Dec 19

FTC augments rules on collecting online data on children

The New York Times reports that the Federal Trade Commission (FTC) has broadened its rules on online data collection on children to better accommodate new portable technologies such as cell phones and tablets.  Generally, online sites must obtain permission from parents before collecting information about their children.  Existing regulations already require parental consent before information that can be used to “identify, locate or contact” a child–e.g., a photo or video–can be collected.  A significant addition in the new regulation, however, is that “persistent identification systems”–tools such a cookies that do not reveal the specific identity of a visitor but tracks visits by the same person across time–are now covered as identifying information.  Since online advertising is often based on prior activity–e.g., an individualized advertisement in an online article for a product for which a person has searched on a site such as Staples.com–is a rapidly growing area, this is a major limitation.

The protection and privacy of children are clearly important and the potential loss of some online content for children that it may no longer be cost effective to provide may be warranted.  An interesting question, however, is the extent to which children under thirteen who sign up for online accounts actually answer truthfully when asked about age.  There are also questions about children on both sides of this age limit.  Are safeguards that might be adequate for children aged 11-13, for example, sufficient for those under 10, an increasing number of whom by now have smartphones?  Further, although children over thirteen may be better able to make judgments about their own more theoretical privacy protection, does this age cutoff send the message about the types of content and offers that might be sent those over thirteen who are subject to extensive protection and close supervision in other parts of their lives such as school and extra-curricular programs?

Is this type of regulation merely a “feel good” measure or does it offer significant practical protection for children?  The answer is not clear.

Sep 27

Do Facebook links lead to actual sales?

A new study by Forrester (also reported in Time) concludes that online sales are more likely to result from search engine results (either “organic”–i.e., merit based–search results or from paid listings) than from links in social media postings, which get credit for only about 1% of the sales made.  In a survey component, 48% of respondent viewed social media as “a great way” to get product information, but that leaves us with the question of whether such information availability, when push comes to shove, actual results in sales.

There are some methodological issues involved here that make the results difficult to interpret.  The study appears to have used a “multi-point” approach that tracks the consumer over time.  This means that  a sale would not have to occur immediately on the first click of the link in question, thus permitting for the possibility that a social media link might initially send the consumer to a manufacturer page or independent review, with the actual purchase occurring in a later step.  Nevertheless, the data were limited to thirty days of activity.  This means that in this study, Facebook would not get credit if a Facebook link got the consumer interested in the product, with an ultimate purchase occurring more than a month after this exposure.  The report acknowledges that social media exposure can be important in gaining product recognition and awareness among consumers.  It should also be noted that this study addresses sales made online; if the consumer ends up buying the product in a retail store, that would not be counted in this study.

Even if the current study somewhat underestimates the sales that result from social media exposure, it seems quite plausible that the effect of social media on inducing sales of specific items may be somewhat overestimated by both consumers and some marketers.  Firms that have attempted to track sales from social media advertising and consumer generated links may have more accurate information about impact. This would be consistent with the decisions of a number of firms to reduce Facebook advertising while still taking advantage of free features such as the product “like” pages.  It also seems reasonable that search engines may be better able to provide more relevant information desired by consumers at the time that they are actively pursuing the purchase in a particular product category.  Future research addressing the potential of social media for long term brand building would be useful in exploring how well this medium actually delivers in this area.