Brandwashed (34 page)

And selling us hope, as well. This is nothing new; companies have been selling hope in one way, shape, or form for the past hundred years. Because hope works. We crave it. We need it. And we buy it.
Charles Revson, the founder of Revlon, was clearly onto something when in 1967 he was quoted as saying: “In the factory, we make
cosmetics; in the drugstore, we sell hope in a bottle.”

Hope is the loan we take out for the perfect home—or the faraway city—we dream of living in someday. Hope is a bunch of camping gear we buy to feel closer to nature (even if we live in the middle of a siren-filled city); a kayak rack for a kayak we’ll never paddle; boots intended to scale a mountain we will never climb; a tent to pitch under the stars we’ll never sleep under.

Hope is joining a health club to get the body we’ve always wanted;
the local, grass-fed beef we eat in the service of leaving our children a better planet; the expensive outfit we buy just in case we someday have someplace fancy to wear it. It’s any product that promises to make our life better in some small way.

I have a friend who recently found his sources of income drying up. One day I peered in his garage and saw his expensive Hummer, which was hooked to his speedboat. “Why don’t you sell your car and your boat?” I asked. It seemed to make sense if he was hurting financially.

No, he told me. At first I thought he was being bullheaded, but then I realized that he was clinging to those objects—those
things—
because they represented hope. And that if he sold them, he would be selling his entire imagined future, that these objects represented a world in which he hoped he would someday live.

Whenever I do speeches across the world, I knock on wood, just for the hell of it. As far as I can tell, it’s never brought me any spectacularly good luck, but I still do it. Hope may be an illusion, but we believe in it—and we’re willing to spend our hard-earned money for it—all the same.

Y
ou’re sitting at home, killing time at your computer, when an e-mail announces itself. No, it’s not from a friend or from your boss; it’s a notice from the chain drugstore you frequent down the street. “Joanne,” it says, “save $5 off your next purchase of Neutrogena moisturizer!”—adding that this special offer expires in three weeks’ time.

Now how, you wonder, did the drugstore know you were a Neutrogena user? Must be a coincidence, you think, and then promptly forget about it. That is, until the following week, when you’re sorting through your snail mail and find another flyer from the same store. This time it’s offering you discounts for your brand of laundry detergent (Tide), your preferred toothpaste (wintergreen Crest with extra whitening), and your guilty-pleasure snack food (“Hint of Lime” Tostitos). This is clearly not a coincidence.

The pieces start to come together as you flash back to your last drugstore visit.

“Will you be using your loyalty card?” the bored teenage clerk
asked as you were paying for your purchases (which included, besides the aforementioned items, Band-Aids, vitamins, your husband’s Head & Shoulders, and your family’s various prescriptions).

As usual, unthinkingly, you handed over the red plastic card, watching impatiently as the clerk scanned the tiny bar code under her wand. After you paid up, the clerk pulled up a two-foot-long receipt, announcing without interest, “You’ve got four
coupons today.” One for half off a pack of Venus razors (funny, you did just switch to Venus from another brand), another for a six-ounce bottle of Purell (weird thing is, you just ran out), a third offering you a 10 percent discount on your next bottle of vitamin D tablets (how did they know that recently you’d been reading tons of articles about vitamin D?), and one for a dollar off the next time you develop a roll of digital photos (huh, you
do
have a family reunion coming up).

On the way out, you were struck by the music playing overhead: James Taylor’s “Fire and Rain.” Though you’d heard this song seven hundred million times in your life, you couldn’t help but wonder: was it sheer coincidence the drugstore knew you’re a sucker for this particular heart-tugging, late-baby-boomer lullaby? Did these people have a microchip implanted in your brain, or what?

Well, sort of.

As it turns out, thanks to the sophisticated techniques today’s companies have for keeping track of your every move, this drugstore—and virtually every other place you shop, for that matter—probably knows more about your wants, your needs, your dreams, and your habits than even you do. And it’s using this information to make money off you in ways you couldn’t even imagine.

Welcome to the $100 billion world of
data mining.

D
ata mining—euphemistically referred to in the marketing industry as “knowledge discovery” or “consumer insights”—is an enormous and rapidly growing global business devoted to tracking and analyzing consumer behavior, then categorizing, summarizing, and smoothing that
data so it can be used to persuade and on occasion manipulate us to buy products. Data mining is how companies know not only your buying habits but also your race, gender, address, phone number, education level, approximate income, family size, pet’s name, favorite movie, and much, much more, creating what one expert calls a “mirror world” of us.
¹
The goal of “consumer insights,” according to Stuart Aitken, the CEO of dunnhumbyUSA, a leading data-mining company based in Ohio, whose clients include Procter & Gamble, Macy’s, PepsiCo, Coca-Cola, Kellogg’s, Kraft Foods, and Home Depot? “We’re looking for the motivations and the understanding behind what consumers do and buy.”
²

Being able to predict what a consumer is likely to buy next—and being the first company in line to perfectly target the offering to the consumer in question—is of paramount importance to companies of all stripes. Why? Because based on marketers’ data, consumers who try a new product are likely to stick with it for an average of
a year and a half
. So if a store can figure out what new product you
might
like and offer a free sample or coupon or promotion persuading you to try it, it’s potentially locked up your dollars for the next eighteen months.

