Privacy for Sale

Social media have created a raft of opportunities for 
local businesses to learn more about what consumers want and to tailor products and services to their needs. 
But the free flow of information comes at a cost.

In the days leading up to the Winter Games, analysts at Fjord West, the Vancouver-based digital interactive arm of global marketing firm Cossette, sat down at their computers and began eavesdropping on the private and not-so-private conversations of tens of thousands of people around the world. Among the 140-character tweets and the updates on thousands of Facebook walls, Fjord retrieved valuable information for its client, Tourism BC.


While others lined up during the Olympics for the hockey house or the mint pavilion, Fjord was hunting and gathering information for a project it referred to as the Listening Pavilion. Half a dozen Fjord staffers began tracking when specific words were mentioned – whether on Twitter, Facebook or personal blogs – and analyzed tens of thousands of posts to figure out what people were saying about B.C. and Vancouver. The Games provided Tourism BC a window through which to monitor what the world of social media was saying about Vancouver, and so, during the month of February, every mention of certain key words associated with Olympics and B.C. was zeroed in on and dissected. 


“After decades without much in the way of innovation, there’s a whole lot of new tools and technology to allow us to market in completely different ways,” says Sandy Fleischer, the 40-year-old vice-president and GM of Fjord West, as he reviews pages of raw data and pie charts in his Yaletown office with Angèle Beausoleil, Fjord’s vice-president of strategy and client services. “Now we’re drinking from the fire hose to stay on top of things.”


That fire hose is spewing out data, personal information, current status and present location of social-media users who post, tweet and reveal all through Facebook, Twitter and Foursquare. Snippets of your opinion – your likes or dislikes at a precise moment, in an exact location – are increasingly being picked up by companies, advertisers and marketers.


That visceral, immediate response to a product or an offer, and the urge to post about it to your friends, is invaluable to companies, and it’s all available to anyone, according to Beausoleil. But few people bother to read the privacy policies on Facebook, Twitter and even their personal blog pages, she adds, looking over Fleischer’s shoulder at his computer screen. 


“You do sign off on it. As soon as you publicly comment, the contract is that it’s for public consumption. All of a sudden, our public is virtual. This is listening that brands and companies can leverage and begin the conversation. Depending on how it goes, it may be perceived as eavesdropping.”


[pagebreak] INTERNET USERS NOW SPEND NEARLY a quarter of their online time on social networks or blogs, according to a 2010 Nielsen survey. And that usage is growing rapidly: in 2007, according to the survey, users spent about two hours a month on social networks; now they spend about six. While the Internet has always been about connecting, social networking, by its very nature, puts it all out there. Hate something? Tweet about it. Like it? There’s a button for that on Facebook. With social media, it’s easier than ever to post details of your life – and savvy businesses are figuring out how to use this public forum to extract information on potential customers, reward their fans or mute their critics. 


Facebook, with nearly 500 million users, didn’t change the perception of privacy, of course, but it did create what has become the most popular platform for openness and sharing. After it launched in 2004, more than a million users worldwide signed up before the end of the year. Today 16 million Canadians, including 2.2 million in B.C., are on Facebook – double the number from just four years ago – sharing everything from their birth date to city of residence to relationship status to cellphone number, wittingly or not. 


That free flow of information has made Facebook valuable, and has given its more than one million developers and entrepreneurs from 180 countries access to the social network’s customer base. Some of those companies, such as Zynga Game Network Inc., the privately held San Francisco-based games developer that created FarmVille and Mafia Wars, attract tens of millions of users through Facebook every month. Users play for free but spend real money on virtual goods.


“Ask yourself why Facebook is worth a billion dollars,” says Michael Fergusson, the 40-year-old CEO of Gastown-based Ayogo Games Inc., which develops games for the Facebook platform. “They have access to information about people. That’s entirely what makes them valuable and why they have the kind of investors they do.” 


Fergusson, who describes himself as a business poet, began his career as a web developer before branching out a few years ago into creating social-network games for Facebook. Some of the games Ayogo creates are free, but hard-core users can pay for perks. Using information provided by the users themselves when they sign up to play, Ayogo has access to tidbits of data – such as which user is likely to buy $20 upgrades and who plays only the free games – that is invaluable to the developer.


