Consumer data: This time it's personal

Consumer data
Consumer data

Two services that enable consumers to profit from their personal data are shaking up the direct marketing sector. David Murphy reports.

The trade in personal data, be it names, addresses, postcodes or email addresses, has grown by stealth. The direct marketing industry has mushroomed over the past 30 years, partly thanks to sales of data and a general ignorance among consumers about the value and, indeed, ownership of their personal contact details.

From the moment people realised that such data was indeed theirs, and that companies did not have a divine right to use it, the direct marketing landscape became a lot tougher for businesses. The rise of opt-out services such as the Mailing Preference Service (MPS) and the Telephone Preference Service (TPS) have gradually and systematically reduced the number of consumers in the prospecting pool for companies engaged in direct marketing.

Despite this, the industry rolls on, and while direct mail volumes have fallen as brands shift activity online, there is a still a huge market in the sale of personal data by players such as Experian, Acxiom, CallCredit and Equifax.

Now, however, a former key figure in what some saw as the aggressive mailing of consumers by financial-services companies, ex-Capital One marketing director Justin Basini, is shaking things up with the launch of a service, Allow, that enables consumers to profit from the release of their personal data to companies.

When consumers sign up to Allow with their name, address and email address, the details are validated and, as a first - and most controversial - step, removed from the big-four data providers' databases. 'We do this to show people that their data is valuable, and to create some scarcity around that asset,' explains Basini. 'We can then increase the value of that asset, and create liquidity in the market.'

Buying intention

For people to make money from their data, they set a buying intention, and agree for this to be released, either to specific brands only, or generally. Allow then asks the consumer a series of questions to qualify the intention. The data is then sold on to brands, with the consumer receiving 70% of the money, and Allow 30%.

Basini refuses to name any clients, but cites the example of a consumer who sets a buying intention of purchasing a mobile phone. In response to the questions, the consumer declares that he wants a smartphone on a contract and will spend up to £50 a month on the tariff. The consumer will earn a few pounds for providing the data. If he subsequently takes out a two-year contract for a smartphone on a £50 tariff, he could earn a one-off payment, of about £60, for the data supplied.

The obvious apparent flaw in this sort of circumstance is that of the self-selecting sample: namely, that the sort of people who sign up for such a service are not the sort of highor even moderate-wealth individuals who many brands are interested in. Basini concedes this could be the case, but says the signs so far are that it is not.

'These things will be proven out,' he says. 'But I can tell you that the 10,000 people currently on the system are representative of the UK population; the only difference is that the skew is slightly younger.'

Control over cash

Basini argues that the point of Allow is more about control than cash. 'We are not really a (cashback and voucher site) Quidco; it is all about targeted offers around your intentions. Initially, you will get cash, but we see this evolving into bespoke packages, products designed for you.'

He adds that, far from being responsible for the blanket mailing at Capital One, he halted it. 'When I joined, it was a top-three mailer and top 50 digital marketer in the UK. By the time I left, it was a top-50 mailer, and top-three digital,' says Basini. 'What I saw at Capital One was the start of this mega-trend toward empowering people with knowledge.'

Perhaps not surprisingly, there are mixed reactions to Basini's plans. Just over 10% of consumers surveyed by Marketing and OnePoll said they would contemplate selling their data to brands (see ConsumerWatch box, above). Penny Hutton, strategy and planning director at Eclipse Marketing, has gone on record as saying that she is 'unconvinced as to (Allow's) motivations - is it really championing the consumer? Or a way to make a fast buck?'

Marketing understands that Acxiom has changed its procedures since Allow started opting people out of its database, now requiring consumers to confirm the opt-out. In addition, Charles Ping, client director, data intelligence at Communisis, which counts British Gas among its clients, describes Allow as 'a solution looking for a problem that doesn't exist in the way the solution thinks it does'.

Ping says that if ever there were a need for a service such as Allow, it would have been in the days when 'every credit card company in the world was indiscriminately targeting to fill people's doormats'.

He also questions the assumption that people know what they want, and are not open to proposals for things they didn't know they wanted. 'It goes back to what Henry Ford said: "If I'd have asked my customers what they wanted, they would have told me, a faster horse",' says Ping.

