to the store.

But then, around 2011, stores began to get very nervous about competition with Amazon. They began to realize that they really have to begin to treat their store essentially in the same way internet sites treat their customers. What happened with Amazon was brilliant, but it scared the pants off the retail industry: What they did is they told people to go into stores, a couple weeks before Christmas, and whenever they came across something they liked, they should scan it. If they wanted to buy it, Amazon would sell it to them at the Amazon price minus 5 percent.

Amazon was stealing products from these companies, as it were, but it was also, in one fell swoop, getting a national profile of the pricing of department stores around the United States. It was unbelievable.

Target had a fit. They threw Amazon stuff, [products like Kindles], out of Target. They said, “We don’t want these pirates coming in here!” But as a consequence, they said, “Hey, we really need to begin to see the store as a place we can track our customers at least as well as we can track them online, like Amazon can track them online.”

So that’s how you begin to see this whole thing emerging. And it’s not just the stores, as I say in the book. It’s an infrastructure that gets created, because once the stores evidence interest in this, you have companies coming up to help them with ways to do it. It’s lights, and it’s sounds, and it’s a whole variety of activities, centered on the relationship between the phone, the person, and the store, as that person moves through the aisle.

Waddell: But even though the digital and physical experiences are integrating more and more, and the line blurs between them, people seem to have very different attitudes when it comes to being followed or tracked in the digital world versus the physical world. How would a company navigate that?

Turow: There are three or four terms they use here. One is relevance, another is tradeoffs, another is loyalty programs—they call them “rewards programs” when they’re consumer-facing. The whole name of the game today is to get the customer to feel comfortable about the relevance, importance, and beauty, as it were, of personalization. Relevance to them, so that they will accept tradeoffs, like giving up data and some privacy for the ability to get the kinds of things you want when you want them.

In the book, I have a real critique of this based on surveys that we’ve done. We’ve done national surveys that show what people really know about what’s going on, and it’s not nearly what people might think.

Apart from that, what I try to make clear is that a major reason that this happens, why people are accepting it both online and in the store, is obfuscation. There is an incredible amount of obfuscation going on. That is, people are led to think that things work in one way when there is a whole world of other activities tracking them, and parsing them, and categorizing them, that they have no clue about.

“It used to be said that a dollar was a dollar no matter who had it. Now, that’s not the case.”

People don’t read privacy policies. In fact, most Americans misunderstand the meaning of the phrase “privacy policy.” We did surveys in 2003, 2005, 2009, 2012, 2015 with the following question: “True or false? When a website has a privacy policy, it means the site won’t share your information with other sites without your permission.”

The answer is false—privacy policies simply mean “We’re gonna tell you what we do.” The Target privacy policy basically says, “We take everything about you, we buy everything about you if we want,” you know, that kind of stuff. The fact is that over the past 10 years or more, we have found, consistently, that way over 50 percent of Americans don’t understand the meaning of privacy policies. Between 58 and 65 percent end up saying it’s true, when it’s really false. And a large percentage say that they don’t know.

So we said to the Federal Trade Commission that if a website or a retailer’s privacy policy is not what people think it should be, then don’t let them call it a privacy policy! Get them to call it “How we use your information”! But so far, they haven’t listened.

What companies will tell you now is that the big difference between websites and what goes on in the store is that the store wants to track you, but you have to have an app on, in most cases. They would say that makes it tougher than just simply having a website, because on websites they can track you by sticking a cookie or some other tracker in and you wouldn’t even know it.

But in the store, they would say, you have to make an affirmative decision to turn on an app. Now, that app doesn’t have to be the store’s app. What’s interesting is that there are different apps that will interact with the store’s marketing dynamics that have nothing to do with the name of the store. There’s a company called InMarket which has its software in many, many different apps. So if you have, say, the Condé Nast app, it can wake up when you walk into the store and tell the store that you’re in, and what kinds of stuff to offer you, and stuff like that.

Waddell: But you have to be using that other app, right?

Turow: You have to have that other app on, yeah. But most of the apps nowadays can wake up by themselves. You don’t even necessarily have to affirmatively do it. I suspect that down the line they would like to make even more non-transparent.

What companies do, since a lot of people don’t have apps for certain stores, is that they send you a text message for a discount coupon. Then, even if you don’t have the app, you’ll put it in the phone’s wallet. The wallet, then, becomes a kind of app, and it can be set to remind you of the discount when you walk into that particular store, or even come within a certain area of that store.

The other thing about it, which I only learned while I was doing this research, is that companies have come up with a way to change the value of the coupon based upon where you are and what they perceive to be the purchase cycle. Or maybe you’ve kept it in your wallet for too long and they want you to use it so they’ll their make the value higher. They can actually change the value of the coupon while it’s still in your phone.

