1

Memo

To: VP of Sales

From: Marisa Weiner

Date: October 15, 2014

Re: The Implications of Implementing Digital Marketing and Data Brokering

Recommendation: Integrate Data Brokering into our business model, while still remaining transparent.

Our team has concluded that the best course of action for Midwestern Retail Inc. is to engage in both

digital marketing through the use of mobile applications as well as data brokering. Although these

practices often provoke controversy, they nonetheless help businesses generate higher revenue.

Moreover, because our competitors engage in these practices, our revenues would lag in the market if we

did not initiate such a program. It is critical to note that the practice of data brokering is currently legal,

although often scrutinized by the government, media and consumers. Our chief concern is that customers

may feel uncomfortable with any lack of transparency. We will thus ensure that our consumers feel as

comfortable as practicable, by striving to integrate a level of transparency into this new digital business

model.

How Mobile Apps are used to Collect Customer Data: Transmission of Data to Third Party Marketers

Digital Marketing refers to the promotion of goods and services through the use of electronic platforms,

thus allowing organizations to track the demand of their products, as well as general consumer behaviors.1

Over the past year, 77% of digital media and marketing professionals have increased their digital

marketing through the use of mobile applications for data collection.2 These applications collect consumer

information such as sex, age, gender and location. The information is thereafter sent to third party

marketing corporations, who compile data about consumers. The following is a list of popular mobile

applications, and the types of information being transmitted to third party marketers:

Angry Birds: transmits username, password, contacts, location and phone ID

Grindr: transmits age, gender, location and phone ID

Pandora: transmits age, gender, location and phone ID3

When asked to explain the increasing trend of data collection through mobile applications, 57% of

marketers cited a need to better understand consumers.4 It is important to note, however, that nearly 68%

of Wall Street Journal readers surveyed felt that these mobile applications should inform users when they

collect and send customer information.5

Data Brokering:

1 “Digital Marketing: What it is and Why it Matters,” http://www.sas.com/en_us/insights/marketing/digital-

marketing.html 2 “Marketers Scramble to Unscramble Customer Data: Data collection up in an effort to create individual customer

profiles,” http://www.emarketer.com/Article/Marketers-Scramble-Unscramble-Customer-

Data/1011003/1#sthash.nqRB2ZgC.dpuf. 3 “What They Know- Mobile,” From the Wall Street Journal, http://blogs.wsj.com/wtk-mobile/

4 Ibid. 5 “What They Know- Mobile,” From the Wall Street Journal, http://blogs.wsj.com/wtk-mobile/

2

A data broker is a third party entity that that “collects personal information on consumers and then sells

that information to other organizations.”6 This practice is based on the commoditization of personal

information, and devised in order to help companies target their specific market. Modern-day marketing

organizations utilize practices such as digital marketing to track personal information such as age, race

and occupation, as well as whether the consumer is pregnant or divorced, rich or poor, or even whether a

consumer is trying to lose weight.7

Companies Involved: Acxiom

There are numerous companies whose principal mission is to broker consumer information. One of the

more well-known companies, Acxiom, has approximately 8,000 clients, including our potential

competitor, Macy’s. According to a profile in the New York Times, Acxiom has information on nearly

500 million people worldwide.8

In an interview with Adweek.com, Acxiom CEO Scott Howe discussed the ethical implications of the

data brokering business, stating, “The bad apples can really ruin an industry’s reputation... If your

objective as a company has been to be secretive and hide behind a curtain, you’re going to lose. There

may need to be guardrails around collection, analysis and use of data. It should be about transparency and

choice.”9

The Legal and Ethical Implications of Data Brokering: A Need for Transparency

Currently, there are no laws in place to regulate the selling of consumer information to third parties,

“unless [brokers] use that data for credit, employment, insurance, housing, or other similar purposes."10

However, President Obama has expressed a need to update United States laws so as to protect consumer

information from becoming commoditized and sold for profit.11

Although legal, the practice of buying and selling consumer information is under increasing scrutiny by

both consumers and the media due to the lack of transparency. Many high profile news casters, including

those on CNN and CBS, have already provided in depth coverage on data brokering, and shined a

negative light onto those who practice it. According to a 60 Minute interview with Federal Trade