Thanks to data-mining companies, or as I like to call them, Big Brother, every time we do a Google search, write on a friend’s Facebook wall, swipe our credit card, download an iTunes song, look up directions on our cell phone, or shop at the local grocery store, an unseen data collector is shadowing us, recording every last bit of information, crunching and analyzing it, and then turning around and reselling it to retailers and marketing firms.

What’s more, the data-mining industry is growing 10 percent a year, and why? Because thanks to technologies like the GPS tracking built into our
smart phones, the license agreements we sign every time we download a new piece of software onto our laptops, commercial spyware (otherwise known as adware) that tracks and records every Web site we visit, and increasingly sophisticated algorithms and computer models to analyze all this information, today each and every move we as consumers make is producing reams more data than ever before. And you better believe companies are using this data to take our dollars in ways we don’t even realize.

D
on’t you miss the good old days, when
coupons showed up in the Sunday newspaper? You’d put down your steaming mug of coffee, get out your scissors, cut along the dotted lines, then contentedly file away that freshly clipped coupon in the handy little folder you kept in your desk drawer. Well, those days are over. Thanks to the Web, the coupon has now gone digital, and that digital coupon knows more about you than you can imagine.

Digital coupons: another sneaky yet little-known tool of the data-mining world. If you think digitizing coupons is merely about convenience and saving postage, you’re wrong. Today the innocent-looking bar codes on those ubiquitous online coupons are encoded with a shocking amount of information about you—including your computer’s IP address, everything written on your Facebook profile and posts, the date and time you both obtained and redeemed the coupon, the location of the store where you used it, whether you found the coupon online, and even the search terms you used to track it down in the first place. And if this wasn’t bad enough, more and more retailers are cross-pollinating this data with other information their databank has about you, including estimates of your age, your gender, your income, your buying history, what Web sites you’ve visited recently, and your real-time whereabouts—creating a profile so intricate and detailed it would impress a CIA operative.

Here’s how it works. Let’s say you receive a coupon in your in-box from Macy’s. You either print it on your computer or send it to your cell phone. Then, when you go into a store to redeem it, the clerk scans it, sending all the information I just noted to a company called
RevTrax. RevTrax then analyzes this information and assigns you to a particular cluster or cross section, depending on the type of consumer the data indicate you are. By matching your online behavior with your in-store purchasing, the retailers can figure out which ads or online product promotions work best on
you
, what offers you are likely to jump at or ignore, and even how long after searching for something online you’re likely to actually go to a store to chase it down. “Over time,” says RevTrax cofounder Jonathan Treiber, “we’ll be able to do much better profiling
around certain I.P. addresses, to say, hey, this I.P. address is showing a proclivity for printing clothing apparel coupons and is really only responding to coupons greater than 20 percent off.”
³
Adds Robert Drescher, chief executive of
Cellfire, a mobile-coupon company that works with grocery chains including Safeway, Kroger, and ShopRite, “We can already tell if you are near or inside a store and can give you particular offers, but that’s the kind of thing we’re moving fairly cautiously on so that the user can get to know us and trust us first.”
⁴

If you use a coupon on your mobile phone, it’s even worse. For example,
Starbucks recently started a program that allows coffee drinkers to keep track of each purchase on our cell phones, rewarding us with a free drink for every fifteenth purchase. Yet what most unsuspecting customers don’t know about this seemingly bighearted program is that it’s actually pulling data from our phones and sending it straight into Starbucks’ database, where it’s then used to
target us with personalized entreaties. “We’ve tried to build a program around recognition . . . and in some ways, that relevance comes from knowing about purchases from data collected from the loyalty program,”
⁵
Brady Brewer, the vice president of Starbucks overseeing brand loyalty and the Starbucks card, told the
New York Times
.

Similarly, last year Target rolled out bar-code coupons, scannable straight from your phone, at its nearly two thousand stores across the United States. But in exchange for receiving five coupons per month on various small items from lip balm to bubble gum, are you aware of what you’re giving up? Check out the company’s terms and conditions, which give Target permission to collect users’ cell phone numbers, their carriers’ names, and the date and the time users redeemed their coupons.
⁶
Worse, a Target spokesperson clarifies that the company may merge the information it pulls from people’s phones with information “from other sources” before sharing that information with “carefully selected” third parties.
⁷
Target’s spokespeople were naturally reluctant to discuss what kinds of data they collect, but one expert estimates that roughly fifteen pieces of information, ranging from what search term you typed in to your address and where you were when you downloaded the coupon (thanks to the fact that most
smart phones are GPS equipped) could be relayed via the bar code of a simple mobile coupon.

That’s right, even our closest friends—namely, our phones—are betraying our privacy. A mobile-phone security firm known as Lookout, Inc., analyzed roughly three hundred thousand free applications for the
iPhone, as well as for
Google’s Android, and found that many of them “secretly pull sensitive data off users’ phones and ship them off to third parties without notification”
⁸
(by third parties they mean advertisers and marketing firms). This information these apps are stealing from right under our noses? Everything from our contact lists to our pictures to our text messages to our Internet search histories to our real-time locations.
⁹
In fact, as the
New York Times
recently reported, when one German politician went to court to investigate just how much his cell-phone company, Deutsche Telekom, kept track of his whereabouts, he discovered that within a six-month period the company had recorded and stored the actual coordinates of his location a total of thirty-five thousand times. “We are all walking around with little tags, and our tag has a phone number associated with it, who we called, and what we do with the phone,” as Sarah E. Williams, an expert on graphic information at Columbia University, explained to the
New York Times.