Waddell: You also discuss a few surveillance technologies that are on the horizon—or maybe closer: Biometrics like facial scanning, even body implants. Is there a limit to what consumers will do in return for a few coupons?

Turow: What’s fascinating is that people in the industry believe there is no limit. I’m a little bit agnostic. I’m more skeptical, for example, of the implant stuff. When I heard that [in an industry presentation], I couldn’t believe it. People were just sitting there, listening to it. And on MediaPost the other day there was another post about a talk where someone casually mentioned that people are going to have implants.

“This quantifies and extrapolates inequalities in ways that we won’t even know about.”

There is this notion that Americans will want to get the best discounts, the most personalized activities for them, and that they’ll want it at the time they want it, and that they’d even go to the length of putting stuff in their body to help them.

Waddell: That would require a whole different standard of what’s appropriate and normal than

what we can even conceive of right now.

Turow: Absolutely. But who would’ve thought that eye scans would be normal? I went to the TSA—I’d been avoiding this for many years—to get Global Entry. They do a lot of facial recognition and they do hand scans and all this stuff.

There’s a quote I have in my book from a man I interviewed 10 years ago. He said that one way to encourage biometrics is to make them feel more secure. In the era of terrorism and everything like that, it’s a little bit easier to do that. So biometrics, I have no question it’s going to be used. Whether it’ll lead to implants is a whole ’nother story.

There’s this whole subtext, by the way, which is really interesting, about the rise of millennials. There’s this notion that people between 20 and 35 years old somehow accept these sorts of intrusions more than people who are older than they. Sure, I’m willing to accept that younger adults will do things online and do crazy stuff on Facebook—more than most people. But when we ask them questions about privacy policies and what they think public policy should be, we found that there were very few differences between older adults and young adults in this arena. In the calm of an interview, they’re much more careful about this.

When we’re talking about that age, are we talking about a generational difference or a maturational difference? Maybe by the time they’re 35 or 40, they’ll have more to lose and all that, and they’ll think much more like older people. So the jury is well out on this. But people in the retail business are convinced that younger people won’t be nearly as concerned about privacy issues as older people.

Waddell: I also want to ask about consumer scoring: When you describe the way retailers rank and rate consumers based on their behavior made me think of credit scores, and how big an impact those have on people’s lives. Do you think, someday, a consumer score could be just as important?

Turow: I have no question about that. But as data is collected about people, and as people get scored, one way or another—sometimes differently by different companies—at least, people will be aware of it. It won’t be an awareness of exactly how it works, but I’ve already spoken to people who say, “Well, you know, I’m going to change my behavior in order to get more points, so that companies think better of me and I get better discounts.”

This is what we’re really talking about—we’re talking about about a major transformation of what it means to buy and sell in the public sphere. In many ways, [today’s retail strategy] has more similarities with what happened before 1840, during the peddler era. Peddlers evaluated you based on their relationship with you, they changed their prices based on what they thought you could afford, there was all this negotiation back and forth. We’re doing that in a very different way now, but it’s far different from the era of the 1850s to 1996, where you had a much more mass-oriented retailing establishment.

Waddell: So this is a form of peddling at scale? Target is essentially playing the role of millions of individualized, personalized peddlers?

Turow: Exactly. And the scoring is related to that, because that’s what peddlers did. They kept notebooks about people, they knew how to charge one person versus another, they understood relationships. All these sorts of things are reemerging in this personalization world that we’re moving toward.

Waddell: What are some ways this might turn sour? You write about how this kind of discrimination is inherent to retail strategies. How might it compound existing inequalities?

Turow: Well, for one thing, the most obvious way is that people that are

considered less valuable to retailers either get no prices—they don’t get shown certain goods—or they get charged more for certain things. Maybe the retailer is worried about them bringing them back too often.

I found in my research that sometimes companies will give loyal members of their stores higher prices than others who are disloyal, because they want to keep those other people—and they feel that people who are loyal are going to stay, anyway. So you never know what prices you’ll get, and you’ll never know what status you have.

One of my arguments is that this is going to create a zone of uncertainty and insecurity in the public sphere. People will not know where they stand, they’ll worry about what their reputation is. They may change their habits because of that.

It also changes the whole idea of what a person’s money is worth. It used to be said that a dollar was a dollar no matter who had it. Now, that’s not the case. Your dollar’s different from mine. You might be getting different commercials on television based on what they think of you. You might even be getting encouragements—Let’s say some retailer gives you two months free of HBO because they want to ingratiate themselves with you. You get Kay Jeweler ads, I get Tiffany.

