A few weeks ago, I ordered some custom Blinds on the internet for my place. Well, yesterday, I received a 700 page catalogue from Restoration Hardware. The only thing I can figure is that the Blinds website sold my information to Restoration Hardware – which is a good bet for RH because I’m now in the category of people ‘doing interior design’ on my residence.

This targeted advertising actually gets really powerful with the internet. Here’s an even creepier example of data-tracking – a year or two ago, I met a girl at a coffeeshop. We talked a bit, she gave me her number, but I never followed up. We never had each-other’s facebook or email addresses. Recently, I saw her appear on my Facebook “people you might know” sidebar. This surprised me a little bit. Here’s what I think happened: I have the Facebook app on my phone. The Facebook app has permissions to read all the phone numbers in my phone. Facebook managed to link a phone number in my phone to her profile on Facebook.

It’s surprising how much information can be pulled together – especially when they’re able to access my phone information. I have a theory that the Facebook App also tracks who I send/receive text messages from, and uses that information to figure out who my best friends are (and, in turn, which Facebook posts should appear in my Facebook feed). I’m pretty sure that they know exactly which websites I’m visiting, thanks to the Facebook widget that appears on most major websites.

On one hand, I’m very creeped out by the amount of information that’s being collected. At the same time, I can see it’s usefulness from a marketing standpoint. When I want to advertise something, I want to spend money advertising to people who might buy my product. Advertising to people who won’t (or are statistically unlikely) to buy my product is a waste of money. Without targeted advertising, it might be a financial disaster to advertise at all. For example, if only 1% of the public is interested in what I’m selling, but it costs be 10 cents for each person who sees the ad, then, even if 100% of that 1% buys my product, I need to spend $10 in advertising in order to make one sale. If I only make $5 profit on each sale, then it’s not even worth the money to advertise. If you can use targeted advertising to narrow down to the 10% of the population who *might* want to buy my product, then I can spend 1/10th as much money on advertising, which means I spend $1 on advertising for one extra sale (for $5 profit). The publisher of Empires of Steel said that they do very little advertising because they have a hard time getting their advertising dollars to pay off. Instead, what they do is advertise to their existing player-base (from the website), which is a kind of targeted advertising (advertising to people visiting the website and forums, which is a group distinct from the general population) rather than the type of “we track details about each of our users, and allow third-party access via targeted advertising” system done by Facebook.

Of course, I still feel uncomfortable with the amount of data collection Google and Facebook have on me.