What Is User Data?
Most people use Google and social media networks daily, thinking these companies are generous enough to provide a free service. Although that could be true to some extent, many internet users don’t know that using almost any internet service comes at a hefty price.
So, how does an average user pay for certain online services?
The simplest answer is by supplying valuable data to advertisers and service providers. Although “If you are not paying for it, then you are the product.” is a cliche, the bitter truth is that big tech companies know us better than we know ourselves.
In layman’s terms, user data refers to any data created or owned by users. This data is collected from various sources and is enough for industry giants to get to know a user’s persona and find new ways to cater to their needs.
Additionally, user data set is of utmost importance for a company that aims to win you over and sell you its product. Of course, that is because your data can show them how to hook you in and sell you a product or service.
Who creates data? Each one of us. How do we create it? Just by existing.
Every digital footprint left by a user can be considered valuable data
Before we explain how user data may be valuable, let’s define what information is considered user data. For starters, user data can be sorted into several categories, including:
- Personally identifiable information: This could be a user’s full legal name, social security number, driver’s license or passport number, addresses, and so on.
- Financial and payment information: Many mobile payment apps keep users’ sensitive financial information, including credit or debit card numbers and payment history.
- Authentication information: Usernames and passwords are considered user data, and users often save them on Google accounts or social media apps and sites.
- Device location: Location data can significantly affect and boost strategic decision-making, customer targeting, and business operations.
Photo illustration: Freepik
Keep in mind that this isn’t the complete list. That is because every digital footprint left by a user can be considered valuable data. Every click, download, comment, or like is information companies want to use to their advantage.
In What Ways Is User Data Valuable?
In today’s world, user data is a valuable resource. It’s more precise than any survey or research, and it’s often perceived as a highly accurate tool that fuels all marketing strategies.
So, who wants it, and in what ways can it be valuable?
Three primary groups that target user data are:
- Companies
- Platforms
- Criminals
As stated earlier, companies need user data to determine which ads could be used to reach a particular target audience. Once an advertiser knows who should be targeted with what marketing, it’s easy to create a perfect advertising strategy that saves them millions of dollars through simple ad selection and user categorization.
How Do Companies Use User Data?
Companies can gather information about how individuals interact with their online advertising campaigns using cookies, specific tracking URLs, pixel tracking, and other techniques. Targeted advertising is created after analyzing this data for market and customer insights.
So, industry giants are eager to invest billions of dollars in user data because it can help them tailor their marketing strategies to meet user requirements.
Photo illustration: Freepik
For example, user data can be so specific that companies end up knowing everything about a person, including their personality traits, preferences, family, sexual orientation, and the political party they’ve voted for. Once gathered and analyzed, this information is an opportunity for companies to understand the audiences’ needs and learn how to adjust their products or services and turn them into a necessity.
Why Does User Data Fall Prey to Social Platforms?
Customer data is attractive to prominent online platforms, including Facebook, YouTube, Instagram, Twitter, and even LinkedIn. These platforms are a breeding ground for consumer data, as pretty much every post, video, or like can give them insight into user behavior and preferences.
Not only does collected data help companies improve user experience and usability, but it also allows them to make extra money controlling who gets to advertise on their platform. Additionally, companies tend to partner with businesses to ensure users see relevant ads.
“To show you more relevant ads, we receive and use data that advertisers and other partners provide to us about your activity on their websites and apps, as well as some of your offline interactions, such as purchases. For example, we may show you an ad for a shirt based on your visit to a clothing website.”(Source: Facebook Help Center)
The same office, Facebook Help Center page then confirms that people can turn off this setting at any moment. Here’s the quote that further explains how Facebook targeted ads work.
– This setting controls whether we can show you personalized ads on Facebook based on data about your activity from our partners. If you turn off this setting, the ads you see may still be based on your activity on our platform. They may also be based on information from a specific business that has shared a list of individuals or devices with us, if we’ve matched your profile to information on that list – stated from Facebook Help Desk.
Is User Data Fuel for Identity Theft?
According to Varonis, brute force attacks or the use of stolen or lost credentials account for over 80% of hacker breaches. Additionally, cybercriminals may steal user data for blackmail, identity theft, or the next online sale initiated by anyone willing to pay for stolen user data.
Photo illustration: Freepik
Cybercriminals’ earnings will vary depending on the type of user data being extorted. So, for example, someone can sell credit card numbers for a significantly higher amount than they would get for selling user home addresses.
How Much for a String of Data?
It’s impossible to determine the exact worth of user data. However, some estimates can give us a clearer picture of how much money, on average, tech companies earn from selling our data to third parties.
Important note: It’s critical to mention that companies won’t sell user data to anyone. In other words, user data sold by tech giants never ends up in the wrong hands (or hackers and people involved in fraudulent activities, at least). Instead, they sell it to other organizations and data brokers or share it with their corporate partners.
According to the Drum, one email address is, on average, worth £84.50 (roughly $94) to a brand.
-£84.50 (roughly $94) is a cross-industry average and we do see a great deal of variation of the lifetime value across different vertical sectors; the lifetime value of a travel email currently stands at £236 (roughly $263), whereas an email within the retail sector comes in significantly lower at £79 (roughly $88). – Richard Jenkings, a lead Drum consultant, explained in an article for the Drum.
Additionally, MacKeeper’s research suggests that data price depends a lot on user demographics.
“For example, the cost of someone aged between 18-24 is more than someone between 25-34, largely because the older you are, the more your money is likely to be tied up in bills and other financial commitments.” Writes Ruslana Lishchuk, a tech expert and writer for MacKeeper.
Utilizing Web3 Technologies to Stop User Exploitation
The Web3 world is still under construction, but we can already observe projects that will result in a life-changing transformation. Cryptocurrency is on its way to becoming a primary payment method, and we’re on the verge of diving into metaverses.
More importantly, NFTs are going mainstream, and experts worldwide are figuring out how to utilize this technology fully. As NFTs are certificates of ownership, they can be tied to any asset, regardless of its market value.
Photo illustration: Freepik
But what does that have to do with user data?
We’re all creating so much valuable information just by existing, and somebody else is profiting from it. Although this isn’t a new issue, it wasn’t until recently that we got a potential solution for this problem.
– Suddenly, a whole new world can open based on the NFTs in regards to keeping track of ownership of data. And that is where Web 3.0 comes into the picture. The companies that are working in Web 3.0 are dealing with this disequilibrium and trying to find ways, so that in the holy grail, each one of us has our own wallet – all of our data is collected for ourselves, and each one of us can come and sell the data to whom we want and receive royalties every time that data is used – says Meirav Harel at the Splet Tech conference.
She also noted that we should be able to generate a basic income based on something we generate even by walking and breathing and talking to other people.
In essence, this is the epitome of Web 3.0 ideology. This is the future we’re all looking forward to. Of course, it will take a while before we get the opportunity to make money selling our data to tech companies. Still, what matters most is that there are people actively working on solutions that will allow users to take control over how their data is used and distributed.