Whether by upgrading games or signing up for coupons, consumers give companies insights into who to target and when. Fergusson says the data he receives from Facebook is so detailed in some cases that he knows when a game user is most likely to make a purchase. But he says he’s conflicted about this increasing reliance on social networks for customer information and is aware that privacy policies can change at any time. Facebook currently has a rule that developers must discard information about users who sign up for its applications if they decide to uninstall the program. But few users remember to uninstall applications – they just forget about them, Fergusson says – and few follow-ups are conducted by Facebook to ensure developers are really trashing the information they obtain.


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ANOTHER GROWING CONCERN IS WITH what exactly is done with that information. Mother of a Deal, a coupons website that posts deals from companies such as Starbucks, Old Navy and General Mills, is run out of the New Westminster home of founder Danielle Connelly, who started the site in 2008 after her first child was born. The company now has about 1,900 bargain hunters following it on Twitter and Facebook, but Connelly says she didn’t realize how valuable her distribution list was until she began getting offers from other businesses wanting access to her network. 


“People who advertise on our site want to know how many friends we have on Facebook, how many followers we have,” says Connelly over coffee with business partner Heather McGrath at their regular meeting spot, the Waves Coffee House on Columbia Street. “Twitter accounts have value. Facebook friends have value.”


With a following of mostly bargain-hunting moms, the 38-year-old Connelly says she’s had to take extra precautions in safeguarding their privacy. She recently declined to post a coupon offering a free box of cereal because users would have had to download an app from Facebook to get it.


“Our priority has to be protecting the privacy of the people who come to us because we want them to trust us – and sometimes people are willing to do things they wouldn’t think about otherwise,” says McGrath, 35, who became a partner in April. “People would do anything to get a free chocolate bar. Like give out their credit card numbers.”


You would think that, with all the stories of privacy breaches and identity thefts, there are more reasons than ever to fret about personal information online. But according to a new study from the Pew Research Center for the People & the Press and the Pew Internet & American Life Project, Internet users are, in fact, growing less concerned: in 2006 four in 10 Internet users claimed to be worried about the information about them online; four years later, only 33 per cent have that same worry. 


Both Mother of a Deal’s Connelly and Ayogo’s Fergusson say that, despite their own concerns about privacy, social networks have become an integral part of their business. Neither of them would even consider leaving Facebook or not using Twitter to reach customers. They’re not alone. In perhaps the most telling sign of people’s diminishing concern – or alternatively, their unbreakable reliance on social media – a much-publicized 
campaign to get users to quit Facebook this spring quickly fizzled. Torontonians Matthew Milan and Joseph Dee set up Quit­FacebookDay on May 31 to encourage people to permanently log out of the site to voice their concerns about the company’s management of personal information. Fewer than 30,000 ultimately signed up for QuitFacebookDay, with an undetermined fraction of that actually logging off for good; meanwhile, during the month of May more than 900,000 new users in Canada were added to Facebook’s ranks.


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LONG BEFORE FACEBOOK, PEOPLE USED to ask their neighbour where they got their hair cut or their shoes repaired; they clipped coupons out of newspapers, and the recommendations companies valued most were word of mouth. Today there’s Yelp, fan pages, Epinions and Twitter. In some respects it’s back to the future, with big-budget, mass-market efforts giving way to more one-on-one interactions. Even Facebook is going more local. If you like Starbucks Frappuccinos, you’re one of more than two million fans – but join Starbucks in Yaletown and you’re one of a few dozen. 


The few are more valuable than the many in the world of social media. Tourism BC, which hired Fjord West to analyze its social-media traffic during the Games, came out with its big flashy TV campaign at the beginning of 2010 with Kim Cattrall and Steve Nash beckoning visitors to the province. And majestic mountains, night scenes of Vancouver and roaring oceans do increase tourism, says William Bakker, e-business director for Tourism BC, who stickhandled the social-media program (he also tweets as Wilhelmus and has more than 1,600 followers). But what had people most excited about Vancouver, in repeated tweets and posts on social networks, was something much smaller.


