Digital Snoops Have Nothing on Joe Sales Clerk

Sure, computers track our online shopping. But for sophisticated surveillance, you can't beat the human being in a brick-and-mortar store

Even as we plunge into recession, the holiday season brings online merchants a windfall of sorts: billions of new shopping clicks to analyze. We may be just browsing or comparison shopping online, but our Web wanderings paint a picture of who we are, what we desire, where we go. In all, we create a vast laboratory of human behavior for the data miners at the e-merchants, portals, and search engines. Last December, Yahoo! (YHOO) collected an industry-leading average of 2,520 bits of information about each one of its users.

Can we defend our privacy by stepping back from these snoopy electronic networks, by getting off the grid? It's tempting to some. But before logging off, keep in mind that by moving from the digital to the analog realm, we substitute one type of surveillance for another. And despite the wonders of high tech and the prodigious reach and memory of computers, old-fashioned surveillance—the kind attached to two eyes, a nose, and a human brain—remains vastly more sophisticated.

Not to demean the new stuff. On the Internet, merchants and advertisers can compare each one of us, literally, with millions of others. Computers at big portals like Yahoo and Google (GOOG) can search for correlations between the Web pages we look at, the articles we read, the ads we click, even the size of our e-mail communities and our instant-chat habits. Yes, it sounds invasive. But most of these analysts—the people I call the numerati—recognize us only as patterns. Their computers see us as dots in a universe of millions.

Social Context

More important, the numerati's machines conduct their analyses largely free of prejudice. They define who we are by what we do. Imagine a group of people who appear interested in both President Andrew Jackson and nearly nude photos of Jennifer Aniston, or perhaps Hawaii vacation buffs who read obituaries. These Web surfers may not be of the same race, gender, or class. For most e-merchants it doesn't matter. They're focused on behavior. What other tastes and inclinations does that group share? The answers could lead to last-minute holiday advertising campaigns targeted to one of these unlikely new tribes. This type of study may feel intrusive, but remember: All of this observation and analysis is done by machines.

Now compare that with what happens in neighborhood shops. Walk through the holly-bedecked doorways, and store owners immediately note your race, your clothes, the way you walk. Maybe they can see your car out the window. Within seconds and without conscious thought, most will draw conclusions about your social status, your income, maybe even your religion, drinking habits, and sexual orientation. (This is a level of analysis eons beyond the power of the brainiest computers.) These insightful humans, their brains busily linking you to other people they have known, heard of, read about, or even smelled, will then guide you toward the kitchen appliances, books, or tools they suspect you'll like. This attention, which on the Web would be called "targeting," is known in the physical marketplace as the "personal touch."

This method can be unfair, of course, even sexist and racist. Will a merchant steer a muscular, short-haired woman away from the jewelry or cosmetics counter, and toward power tools? Will a man who looks like the oft-cited Joe Six Pack be more likely to wash down turkey with Bud than Alsatian riesling? Humans are making these judgments all the time, placing each other into convenient groups. Some customers don't like it. Why is it, after all, that pornography thrives online? I would guess that consumers prefer the online monitoring of machines and the relentless tracking of cookies to the inquiring and judgmental eyes of humans in stores. They seek out a degree of privacy on the grid.

In the end, the two worlds are coming together. Researchers at Accenture (ACN) are mapping the buying patterns of grocery shoppers. Their vision is eventually to put us behind computerized shopping carts that will guide us toward special deals on the items we're most likely to want or need. In this scheme, the statistical analysis so prevalent on the Internet moves into the physical realm. In a sense, it's a computerized return to the old-fashioned stores, where the folks behind the counter knew our tastes and preferences, which customers kept kosher and which ones topped off their coffee with a slug of schnapps or Kahlúa. Surveillance has been around forever, and it's evolving along new paths—on and off the grid.

Before it's here, it's on the Bloomberg Terminal.