Pity the Poor Data Brokers

Times have been tough in the data industry recently. It’s never a good thing when 60 Minutes decides to come knocking. The negative press that data brokers have been getting reflects the complex information relationship between consumers, brands, advocacy groups, Congress and regulators.

Information has been collected, analyzed, packaged and sold for a very long time. Direct mail houses, political campaigns, fundraisers, alumni associations, retailers, pharmacies, local governments – basically any entity you can think of – rely on information about their customers, clients, constituents or contributors to be most effective.

Some organizations – most even – collect some data themselves. They know you, you know them, you do business, you share information and they use it to do a better job of serving or selling to you. There’s a limit to how much information an organization can collect about consumers and there can also be gaps in the information they have.

This is where data brokers come in and play a valid and valuable role in the market. In most cases, these organizations are simply doing the legwork to collect and cleanse publically available information. In the case of Semcasting, we have worked long and hard to create a dataset of information on U.S. businesses and consumers. That data is used to help marketers reach their customers more effectively and efficiently.

For decades, the collection and use of data in the offline world raised few eyebrows. When it did – as was the case with the perceived misuse of consumer credit data – Congress acted and business practices changed.

Data in the digital world is different; and those differences – whether the fault of data brokers or not – have changed the data discussion. The biggest change is certainly the sheer volume and variety of available data: demographic, psychographic, location, context, behavioral – the list goes on and on. Another is the fact that the businesses that once might have purchased information have recognized that their own data might be of value to others. The sale of first-party data, even if it has been “de-identified,” is a cause for concern since the customer likely has no clue they have been commoditized.

Eyebrows go up again and again and we learn of data breaches or concealed or unregulated collection of private data. Data fear swirls as more disclosures and details come to light. As data paranoia inches toward hysteria, it’s easy to paint a target on the back of data brokers.

They’re the ones! Hoarding and hiding and sorting and selling all of our secrets large and small.

Is that what’s happening? Are data providers nefarious traders of our private lives? The answers are “no” and “no.” What does need to happen is for the information industry – either on its own or with the hand of regulators to guide them – to get ahead of consumer concerns. Transparency on the types of data being collected, from where and by whom, would be a start. Creating opt-out opportunities at the session level would give consumers greater control over how their information could be used makes sense too. As does a prohibition on businesses reselling their customer data – even “de-identified.”

A lot of what ills the industry isn’t the fault of data brokers and they provide an important and valuable service that benefits marketers and consumers alike. As long as data is seen as a dirty word (and one seemingly getting dirtier by the day) they will face scrutiny, hostility and scorn. Maybe we really should pity the poor data brokers.

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