“Everyone was talking about Japa Dog, blogging about it, taking pictures and posting on Flickr, and any time Japa Dog came up on a tweet, it became insane,” says Bakker, referring to the street food phenomenon that started with a cart in front of the Sutton Place Hotel with little fanfare in 2009 and now includes, post-Olympics, its first store location on Robson Street and two other street carts downtown. “If you do something a little more niche, it appeals wildly to a particular group and they become fans – your advocates and your followers – and every time they engage with you, they have on average their 130 Facebook friends who are also following along.”


For an organization such as Tourism BC, success is easily tracked. If more tourists land in B.C. or Vancouver, the marketing tactics worked. What is harder to trace, Bakker admits, is the long-lasting impact of connections made through social networks. One Tourism BC employee’s job during the Games was to respond individually to tweets and posts made about the province and city during the Games. But Tourism BC analyzed 54,000 tweets mentioning Vancouver during the Olympics, Bakker says, so it all came down to instinct about whether someone’s exclamation of the city’s attraction was a real expression of a desire to visit. Any one-on-one interaction initiated by Tourism BC was done after getting a sense the poster was interested in learning more and did not continue if there was no response back. 


The increasing use of smart phones has made it even easier to tweet, update your Facebook wall and shoot videos to post right away on YouTube – and for companies and organizations to exploit this information. The next step in that evolution takes it even further: geo-locator mobile applications that allow users to let anyone in their network, and anyone peeking in or eavesdropping, know where they are at that exact moment. 


Currently, these apps – the most popular ones being Foursquare and Gowalla – are treated as games by consumers, but Chris Breikss, co-founder of Vancouver’s 6S Marketing Inc., says he immediately recognized their business value. Companies already want to reach consumers in their vicinity, he observes, and consumers who voluntarily check in when they’re inside your establishment are especially valued.


[pagebreak] FOURSQUARE, THE LEADING APP IN the geo-locator realm, came out in 2009 and now has about 2.5 million users worldwide, with an estimated 20,000 Vancouverites having Foursquare on their phones or mobile devices. Users sign up to obtain badges that can give them coupons or freebies; enough visits to a particular spot and you’re crowned “the mayor.” Forget Gregor Robertson being the mayor of Vancouver; in the world of Foursquare, the mayor at city hall is 26-year-old Calgary native Matt Kyska, a web specialist who’s checked in more times than anyone else. Kyska has received no benefits from being the mayor at city hall but regularly scores free drinks at one of the Starbucks on Pender Street, where he’s also served time as mayor. 


Breikss – a restless 34-year-old so keen on social media he racked up a $6,000 phone bill after tweeting non-stop while on vacation recently in Australia – makes money for his company by signing businesses such as Earls Restaurants Ltd. onto social-media networks, allowing them direct access to their consumers. What businesses get are loyal customers; what consumers get are discounts or free stuff. Helping local businesses, specifically around Yaletown, use social media to reach customers has gone from zero per cent of 6S’s business two years ago to making up one-third of its $2.5-million annual revenues, according to Breikss.


While Foursquare is emerging as the leader in geo-locator apps, that hasn’t stopped local developers from trying to cash in on this newest form of social networking. 


Adarsh Pallian is the 28-year-old founder of Yaletown’s Pallian Creative, which created JustBought.it, an app where users can tell their network about their purchases. Pallian says the potential for networking in real time is exactly what companies have been waiting for in the evolution of social media. “Everyone can see the monetization now when you have people in a bricks-and-mortar store and using social media to connect with the store and their own personal network,” says Pallian, whose app has about 5,000 users. “This is the next generation of loyalty cards.” 


Faster networks and smart phones have made it possible for consumers to give immediate reaction to products and services. That type of feedback didn’t exist three years ago, and it has created what Fleischer of Fjord West calls a “megaphone” for customers to tell business what they think, as well as an opportunity for them to reveal more to get more in return. 


“People have a stage now, a platform they didn’t have before,” says Fleischer. “Technology hasn’t made our lives easier; it’s made more work for us and our clients, and that’s a permanent change. In a few years from now, Twitter may not be around and Facebook may be gone, but social media is here to stay.”