Takeaway: Marketers have long used online media to manage their company’s reputation with consumers. However, in an effort to more precisely select and target profitable customers they have now turned the looking glass around on the consumer.
By analyzing the online behaviors and social networks of their customers, marketers believe they can determine who has been naughty and who has been nice.
In this world of increased transparency, who will come a-wassailing in your virtual neighborhood this holiday season?
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Excerpt from Fast Company, “How Rapleaf Is Data-Mining Your Friends Lists to Predict Your Credit Risk,” by Lucas Conley, November 16, 2009.
They say you can tell a lot about a person by the company they keep. By now, you probably already know your behavior on social networking sites like Twitter and Facebook can get you fired, evicted, and even arrested–but what about your friends’ behavior? Upon reviewing your social networking friend list, the data-mining firm Rapleaf says it can help predict which ads you’ll pay attention to and whether or not you’re a worthwhile risk for a credit card or a loan–all without hacking into any accounts or breaking any laws.
Until recently, such data has largely been applied towards reputation management, helping brands, advertising agencies, and public relations firms hear what we’re saying about them. But as the volume of consumer data has grown, and the technology employed to gather, sift, and analyze it has advanced, organizations are turning the tables, asking what the data says about us. There is mounting evidence suggesting that your friends influence everything from your weight to your happiness.
Seventy percent of U.S. consumers claim they “definitely would not” allow advertisers to track their online behavior–even if they were to remain anonymous. It is therefore unlikely that consumers will react favorably to businesses monitoring and ranking their social footprints.
Rapleaf only aggregates publicly available information, and allows customers to opt out or register “to discover what information about you is available online and to edit your Internet footprint.” Rapleaf claims it is making ecommerce faster, cheaper, and easier for consumers and businesses alike.
By accessing its database of nearly 380 million consumer email profiles, banks, retailers, and anti-fraud firms, Rapleaf can quickly confirm legitimate customers and weed out scammers, cutting verification costs and improving the user experience. “Companies spend as much as $100 getting customers to their site. The goal is to filter out the bad people and keep as many good people as possible,” Rapleaf says.
Beyond simply helping verify your identity, Rapleaf claims information about your friends’ behavior can be used to better predict your behavior. For one company, Rapleaf adapted ads based on friends’ responses, ultimately tripling the click-through rate. Rapleaf’s Web site even suggests that clients “use friend networks to enhance … credit scoring.” Rapleaf explains: “Say someone would have been rejected for a credit card, but their social graph says their friends are good payers. Instead of saying ‘Rats, we couldn’t give this guy the card,’ they’ll be approved.”
“Social networking is part of the advertising-supported Internet,” he says. “It’s one of the free services we all enjoy. Now people are becoming aware there is a cost.”
Edit by BHC
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Full Article: http://www.fastcompany.com/blog/lucas-conley/advertising-branding-and-marketing/company-we-keep
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The Homa Files 
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