Jul 25, 2017 | Amazon Prime Day and Big Business: The Intersection of Privacy and Personalization

By Xander Kotsatos, Director, Channel Strategy

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If you've been anywhere near a computer over the last couple weeks, you may have seen the advertisements hailing July 11th, asAmazon Prime Day. This is the third annual eponymous 'Christmas in July-esq' extravaganza for the world's largest digital retailer and this year it capitalizes on the publicity of Amazon's recent stock surge and acquisition of Whole Foods Market. Even more intriguing, Prime Day 2017 occurs with the backdrop of competingbrick-and-mortar retail chains slashing locations at unprecedented levels, leading some publications to announce that Amazon is 'killing Black Friday'.

But while Prime Days of the past havebroken sales records, they have not always generated exclusively positive press. In 2015 users found deals only on products exclusive to Amazon ornon-in-demand items. A2016 Prime Day site crashnot only irked customers but reportedly cost the company millions in lost revenue due to downtime and, this year, 'Cell-Phone-Case-Gate' threatened to once again mar the face of eCommerce's biggest Summer draw.

So these alternatingly funny and scary Amazon fiascos lead the casual consumer to wonder why the e-retail giant keeps hyping a day of sub-par deals? The answer is to generate new Prime Subscriptions: a service that has the company trading razor-thin margins on expedited shipping for drastic increases in annual spending (more than $1,300 per year per subscription by one estimate). Buthigher Prime saturationdoesn't only lead to increases in revenue per customer, it opens up a wealth of consumer data that has sky-high resell value.82% of America's wealthiest households are now Prime subscribersand that population subset holds the purse-strings to the economy.

Amazon isn't alone in trying to exploit user-data from a subscription model. If anything, they're trying to play catch-up to brands like Facebook, which has built a $450+ billion business on selling ad spots and behavioral targeting audiences to the world's largest marketers. Brands like Facebook and Google have proven repeatedly that data privacy infractions are soon forgotten, especially in an age where internet users have come to expect that digital organizations will play fast and loose with their personal data. Facebook famously overstepped back in 2006, prompting Mark Zuckerberg to release anopen letterpromising to give more privacy control back to users. But quickly the convenience and the addictive design of the social networking site outweighed concerns and, without external pressure, Facebook reverted back to a more 'advertiser friendly' privacy policy only a few years later (for more on this see Antonio Garcia Martinez's Silicon Valley MemoirChaos Monkeys).

Across the board, digital companies are in an arms race to push the envelope on leveraging data to increase revenue. In a world where a digitally attuned individual sees in excess of3,000 advertising messages per day, there's a battle for data that gives insight into the exact 'moment' that will capture an individual's attention in this Attention Economy. These players, dubbedThe Attention Merchantsby Tim Wu are increasingly gobbling the Internet's real estate in order to gainend-to-end control of our digital brain wavesand a nearly uninterrupted view into our daily interactions. Facebook went-so-far as to launcha web browser within their applast year, meaning that one never needs to leave their ecosystem on a mobile device. This not only gives them behavioral insight into the browsing patterns of consumers, it further wrests control of user-data from third party publishers: like the New York Times, Huffington Post, or TechCrunch.

Increasingly, more invasive behavioral targeting methods are creeping out of our computers and further into our daily lives, such as a flight deal stemming from a vacationconversation that you hadwith your spouse in front of your Amazon Echo or, perhaps more disturbing, an offer for a free trial of an ED tablet stemming from a discussion with your doctor. The open internet's fragmentation and third party tracking rules prevent this sort of pervasive and intrusive reselling of social and contextual data, but when information is passed within a single brand or ecosystem's walls, the current legal framework doesn't cover such an invasion of privacy.

But there are ways to make money and provide relevant advertising while still being sensitive to consumer privacy.Rocket Fueluses artificial intelligence to create positive, data-driven, customer experiences that drive true business outcomes, without the need to leverage personally identifiable information (PII). When user data is tied to an anonymous customer ID - rather than PII , it can be used to improve site performance or generate predictive experiences (think product recommendations or a relevant discount for a specific brand).

To this end, not all data targeting is bad. While surveys of the American public consistently show thatusersdon'twant to trade privacy for relevance, people continue to choose brands that liberally use customer data when they vote with their wallets. Slow moving and monopolistic telecommunications companies that make meager use of available customer data areraked over the coals for poor customer servicewhile more cutthroat verticals that exploit available customer informationtypically achieve higher marks, with Google, Apple and Amazon all cresting the top 10. Through this lens, it's obvious that customers want personalized experiences on the internet.

And this makes intuitive sense: a brand can have an effective message that creates a positive customer experience without necessarily being invasive. The most obvious examples in my own day-to-day are popular QSR brands likeDunkin DonutsorShake Shack, where the mass-appeal of a fairly limited set of products still allows for user-created personalization at the time of checkout without the need for extensive tracking. In this way, the customer identifies with the brand rather than the other way around.

In this way, the story behind Amazon acquiring Whole Foods has been aboutAmazon bringing the grocery industry into the 21st century, but maybe Whole Foods will help Amazon build brand equity through value-added curation of the products sold? What if Amazon's personalization technologywas the product, rather than a shadowy mechanism to drive revenue? Imagine what Prime Day 2018, or even 2020 could look like: consumers would be willing to pay a premium to Amazon to provide relevant deals and recommendations that, not only improve customers' shopping experience, but also protect user privacy.