Will using big data create marketing racists?

I don’t believe so. But the White House is worried about this.

In a recent editorial by Thorin McGee, Editor-in-chief of Target Marketing Magazine, he presents the eventuality of a legislative reach by the Government to ensure that big data can’t be “misused” to target groups by race.

These findings came out of a recent government study that drew concern about targeted ads served up along racial lines. And that these “racist practices” should be legislated. The example referenced a Google Ad for legal services that specifically targeted individuals with African-American sounding names.

Marketing is, by its very nature, discriminatory.

If the definition of a marketing racist is to use as much data as possible to identify the very best potential consumers then we are all guilty. Discrimination is the key tool that makes all marketing efforts work efficiently. Imagine having to return to mass advertising where everyone receives an offer whether or not there is any relevancy?

Imagine the absurdity of sending a brochure written in Spanish to a household whose primary language is Vietnamese, or marketing surfboards to residents of Alaska.  How about hair care products to bald people? The list is endless.

Marketing science is imperfect but improving

Data helps marketers and consumers make better decisions, improve conveniences and reduce costs by eliminating wasted messaging. The more focused the communication is, the lower the cost and the higher probability of meeting a potential need. Targeting keeps ad costs low and allows prices to stay lower as well.

There are many implications coming from the use of Big Data

In the report to the President, Big Data shows the potential for both positive and negative uses.

On the positive front:

• Saving lives by identifying health trends, including infectious disease
• Making firms better equipped to adjust capacity and service as demand changes
• Guarding against fraud in government payment systems

The list of negative implications included:

• Altering the balance of power between government and citizens (think NSA)
• Revealing intimate personal details about an individual (consumer protection)
• Discrimination in decisions that may affect housing, employment and credit.

“Using data to try and sell products (especially products that consumers want) is not the real concern,” says Stephen F. DeAngelis. The more basic concern is discussed in the third bullet (discrimination). Steve Sailor, a privacy advocate explains, “if you know someone drinks grape soda, smokes Kools, loves Tyler Perry you can likely determine that they are black.”

The conclusion I draw is if you intentionally exclude an African American (or any other ethnicity) that is a qualified consumer, you may be discriminating along racial lines.

If for instance, you use data points to determine age, income, lifestyle segments, and hundreds of other attributes to identify the right consumer … and then use Big Data to screen out, say, all the Asian consumers, that would like be discrimination at another level.

Speaking as a marketer, I can’t think of a reason to exclude anyone  that otherwise meets the profile of those the company is trying to sell to. Every product is unique with its unique set of features and benefits. Finding the right purchaser means making some discriminatory decisions to create a more relevant conversation and share the product benefits in the proper context.

Plus, we already have laws that protect consumers from using race in major life decisions like housing, credit, and employment.

This issue has wide ranging implications

The conversation around Big Data and consumer privacy is heating up. It will likely mean some additional rules and potential laws that will influence the how and when of marketing within certain unique categories. There is a lot written about this issue from both sides of the argument.

I do believe that the free market will win out in the long run. Companies that respect their customers and their potential customers will always win out in the marketplace.

A company such as Yahoo, that recently eliminated the “do not track” feature in its privacy settings, will have to deal with the backlash from their customers and pay whatever price in lost usage and ad revenues. They are putting a greater value on the data they receive than the relationship with that use.

We do need laws and regulations to cover the important things in life. From a marketing standpoint, I believe we have the laws in place to protect consumers from discrimination.

The seminal question

The topic that isn’t on the table is “How do we, as consumers. control what is tracked about us?” Somebody ought to be spending time on this issue.