Commissioner, Julie Brill, one of the biggest ethical dilemmas involved in data brokering is not

necessarily what or how much information is being bought and sold, it is that, “we don’t know what is

being collected and sold about us.”12

It seems much of the public is less preoccupied with what or how

much data is being sold, and more focused on the fact that there is little to no transparency in the data

brokering industry. A survey conducted by TrustedID highlighted how little that consumers know about

Data Brokers, finding that 80% of participants did not have a “good understanding of what a data broker

[was]” and only 16% had a “significant” understanding of what data brokers collect.13

6 “Data Broker (and Information Broker).” 7 Louis Beckett, “Everything We Know About What Data Brokers Know About You,” ProPublica: Journalism in Public

Interest. 8 Natasha Singer, “Mapping, and Sharing, the Customer Genome,”

http://www.nytimes.com/2012/06/17/technology/acxiom-the-quiet-giant-of-consumer-database-

marketing.html?pagewanted=all&_r=0. 9 Ibid. 10 Lois Becket, “Everything We Know About What Data Brokers Know About You,” from the Huffington Post. 11 Jason Morris and Ed Lavandera, “Why Big Companies Buy, Sell Your Data,” From CNN,

http://www.cnn.com/2012/08/23/tech/web/big-data-acxiom/ 12 Steve Kroft, “The Data Brokers: Selling Your Personal Information,” 60 Minutes, March 9, 2014. 13

Kashmir Hill, “The Obama and Romney Campaigns Know if You’ve Visited Porn Sites. Why ‘Do Not Track

Matters,” from Forbes http://www.forbes.com/sites/kashmirhill/2012/10/16/the-obama-and-romney-campaigns-know-if-youve-

visited-porn-sites-why-do-not-track-matters/.

3

Bibliography

Bachman, Kathy. “Confessions of a Data Broker: Acxiom's CEO Scott Howe Explains How Self-

Regulation Can Work.” Adweek, March 25. 2014.

http://www.adweek.com/news/technology/confessions-data-broker-156437.

Becket, Lois. “Everything We Know About What Data Brokers Know About You.” ProPublica, June 13,

2014. http://www.propublica.org/article/everything-we-know-about-what-data-brokers-know-about-you.

Hill, Kashmir. “The Obama and Romney Campaigns Know If You’ve Visited Porn Sits: Why ‘Do Not

Track’ Matters.” Forbes, October 16, 2012. http://www.forbes.com/sites/kashmirhill/2012/10/16/the-

obama-and-romney-campaigns-know-if-youve-visited-porn-sites-why-do-not-track-matters/.

Kroft, Steve. “The Data Brokers: Selling Your Personal Information.” CBSNews, March 9, 2014.

http://www.cbsnews.com/news/the-data-brokers-selling-your-personal-information/.

“Marketers Scramble to Unscramble Customer Data: Data collection up in an effort to create individual

customer profiles.” eMarketer, July 16, 2014. http://www.emarketer.com/Article/Marketers-Scramble-

Unscramble-Customer-Data/1011003/1#sthash.nqRB2ZgC.dpuf

Morris, Jason and Ed Lavandera. “Why Big Companies Buy, Sell Your Data.” CNN, August 23, 2012.

http://www.cnn.com/2012/08/23/tech/web/big-data-acxiom/.

SAS. “Digital Marketing: What it is and Why it Matters.” Accessed October 13, 2014

http://www.sas.com/en_us/insights/marketing/digital-marketing.html.

Singer, Natasha. “Mapping, and Sharing, the Customer Genome.” The New York Times, June 16, 2012.

http://www.nytimes.com/2012/06/17/technology/acxiom-the-quiet-giant-of-consumer-database-

marketing.html?pagewanted=all&_r=0.

WhatIs.com. “Data Broker (Information Broker).” Accessed October 13, 2014.

http://whatis.techtarget.com/definition/data-broker-information-broker.

“What They Know- Mobile.” Wall Street Journal. Accessed October 13, 2014. http://blogs.wsj.com/wtk-

mobile/.