Sunday, February 26, 2012

Data Mining the Social Media – The New Gold Rush

Our mobile connectivity, social media and hunger for apps have opened up the Pandora’s box of privacy breaches and their potential abuse. Not a week goes by when we don’t hear yet another story involving a breach by not just small app makers but giants like Google, Facebook or Apple. Government is weighing in, announcing a proposal for “Privacy Bill of Rights” or winning agreements with mobile leaders to enforce do-not-track or other privacy protection options.

Interestingly however, a recent study shows that users aren’t that concerned with privacy implications. For instance, according to a new study by Sociable Labs, more than half of the consumers (56%) regularly grant online retailers permission to use their Facebook data that range from access to basic profile like gender and name to details like birthday, product preferences and authorization to post status updates on Facebook walls.

Access to such data is proving to be a gold mine for the eCommerce industry. Online monitoring of  Social Media sites like Twitter, Facebook, Google+ and Youtube is a new emerging tool for anyone fishing for trends with your personal data. 

The story is particularly interesting with Twitter. The chatter of millions of tweets is increasingly viewed as a potential indicator of society’s mood. In fact, some wall street funds and traders are text mining and analyzing the words in tweets as serious “crowd sourced” market intelligence. A 2010 study by Indiana University found strong correlation between the collective public mood and the Dow Jones Industrial Average. At a company specific level, a similar study by Pace University found that the popularity of product brands, as measured by Facebook “Likes” or Twitter followers, can be a lead indicator of their individual stock performance.

Next time you tweet, remember that many web analytics firms are collectively trawling and monitoring your stream too.

Retailers and advertisers are jumping into this fray as well. They are quickly finding out that experience shared in social networks about any product also has the potential to predict what consumers or their network buddies could potentially buy. Isn't this a great opportunity to influence future purchase decision through targeted ads!!  Knowing what people like or want, as evident from their tweets or Facebook wall “likes”, can also help retailers better manage their supply chain. In the past such information was proprietary and only available from transactional data through companies such as Visa or Mastercard.  But, thanks to consumers’ sharing their opinions and personal data, often complete with where they are, a new gold rush for market analytics and targeted ads has just begun.

Walmart, for example, has set up a digital analytics division @WalmartLabs which reportedly uses crowdsourcing techniques to determine which items the company should stock based on its tracking of popular social media sites including Facebook, Twitter and Google+. 

Where do we go from here? Will there be new applications of social media mining for common good? Or will it evolve to be primarily a tool for tracking and advertising? Will there be consumer backlash? Or will consumers’ unwillingness to share personal details always be over-ridden by the instant gratification of getting the next discount or the coupon? 

Please comment here or simply share your thought by blowing in a new tweet to the cyber-space!

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