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Preference profilers: 'We know what you bought last summer'

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Earlier this month, Fame displayed a variety of soaps with unusual ingredients. It found that while eggplant soap might attract the curious, shoppers generally gravitated to more familiar scents. The cameras also collect other clues.

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"We can test a customer's interest in a product by how often they pick it up, how they look at it," says Jeri Quest, Fame's executive vice president of strategic development.

Often, a Fame researcher will approach a customer to ask for additional information. So far, the combination of overt and covert research has elicited no complaints.

"Customers understand what's happening, and they have a choice" to shop or not shop at the store, Ms. Quest says. Just outside the store, a blinking sign alerts would-be shoppers when a test is under way.

Of course, observational researchers also tape customers without their knowledge – a practice researchers defend as long as customers remain anonymous.

"They're not interested in prying into the lives and burrowing into people as personalities," says Bill Abrams, president and founder of Housecalls Inc., a New York market-research firm. "They just want to know how consumers in general approach the shelves and select the product."

As for identifying individuals and their habits without their knowledge: "That's a little bit invasive," he says. "When it gets beyond a certain point, yes, a line needs to be drawn."

With little steps, technology is already moving in that direction. Brickstream Corp., a software firm in Arlington, Va., has developed software that tracks people as they move around the store.

When in-store cameras pick up a person, the software tags her as, say, "short lady in red," then notes where she goes and how long she stays at each location. Hundreds, even thousands, of people can be tracked at one time, offering retailers valuable insights, such as how much time someone spends in a customer-service line.

The firm also addresses privacy concerns by keeping only aggregate data, not the actual video of individuals. "Our technology ... has no knowledge of who the people are that are tracked," says Amir Hudda, Brickstream's chief.

Next: Face recognition?

But it's not hard to imagine how marketers might tie tracking software to credit-card purchases and face-recognition software. Suddenly, the short lady in red becomes the female executive from a posh suburb who blew $50 on lip gloss last month.

"I think it eventually will come," says Warren French, a marketing and business-ethics professor at the University of Georgia in Athens, Ga. But "it's going to take tremendous algorithms to make sense of that."

At the moment, marketers are already drowning in the data they have, he adds.

An easy venue to watch you shop: the Internet

For marketers, the Internet represents the biggest opportunity to profile individual shoppers. For consumers, it's the biggest threat to privacy. Web browsers reveal what software and hardware you use, details of the link you clicked on, even possibly your e-mail address.

Using "cookies," a type of electronic serial number, e-tailers can track where you go on their website and, if you register, who you are.

Such technology offers merchandisers the hope that one day they'll be able to market one to one. Many e-tailers are already working on permission-based marketing, which gives consumers a choice to opt out of offers.

Last month, the World Wide Web Consortium – an international industry group – released a new privacy standard for websites that makes it easier for customers to control their data and understand how it might be used.

Yet a raft of Internet businesses are using technology to amass a rising tide of information about consumers – without their permission or even their knowledge.

Public pressure has forced some high-profile sites to curb some practices. In 1999, a public brouhaha convinced Internet music software company RealNetworks to disable software that matched a user's identity with the music they downloaded.

Earlier this year, DoubleClick, the largest Internet advertising firm, agreed to pay $1.8 million to settle suits connected with its sale of consumer information. The company has promised not to link information about people's Web-surfing habits with information that identifies who they are.

Privacy advocates say such moves have yet to curtail customer profiling online. And the combination of Internet and surveillance technologies worries some experts.

"There's a lot of these devices that are created for one thing," says William Staples, a sociology professor at the University of Kansas. But "once this technology becomes available and is used in one place, what's to prevent it from being used someplace else?"

So far, no one has a good answer.