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Say Goodbye to Your Privacy. You Probably Won't Miss it Much

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You are being watched. It doesn't matter what site this article happens to be posted to. It doesn't even matter if some enterprising sort copied-and-pasted the entire thing and stuck it onto their personal blog for cheap clicks. Modern technology and data analytics have developed so many ways to track you, analyze your behavior, and propose responses that it's begun a fundamental transformation of how people interact with their machines and with each other. Get used to it, because there's no going back.

Tip of the iceberg
I chose this development -- the merger of targeted social advertising, privacy erosion, and data analytics -- as one of the key technology trends of 2012 just two months ago. Since then, there's been ample evidence to support my prediction.

Apple (Nasdaq: AAPL  ) had a brief kerfluffle over the "Path" app pilfering its users' iPhone address books. Google (Nasdaq: GOOG  ) changed its privacy policy, began offering users payoffs to install Chrome-based tracking extensions, and acknowledged bypassing privacy settings on Apple's Safari browsers, all in the span of less than a month. Microsoft (Nasdaq: MSFT  ) took aim at Google's privacy changes with sanctimonious ads, but it's not got a leg to stand on in the fight. Using Kinect, Microsoft plans to create mall ads that offer customized content depending on what type of consumer walks by.

Each of these events got a bit of press, but what's the result? A "Do Not Track" button in Web browsers, agreed to in principle by the browser giants after much wailing and gnashing of teeth. Clicking it won't get you far, since you'll still be fair game if companies feel like doing market research or product development. Loop, meet hole. After all, what's the point of tracking if not to research a market?

Stranger than fiction
The average Web surfer pays minimal attention to the many ways they can be tagged and tracked because it's very rare to see the system laid bare in action. But it can be quite jarring when the veil is lifted. Take Target's (NYSE: TGT  ) efforts to connect to expectant moms.

Through analytics, the company identified the shopping habits of pregnant women, and has been reaching out to them to lock in that critical mommy-shopper segment. Target's even identifying the pregnant before family members do, in some cases! (Although it had to start being subtler, as pre-birth coupon books offering nothing but diapers and baby clothes started freaking out mommies-to-be. Real smooth, Target. The diaper coupons are now wedged in between power drill specials.)

Now let's think about that applied in real time. Microsoft's still working on its Minority Report Kinect-ed advertising, but a spatially sensitive virtual greeter has already popped up in one upscale Toronto store. It's only a start. Location-based advertising is already on the upswing, thanks in part to Groupon (Nasdaq: GRPN  ) , which recently bought out a location-based targeting software company.

That's great for companies when customers sign up, but "opt-out" seems preferable to "opt in" -- Groupon CEO Andrew Mason doesn't expect location-based sales to be real contributors for a while. He might change his tune if Groupon got a foothold in Kinect-ed ad displays. Hey, you! You look like a fit middle-aged male, and your shoes look uncomfortable. Here's a half-off coupon for some cross trainers!

All eyes on you
A recent Atlantic piece on drone proliferation points out that the feeling of being watched in public could force changes to the way we view privacy itself. It also notes that we don't seem to care much that our every click is dissected, analyzed, and optimized for advertising online.

Perhaps machines saying they know what you want as soon as you enter a store will trigger the necessary visceral repulsion to make people realize they need barriers, but somehow I'm not so sure. Inch by inch, millions (maybe billions) have gotten used to their every move being watched. Many eagerly join in. I often wonder why my friends want to "check in" on social media when they go places, but this is part of the transformation I mentioned earlier. Privacy advocates, despite their efforts, don't speak for the majority. With half a billion people using Facebook every day, it's safe to say there are plenty of people who view privacy as a thing of the past.

Get used to it
It's meaningless to reject companies using these surveillance techniques if they all do it. We might imagine Big Brother when told that the billboard knows our secrets, and recoil in horror from the prospect of 30,000 surveillance drones over American skies by decade's end. By the time real-world tracking technology advances to the point of seamlessness, we'll either be used to it or holed up in our homes doing everything online. As we all know, there's already tracking out the wazoo on the Internet.

The litmus test for investors here boils down to participation. If your chosen companies have anything to do with consumers, how well are they using the tracking and analytical tools available? If companies don't start learning more about their users, they'll probably wind up shut out by those companies that can better reach out. Not every company will have its own system, so the best analytical companies will have plenty of room to expand.

To find out more about one company leading the analytics charge, take a look at this free report. It'll tell you everything you need to know about this company's prospects and how it's changing the way companies use data to reach consumers. Reserve your free copy now while it lasts.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights.

The Motley Fool owns shares of Apple, Microsoft, and Google. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Microsoft; creating a bull call spread position in Microsoft; and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 24, 2012, at 11:19 AM, DJDynamicNC wrote:

    People LIKE being the center of attention. They like feeling as though companies and corporations and big powerful people actually care about them personally.

    This is why criminals get caught bragging about their crimes.

    So long as the privacy losses are distributed equally then I am fine with them. Transparency isn't a bad thing, and I suspect that people will be forced to become a lot more tolerant of other people's peccadillos if their own are on full display. The problem is that privacy likely won't be distributed equally, and that creates a major power disparity.

  • Report this Comment On February 24, 2012, at 12:20 PM, 5000monkey wrote:

    Our children won't care, and our grandchildren won't even know that any one did care at one point.

  • Report this Comment On February 24, 2012, at 3:43 PM, Clint35 wrote:

    I'm totally against all this tracking. Regardless of who's doing it or why. But is there anything we can do to stop it? Good article Alex.

  • Report this Comment On February 24, 2012, at 7:26 PM, Felshade wrote:

    I imagine Mozilla Firefox and adblock plus with grow in popularity as ads grow in frequency. I like video games and keep up with new releases. But do I really want to see those ads everywhere I go? Angry consumers do not buy products.

  • Report this Comment On February 24, 2012, at 9:06 PM, ibuildthings wrote:

    It wasn't that long ago that people went nuts that tracking cookies are used to monitor your surfing habits with the specific end of tailoring ads. Objectionable, but not horrible.

    Now the smart phone apps steal your address book? Why do they need that?

    And Facebook had trackers everywhere on the net. If you have an account and an active cookie, they sell your habits to anyone with the money. Are they selling your friends names and contact information too?

  • Report this Comment On February 24, 2012, at 9:45 PM, Acesnyper wrote:

    As someone who refuses to use things that share info with out warning or any social media etc

    I found this statement rather rude:

    It's meaningless to reject companies using these surveillance techniques if they all do it.

    This well if they all do it is lemming speak, that's how wrongs are allowed, you'll post XYZ is stealing but will you no longer call him a thief if I and another do it too?

    We need to stop and make a stand, this loss of privacy comes from people's apathy and the people who set up those sites/networks/companies willing to exploit that.

    I have no problem with the fact people choose to use those programs, but it should stop with them who are willing to give up the data, because so few do care we soon will all lose something because it doesn't bother most.

    I for one will miss it and if these things take place I will be branded a nut for throwing out my computer and the such.

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