Management Professor Sandra Matz understands why people are skeptical about data collection.
One needs to look no further than the 2018 scandal involving Cambridge Analytica, the British consulting firm that collected information from millions of Facebook profiles without the users’ consent. The incident was characterized in the media as an unconscionable breach of privacy, and it was, for many social media users, an education in the ethics of data accumulation.
“There was a lot of negativity about data and Cambridge Analytica,” Matz says. “Given what they did, that criticism is certainly justified and important.”
But Matz’s research in recent years has also demonstrated the benefits of personalized marketing.
In the wake of the scandal, Matz believes it is essential for academics, industry leaders, and politicians to have a balanced, nuanced, and research-based conversation about data.
In a 2017 review paper titled “Using Big Data as a Window into Consumers’ Psychology,” Matz, along with her co-author, marketing professor Oded Netzer, discusses research that explains how data doesn’t just benefit businesses; it can also help consumers with access to healthcare and help people better engage with politics.
“If we can understand what motivates people, what drives them, yes, it does open the door for manipulation,” she says. “But on the flip side we should not forget there is an enormous potential in understanding what really drives and motivates people.”
Matz says that much of the early research on data and consumer behavior focused mainly on a consumer’s psychological traits. She offers the example of obtaining information from a Facebook account, then determining that a user is an extrovert, which serves as a building block for a research model.
But the outward expression of extroverted behavior is not the same in every situation, and a more contemporary use of the same data not only takes into consideration a consumer’s traits, but also looks at how they can change over time. This more comprehensive view creates the potential for hyper-specific marketing of products and ideas that are tailored to who you are and the context you are in.
“If you’re at home you’re probably less extroverted than when you are hanging out with friends at a party,” Matz says. “The same holds true for mood; some people are generally in a better mood, but that can fluctuate.” Matz points out that knowing whether you currently feel extroverted or whether you’re currently in a good mood can offer insights about your susceptibility to particular messages and recommendations.”
“It’s about sending the right message to the right person at the right time,” Matz says. “Assuming I consider myself an extrovert, for example, and I’m in an extroverted situation, that might be the best time to approach me.”
In the coming years, according to Matz, new forms of data collection, such as wearable devices or smart contact lenses, will make it easier to track people in real time and contextualize them. This ability to hyper-target individuals could help streamline purchase options for those who, for instance, encounter “choice overload” in online stores. Marketing and product recommendations are just one of many contexts in which psychological targeting could be implemented. Hyper-targeting could also be used to detect early signs of depression and send personalized support to people in need. There is also the possibility to design personalized bank accounts for people who struggle with saving money.
While these advances benefit individuals by helping them make better decisions and follow through with their intentions, Matz highlights the need to carefully consider the ethics of psychologically personalized marketing. Used in the wrong hands and for the wrong purposes, psychological targeting can quickly turn into a tool that exploits vulnerabilities in somebody’s character. For instance, an impulsive person with an addictive personality could receive advertising for an online casino.
Technologies such as psychological targeting offer amazing opportunities but, as Matz points out, also pose considerable challenges. Matz says there is almost zero transparency about how companies collect and use data. There is a big gap between the powerful few that accumulate data, and the vast majority of people who are affected by their application.
“It’s important that we get the ethics right and in most cases, we are not doing this at the moment.” Matz says. “Most predictive technology is being deployed behind people’s backs. The first thing we need to do is ramp up education on this issue. People need to better understand what is happening. This is the only way to get them mobilized and stand up against the tech monopolies.”
Academics can play a crucial role in helping people understand the challenges and opportunities that data presents to the world of consumer psychology.
“We have to talk about it,” Matz says. “We can’t just publish our papers and that's it. What is needed is a public discussion around how to use them in a way that protects citizens and maximizes their benefits.”
For more on Matz's research on personalized marketing watch this video.
READ THE RESEARCH
Sandra Matz, Oded Netzer. "Using Big Data as a Window into Consumers' Psychology."