30 October 2020


'Online Behavioral Targeting: Are Knowledgeable Consumers Willing to Sell Their Privacy?' by H. Li and A. Nill in (2020) 43 Journal of Consumer Policy 723–745 comments 

 Unbeknownst to many online consumers, their personal information is being traded on a flourishing and rapidly increasing market for privacy data. In a process often labeled online behavioral targeting (OBT), data mining companies and online brokers collect, analyze, buy, and sell consumers’ personal data in an effort to enable online and offline marketers to deliver personalized, highly relevant, and ultimately profitable advertisements. For the most part, consumers have not yet been afforded the opportunity to meaningfully participate in this market for privacy data. The purpose of this article is to explore more deeply the impact of knowledge on consumers’ potential willingness to keep versus trade their private information. Using survey data methodology, we find that those consumers who are more knowledgeable about OBT are willing to pay more for keeping their data private and, at the same time, are willing to sell their data for less money than less informed consumers.

The authors argue 

Dan Abate could not explain why he received so many advertisements about diabetes-related medications--online and via regular mail---until he discovered that his name showed up in a database of millions of people with “diabetes interest.” Acxiom Corp., one of the world’s biggest data mining companies, sells this list to advertisers and data brokers. One of Acxiom Corp’s customers, the data reseller Exact Data, posted Dan’s full name and his physical address online, along with 100 others, under the header “Sample Diabetes Mailing List.” This is just one of hundreds of medical databases up for sale to marketers (Pettypiece and Robertson 2014). A data broker such as Exact Data typically buys those lists wholesale for a mere 20 cents per name and breaks the data down into sub-categories, including income level, sex, profession, geography, and ethnicity. These customized lists are sold to marketers such as pharmaceutical companies who in turn can send customers highly relevant advertisements. Dan’s story is an example of online behavioral targeting (OBT) and its potential consequences in the physical world. While Dan’s personal information has been bought and sold several times, he has not been afforded the opportunity to meaningfully participate in this market for privacy data. He had no control over how his data were being used, and, in fact, he was not even aware that his personal data had been traded. 

OBT potentially enables marketers to deliver personalized, highly relevant, and ultimately profitable advertisements. While the revenue of those advertisements allows “free” access to most of the content provided on the Internet, consumers---often without their knowledge---“pay” for it by allowing online marketers access to their private information. For example, Dan Abate from the example above likely filled out a website registration form that asked for his health information in order to grant him “free” access to the site. One such site is Primehealthsolutions.com, which provides basic health information on a variety of conditions. The site makes money by collecting data on users and their diseases and reselling this information to data brokers. 

An analysis of the main marketing publications dealing with digital, social media, and mobile marketing over the last 15 years revealed a lack of comprehensive answers to some of the fundamental questions concerning the use of big data from a consumer privacy perspective (Lamberton and Stephen 2016). Little research addresses the question how consumers are or can potentially control their private information to their own benefit in a world where this information---knowingly or unknowingly, consented, or unconsented---is already widely accessible and available to a host of marketers and other interested parties (Ferrell 2016; Martin and Murphy 2017; Martin 2016). Accordingly, our overarching research interest is no longer if consumers are willing to disclose their private data---it is too late to put the genie back in the bottle---but are consumers able and willing to actively gain more control over their personal information, if they were provided with the opportunity to do so? Senator Ron Johnson pointedly asked Mark Zuckerberg this question in the senate hearing April 2018: “Have you thought about that model, where the user data is actually monetized by the actual user” (Washington Post 2018)? Would consumers be interested in such a model? 

The main theoretical contribution of our analysis is to show that knowledge has a significant impact on consumers’ ability and willingness to actively control their data. The main public policy implication is that knowledgeable consumers are much more likely to perceive their personal data as a tradable good. In other words, educating and informing consumers about OBT are necessary before a market-based solution for private data. Consumers who lack knowledge about OBT have often unrealistic expectations about the market value of their personal information, are oblivious of the current tradeoff between free online content and collection of personal data, and would neither be willing nor capable of participating in a market for online data in a meaningful wa