There is no such thing as a free lunch. Someone is paying for it.” When it comes to the Internet, we don’t ever sit up and ask who is paying for all the free stuff that we take for granted. Don’t be in a rush to find out the answer. It is you. You are paying for the ‘free’ webmail, the ‘free’ site where you store documents – especially the important ones or the free apps that you can download for your device. The maps that you use to navigate to your friend’s party are really not ‘free’. You are paying for it by sharing your personal data.

The free services are all paid for by advertising. The more targeted the message is to you, the more effective it is. That is what market research always did. For every product, you need to understand the demographics of the customer i.e. name, age, income level, education level, etc. As research methodology became more sophisticated, the consumers were profiled on the basis of psychographics. Psychographics profile the consumer on the basis of their interests, activities, and opinions. Then, there are behavioral variables such as usage rate or loyalty. All these data points can help to target a specific product or service ad towards the customer. The more we know about a person, the more successfully we can target the messages. We are voluntarily helping the companies build this database about us in exchange for free email or storage or videos.

Each time you register for a website, think of the information you are voluntarily sharing. You give them your name, age (or worse still, your date of birth), gender, languages known, etc. That is just for starters. Then there are sites like Facebook that ask you if you are currently in a relationship, the books the music, the languages you speak, your school/college names, etc. As you start using the site, you are putting up photos of family members, sharing your moments of joy and sorrow that are useful for targeting products that you specifically ask for by clicking on them.

There is constant research done by companies to tailor the ads to target the individual. This is where analytics works for the marketing department. The retailer Target was in the news recently when they shared how they can tell whether someone is pregnant based on their shopping habits and then start to send them coupons for baby products and diapers.
Predictive models tell advertisers about the hot buttons they can press to trigger certain behaviors in individuals.The predictive software also has the ability to start persuading you to buy products that you have not thought of buying. Product managers at Google have tested shades of color with users and found they were more likely to click on the toolbar if it was painted a certain shade of blue. If two people search for the same term on Google at the same time, their search results will be different. The information is filtered based on the prediction of the person’s profile, the location, the laptop or hardware a person is using, etc.

At several online shopping sites you will get ‘recommendations’ based on your purchase history or even what your friends have bought. Social persuasion is a powerful way for people to be nudged in a certain direction. Experiments have shown that when restaurants put a ‘suggested’ amount for a tip, people are more likely to tip higher amounts when they settle the bill.

Nobody would object to the convenience of getting information that helps people do comparison shopping. Where that line gets blurred is when the ads get you to buy things you do not need or worse still, buy things you cannot afford, just because the marketeer knows your vulnerabilities. What is worse is that you have no one to blame, because you volunteered all the personal details in exchange for free stuff. Think about it.