The cost of shopping—the psychic cost and the social cost—gets higher and higher. It may affect the kinds of things that companies share, that you don’t even want them to share: Ideas they come up with about you based upon your over-the-counter drug activity, or the foods that you eat, that may affect the way that companies reach out to you or don’t.

Waddell: This seems like the sort of thing that could take a family that’s disadvantaged because of their race or income or where they live and and make it even harder to escape the inequalities they’re already subject to.

Turow: Exactly. What this does is it quantifies and extrapolates the inequalities in ways that we won’t even know about, because it’ll be done by formulas.

Waddell: Is it legal for an advertiser or a retailer to decide, based on someone’s profile, like their race, that they’re higher risk and perhaps not show them certain goods?

Turow: Sure! Of course. They’ll never say that it’s because of race—and they wouldn't do it just because of race. They’d do it because of, say, income. If you have the money, it doesn’t matter what race you are, from their standpoint—but race gets built in by virtue of where people live, their income brackets, and other things that are much less obvious.

I think age is going to be a major factor. It already is, among retailers. Income is going to be a big factor. And things that we don’t even think about, various concatenations of lifestyles that lead to certain predictions about what you will or will not read, or when you will or will not take a vacation, or if you will or will not have certain frequent-flier miles.

The ability to run through thousands of datapoints about you and compare them with thousands of datapoints about people you don’t even know, and then come up with a sense of what you will buy or not buy at what price: That’s the goal. The goal is to come up with a price for you that you accept based on the product they think you would want.

Waddell: So, once upon a time, the equation was pretty simple: You stay loyal to a brand, and you’re probably rewarded. Now, it’s so complex. They have more information than ever before. Is there a way anymore for the consumer to win? Or does the house always win at this point?

Turow: No, some people win, because they’re very well off and because they decide to stay with a company. The closest I think we have right now to this obscure world is the airline-miles baloney game. The way the airlines play with people’s lives in terms of frequent-flier miles and all.

People who run stores have told me they could never do it as bluntly or as meanly as the airlines do. If you don’t have a good number of miles on an airline, you get treated like the back of the bus. You’re not going to get the best seats, you’re going to be in Zone 4, you may have to give up your bags. That’s mean! But it works.

“On a day-to-day basis, people are learning to give up this data as a logical, natural part of life.”

But have you ever seen anybody revolt? I’ve never sat at a gate where some guy says, “Hey, I just paid 700 dollars for this damn flight! I can’t help it if I don’t have a frequent flier plan! Why am I in Zone 4?”

People tell me stores can’t go that far in many cases because people have more choices than they have with airlines. But there is this sense that if they cultivate you in a certain way and you prove a certain kind of loyalty—if you don’t buy just the bargain goods, for example; if you buy the expensive stuff that’s not on sale; if you show that you’re a person that’s in good standing—you’ll be treated better than if you just walked in. “Better,” in quotes.

If a person is only looking for sales and they go back and forth to different stores, and the store has no profile on them, they may not be treated very well at all and they may not get the best prices and they may not even get the kinds of products pitched at them that other people would want.

But, as I say, the larger issue is social. What does it mean that people are walking through a society, wondering how they’re scored, and what do people think of them? The fact that I know you—is that affecting the prices I’m getting?

Waddell: The frequent flier example made me think: There’s two ways to win at that game. Either you’re just very wealthy and fly all the time, or you can become part of this small group of people who try to game the system and spend a lot of time and energy doing strange things like buying round-trip flights without actually getting off, in order to improve their status as much as possible. Are we going to be doing this for grocery-store points someday?

Turow: Yes! I think so.

Some grocery could say, “Based on your mood, we will give you the best products to make you feel well that day.” There’s a whole blending of issues—we’re so stuck sometimes looking at demographic characteristics that we don’t realize today that’s the tip of the iceberg. Companies are looking at lifestyle, they’re looking at habits, they’re looking at who your friends are, they're looking at what you say about them online, and sometimes what you say about other things

They’re interested in your hobbies, and what that says about you and the kinds of things you and your family might get.

And the larger theme is not just that it’ll affect what you buy. My overarching argument is that it is training people to accept this kind of attitude in every aspect of our lives, for every kind of institution. Once we get used to the idea of doing this in the store, we’ll get used to the idea of doing it everywhere. It is a training ground. It is what I call the “hidden curriculum.” That’s the hidden curriculum of the retail business: to get people used to the idea of giving up their data for the purposes of relevance and tradeoffs and all that.

At the same time, I argue, while all these fights are going on in Washington about marketing and the NSA and advertising, on a day-to-day basis, people are learning to give up this data as a logical, natural part of life, in their everyday shopping.

So if it happens that I go into the Global Entry office and they say, “How about this?” I say, “Well, yeah, I’ve done that before!” I get used to the idea, and it becomes second nature to think about giving up data.