Less reliable

Lisa Chittenden is director of data strategy at Transactis, a channel management company, which has a core database featuring transactional data from more than 200 retail brands. She concedes that she does see a case for services such as Allow, but argues that even if they are being paid to share their buying intentions, this is less reliable as a guide to what they might buy than an analysis of what they have previously bought.

'Transactional behaviour is the reality of what you do and how you spend your money, as opposed to saying how you want to spend it,' Chittenden says. 'We use this data predictively, to say that if a person spends several hundred pounds a year on garden furniture, and has done so every year for the past five years, this is a good guide to what they might do in the future.'

There has been some support for Allow, however, from an unexpected source - Experian, one of the biggest traditional data suppliers. 'The world today is more knowledgeable, and consumers are more aware of their value as part of a marketing audience,' says Nigel Wilson, managing director of Experian Marketing Information Services, UK & Ireland.

Moreover, while Wilson argues that this does not necessarily mean that they will want to be paid to receive messages, he has more to add. 'The Allow model is innovative and creates interesting and positive debate in the industry,' he says. 'Anything that also creates an understanding about the value and worth of data is a good thing, and we welcome it.'

Experian has also given its support to another scheme, Mydex, which tries to put consumers in control of their personal data. Co-founder and chief information officer Iain Henderson describes the organisation as a social enterprise that helps individuals manage their data more effectively and realise the value of it.

Community prototype

Mydex is currently running a 'community prototype', involving about 500 people and a number of mainly public-sector organisations, including Brent Council, Windsor Council, Experian and YouGov. The project will run until the autumn, at which point, once the lessons from the trial have been processed, Mydex will go live.

Henderson says that local government is interested in the services because of its potential to save them money. 'Organisations spend pounds x a year to maintain customer records in ways that are disconnected from the individual,' he says. 'So if they change their address, the organisation might only get to hear about it months down the line, after spending more money. Mydex provides a more structured way to manage this by giving individuals a toolkit to manage their personal data via their mobile phone or computer.'

Once they have the toolkit, Mydex members can decide with which organisations they want to share this information. Also, once the system is fully up and running, Mydex will allow users to share their buying intentions with brands. Users will be able to issue a 'personal RFP' (Request For Proposals), similar to the way businesses put contracts out to tender. A typical RFP might contain information such as the person's postcode, number of children and an alert that they are in the market for a new car and have a bank loan to buy it. Companies can then opt to buy the RFP and pitch for the consumer's purchase. The company that snares the sale will pay more for the RFP.

It sounds good in theory, but how will such a system work in practice? Henderson says the most likely set-up would involve a marketplace where the RFPs are promoted, so that brands can see, at a given point, that there are 14 Mydex members in London looking for a 4x4, for example, and 200 people looking for a house.

Mydex has no targets for user numbers, and Henderson concedes that it doesn't expect it to cover '100% of the population any time soon'. However, he does expect the organisation to attract a significant user base, once it has demonstrated its value.

Dane Wright, Brent Council's IT strategy manager, says the authority is trialling Mydex because it mirrors its own views on helping people to manage and authenticate their identity online. 'We are explaining it to people as a new way to deal with the council and manage their personal information,' says Wright. 'Currently, people can authenticate their identity online using Government Gateway, but that does not really do much for you beyond tax self-assessment. Mydex offers a much wider range of value-added services, and gives people a much greater degree of control over which publicand privatesector organisations they release their data to.'

Economically inevitable

However Mydex and Allow play out, Henderson can see why both initiatives have caused such a stir in the data industry. 'Experian is part of the community project, but that does not change the fact that for it, this is very disruptive. It's a threat, but it's also an opportunity. This stuff will happen anyway, whether it's Mydex, Allow or anyone else, it is economically inevitable, so my advice would be to get behind it.'

For his part Basini, who clearly has a vested interest in Allow succeeding, also takes a pragmatic line. 'Whatever happens, this has energised the (data sector) again,' he says. 'The marketing-data industry has been lacking consumer-led innovation for some time. I clearly hope this works, but even if it doesn't, the reaction it has caused has created interest in data again.'

Whatever you think of Allow's aim, and as the days of blanket mailing and perceived permission recede into the industry's collective memory, it's hard to argue with that statement.

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