Data Mining Versus Privacy

Data Mining Versus Privacy

Data mining, what is it? What is it used for? What is it really used for? How does it affect our privacy? Are we truly responsible for our own privacy?

When I first heard about data mining in my Knowledge Management class, I thought it was an awesome idea. I was excited about how data is gathered and used in various ways to market, to see patterns, to assist in decision making for management and so on. As I was researching data mining trying to figure out how I was going to narrow my scope and write this paper, I came across a few articles on data mining and privacy. A light bulb turned on. As I began to read these articles I realized there is another side to data mining. Maybe it isn't as awesome as I thought it was. Maybe it is a little scary to realize just how much data is collected about me, that maybe I do not want companies to know. So for this paper, I am going to look at data mining from the privacy perspective and try to shed some light in a very dark corner.

So let's begin. Data mining, what is it? Is it more than just a buzz word in technology? Well yes it is. Data mining is the "computer-assisted process of digging through and analyzing enormous sets of data and then extracting the meaning of the data." (Alexander) It is basically finding the needle in the proverbial haystack. Data mining can help predict behaviors and trends, assisting management with making informed, knowledge based decisions. The tools used in data mining can produce answers to business questions that were at one point in time, too time consuming to answer. These tools are built to scan databases for patterns not recognized by humans, and can find information that could be missed because humans may have certain expectations and they may "not see the forest for the trees".

Now on to what data mining is used for. The first time I ever read about data mining it was an article about Harrah's Casino and how they used data mining and the applicable tools to aide them in marketing to their customers, to learn how their customers gambled and how much each customer spent. (NA) I was impressed with how they were able to collect the data on their customers. I even wanted to visit the casino to see how it works, watching as people gambled and see if I could tell when and where data was being collected. Harrah's collects data on almost everything their customers do at their casinos. They then take all this data and use it to predict if that person would be the type of customer to pursue with future marketing, and if they make the cut, they get better offers, service and discounts. Wow, this is incredible. But wait, is it really?

Do customers who visit Harrah's understand that their every bet, drink, and attendance to shows is being used to attract them back? Are the offers, service and discounts worth the trade off in privacy? I do not believe that customers who use their rewards card at Harrah's know that they are being tracked from the time they check in, until the time they leave. But hey, Harrah's isn't the only place that does this.

Data mining has many uses for businesses. It is used to discover relationships and patterns in data to aide in better decisions by management. Some specific uses of data mining include: Market segmentation which identifies the common characteristics of customers that purchase identical products from the same business. The next use is customer churn, which is data that predicts which customers are likely to stop purchasing from one business and begin purchasing from its competitor. Fraud detection is another use of data. It is pretty self-explanatory.

Direct marketing, a common term used in advertising, uses data to identify which potential customers to include in mailing lists to get the highest response (Alexander). Some examples of direct marketing include infomercials, telemarketing, mailed catalogues and postcards (WiseGeek).

I sometimes wonder about the accuracy of direct marketing. I have received various direct marketing materials in the mail and toss them immediately into the trash. So it makes me suspicious about the data purchased by the company who is marketing to me. I have never smoked but I continually receive advertisements for cigarettes.

Another example of direct marketing is targeted ads. You know those ads that appear in your web browser from a site you recently visited. This almost has a feeling of being stalked. Yes I visited the Foot Smart website, but I do not want to continue to see the shoes I viewed on their site, in my browser. This isn't necessarily harmful, but what if I was looking at a gift for someone and they use my computer and see it? There goes the surprise.

You know those little product registration cards we get with the purchase of a dishwasher or a vacuum, or even a child's toy? I did not realize, until I was doing this research, that those cards are being submitted to a company that collects the data and then provides the information to the manufacturing company for free. The data collection company can then sell the data to whomever they please (Shermach). Well I will not be sending in those little cards anymore.

A favorite of mine, not really, in data mining is interactive marketing. This is where companies pull out their crystal ball and try to predict what people would be interested in on their website (Alexander). Amazon is genius at this. Whenever I login I get to view any previous purchases and any associated items they feel I might like to purchase. I will be honest they got me a couple of times with this strategy.

Another way data is used is through market basket analysis. This is recognizing what products and services are commonly purchased at the same time (Alexander). Amazon is a master of this technique as well. There are always a couple of suggested items at the bottom of the page under the "Customers who bought this item also bought:". They got me with this strategy just this past week while I was shopping for Christmas. I guess we are all just fish in a barrel.

The last technique is trend analysis, which is using data to reveal differences in customers on a periodic basis. It could include what items they bought, what day these items were bought, is there a relationship between the purchases of one item with the purchase of another. There are many other uses for data mining, but these seem to be the most common uses in my research. As you can see data mining has a place in the business world. It really does help companies with decisions, learning how to market to their customers by know what works and what does not; they also learn general and detailed information about their customers, which leads me to the dark corner of data mining and what is it really used for.

Well