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Whose Life Is It, Anyway?

Consumers are learning their data is currency and new companies are betting they can help them cash in

Photo Illustrations: Andrea Levy

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To hear it from the Federal Trade Commission, an online data collector is an awful lot like a Hollywood paparazzo.

Companies that track and collect online consumer data can act like “invisible cyberazzi,” said FTC chairman Jon Leibowitz during a speech at the National Press Club in October. The chairman, while noting that he doesn’t want to “pull a Sean Penn” and get rid of behavorial targeting, said, however, that these companies, hidden in shadow, trail people on the Web, nabbing personal information and snapshots of activity that they then share with marketing firms.

There’s another way in which this exchange of consumer data is like the trafficking of celebrity snaps: It’s a big business. Each year, companies in the U.S. spend more than $2 billion on third-party consumer data, according to Forrester Research. Add in the money spent on credit data, market research and other kinds of derived information, the research firm says, and you’re looking at a multibillion dollar industry. In fact, the volume of digital data created by consumers is growing at such a fast clip that the World Economic Forum and other futurists have called personal data the “new oil.”

Many consumers have begun to find this surreptitious cookie- and beacon-enabled tracking (“discovered” when they see ads and content that match their activities) disconcerting at best. Indeed, in the past few years, companies that rely on Internet tracking, including tech giants such as Google and Facebook, have come under fire for collecting, using and sharing consumer information in ways critics say are not only stealthy, but also erode privacy. (The business is self-regulated, with much-hyped guidelines making slow progress in Congress.) And as mobile technology gains adoption and the demand for location data grows, concerns about under-the-radar data trackers that can follow digital footprints in real time loom even larger.

Research does show that consumers are uncomfortable sharing sensitive personal information, such as location data. According to a spring/summer 2011 study from Internet privacy company TRUSTe, for example, 46 percent of consumers said they “definitely would not consent” to sharing their current location with advertisers. Another 20 percent said they would “probably not” consent to sharing that information.

In response, a growing number of companies, including Personal, Azigo and Experian, now aim to give consumers a degree of control over their data. Through so-called “data lockers” or similar kinds of online destinations—places, in essence, where selected streams of information can be deposited and managed—they offer tools that help consumers decide how much data they want to share, with whom and for what purpose. Describing it as a win-win situation, these companies say that in exchange for sharing data, consumers can receive deals and, in some cases, cash, while marketers can reach consumers on their terms, gaining the insights that will make their offers even more relevant and effective.

“The market is set up for a pretty big shift. People have to understand how [data tracking] works and have some control over it or else it’s going to become way too spooky and invasive,” says Personal CEO Shane Green. “We believe that the more people have that ability to aggregate their data and set permissions on who gets it, the more they’ll be willing to share data with companies, advertisers and marketers who can actually deliver real value for them.”

Launched in open beta in November with more than $7 million in funding from AOL co-founder Steve Case and other investors, Personal, using category-specific data “gems,” can store information, from insurance policy numbers to favorite recipes to pet-sitting directions. Other “gems” could store electronics purchases or websites a person has visited. For now, people can use the site as a quick reference or to share “gems” with others. It’s also intended to aid in the filling out of forms.

In the second quarter of this year, however, Personal says it will offer consumers, on a limited pilot basis, the option to be matched up with marketers. A consumer ready to buy a hybrid car, for example, would indicate her intention on the site, and participating marketers would compete for her business by paying for her time and engagement. Maybe it’s $10 for watching a video or multiples of that for heading to a local dealership for a test drive. The consumer gets payment as long as she transacts with one of the companies courting her on Personal. Whenever a Personal user makes money, the company gets 10 percent of what the marketer pays the user. The marketer, says Green, only learns the full identity of the individual should they choose to share it.

Boston-area startup Azigo, which plans to launch in public beta next month, will have people choose the companies they want to interact with by redirecting email from marketers to Azigo’s website. There, consumers can adjust the amount of information they share with marketers via loyalty programs, e-commerce accounts, daily deals, etc. For example, a clotheshorse in San Francisco could conceivably use the site to give J. Crew specific information about her demographics and preferences, but could have Azigo limit information for JetBlue.

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