Preference profilers: 'We know what you bought last summer'

Remember the global village? The place where distance didn't matter anymore and everybody knew everybody else?

Well, digital technology has moved us partway there. But, increasingly, the future looks like a fish bowl.

Tiny cameras record your reactions in store aisles. Web software tracks your mouse clicks. To paraphrase that old "Cheers" theme song, we're going where every marketer knows our name.

Now, before you complain, consider the benefits.

By delving deeply into consumer thinking, companies can deliver excellent customer service and, occasionally, stunning new products. Lines at the bank and the grocery store should grow shorter. Ideally, marketers would never call or e-mail unless they had something you really wanted (but don't hold your breath on that one).

The tradeoff for this marketing paradise is privacy. The security cam- era in the convenience store becomes an intelligence gatherer. That favorite website where you registered sells your name and address to firms you've never heard of.

"We need to be more vigilant in the big scheme of things," says William Staples, a sociology professor at the University of Kansas and author of "Everyday Surveillance: Vigilance and Visibility in Postmodern Life."

While people usually link surveillance to Big Brother government, private entities – what he calls "Tiny Brothers" – are carrying out the bulk of today's watching. "I think there's more of a threat to privacy from them rather than the feds," Professor Staples says.

And however much researchers share common concerns about privacy, this new area of consumer research is moving so fast that few of its practitioners have really grappled with its social implications.

When the American Civil Liberties Union surveyed Manhattan in 1998, it discovered 2,397 cameras monitoring the streets. Private entities operated more than 2,100 of them. And while law enforcement is increasingly embracing video technology, especially since Sept. 11, businesses still own most of the cameras.

By one estimate, the average American is videotaped 30 times a day doing ordinary tasks, such as taking money out of an automated teller machine or entering a grocery store. Security cameras follow us everywhere to prevent theft. Now, market researchers are training cameras on consumers to learn more about them, sometimes in the most private places.

Determined to figure out what people really wanted in a showerhead, Moen Inc. began in 1996 to look for ways to videotape people in the shower. It engaged QualiData Research, one of the pioneers of a growing field called "observational research" or "ethnography."

The immediate challenge was how to install a small moisture-proof camera next to a showerhead without it fogging up or electrocuting someone.

Geting volunteers was simpler. The company contacted nudists and others, offering money for the chance to videotape them lathering up in their own homes. Men and women stepped forward.

"Most people thought it was fun to be a part of," recalls Hy Mariampolski, managing director of QualiData. "It's the kind of thing you do on a dare."

So in 1996 and again in 2001, QualiData taped several dozen people of all shapes and sizes while a camera crew monitored the event from just outside the bathroom.

"We found ... the spray was too restricted to be really comfortable," says Dr. Mariampolski. On tape, the subjects used the water to relax or energize themselves. They lost track of time. One man prayed.

For many people, "it's more than a cleaning experience," Mariampolski explains. "They're looking for some psychic outcome." Based on Moen's research, its "Revolution" showerhead was born.

Launched last August and priced at the upper end of showerheads, the "Revolution" offers users a dial that can can be easily adjusted with one hand. The showerhead spins the droplets, which hit all points of the body with more force.

The observational research has "given us a much better understanding about what occurs in people's showers," says Jack Suvak, director of marketing research for Ohio-based Moen.

And it reinforces one principle that many observational researchers agree on: They can delve into very private areas as long as the consumer has the choice up front not to participate. How obvious that choice should be gets a little tricky.

In downtown Minneapolis, a retail-brand agency called Fame runs an elegant store that sells an eclectic mix of gifts and housewares from $1.99 greeting cards to $15,000 antique furniture.

But it's really a laboratory for retailers. Wired with microphones and cameras, the store carries products that manufacturers want to test on shoppers.

Earlier this month, Fame displayed a variety of soaps with unusual ingredients. It found that while eggplant soap might attract the curious, shoppers generally gravitated to more familiar scents. The cameras also collect other clues.

"We can test a customer's interest in a product by how often they pick it up, how they look at it," says Jeri Quest, Fame's executive vice president of strategic development.

Often, a Fame researcher will approach a customer to ask for additional information. So far, the combination of overt and covert research has elicited no complaints.

"Customers understand what's happening, and they have a choice" to shop or not shop at the store, Ms. Quest says. Just outside the store, a blinking sign alerts would-be shoppers when a test is under way.

Of course, observational researchers also tape customers without their knowledge – a practice researchers defend as long as customers remain anonymous.

"They're not interested in prying into the lives and burrowing into people as personalities," says Bill Abrams, president and founder of Housecalls Inc., a New York market-research firm. "They just want to know how consumers in general approach the shelves and select the product."

As for identifying individuals and their habits without their knowledge: "That's a little bit invasive," he says. "When it gets beyond a certain point, yes, a line needs to be drawn."

With little steps, technology is already moving in that direction. Brickstream Corp., a software firm in Arlington, Va., has developed software that tracks people as they move around the store.

When in-store cameras pick up a person, the software tags her as, say, "short lady in red," then notes where she goes and how long she stays at each location. Hundreds, even thousands, of people can be tracked at one time, offering retailers valuable insights, such as how much time someone spends in a customer-service line.

The firm also addresses privacy concerns by keeping only aggregate data, not the actual video of individuals. "Our technology ... has no knowledge of who the people are that are tracked," says Amir Hudda, Brickstream's chief.

But it's not hard to imagine how marketers might tie tracking software to credit-card purchases and face-recognition software. Suddenly, the short lady in red becomes the female executive from a posh suburb who blew $50 on lip gloss last month.

"I think it eventually will come," says Warren French, a marketing and business-ethics professor at the University of Georgia in Athens, Ga. But "it's going to take tremendous algorithms to make sense of that."

At the moment, marketers are already drowning in the data they have, he adds.

For marketers, the Internet represents the biggest opportunity to profile individual shoppers. For consumers, it's the biggest threat to privacy. Web browsers reveal what software and hardware you use, details of the link you clicked on, even possibly your e-mail address.

Using "cookies," a type of electronic serial number, e-tailers can track where you go on their website and, if you register, who you are.

Such technology offers merchandisers the hope that one day they'll be able to market one to one. Many e-tailers are already working on permission-based marketing, which gives consumers a choice to opt out of offers.

Last month, the World Wide Web Consortium – an international industry group – released a new privacy standard for websites that makes it easier for customers to control their data and understand how it might be used.

Yet a raft of Internet businesses are using technology to amass a rising tide of information about consumers – without their permission or even their knowledge.

Public pressure has forced some high-profile sites to curb some practices. In 1999, a public brouhaha convinced Internet music software company RealNetworks to disable software that matched a user's identity with the music they downloaded.

Earlier this year, DoubleClick, the largest Internet advertising firm, agreed to pay $1.8 million to settle suits connected with its sale of consumer information. The company has promised not to link information about people's Web-surfing habits with information that identifies who they are.

Privacy advocates say such moves have yet to curtail customer profiling online. And the combination of Internet and surveillance technologies worries some experts.

"There's a lot of these devices that are created for one thing," says William Staples, a sociology professor at the University of Kansas. But "once this technology becomes available and is used in one place, what's to prevent it from being used someplace else?"

So far, no one has a good answer.