Privacy vs Utility

“Can I get your postal code?”

We’ve all had this question as we check out of our grocery store or local Ikea. Companies looking for our data to help them service us better. The optimist in me hopes that retailers ask for your postal code to better understand what parts of the city their customers are coming from in order to better serve them. The realist knows that they can merge this data with my credit card information and find out my name and address. Whichever you subscribe to, giving up even something so innocuous as a postal code means giving up a small piece of privacy for little to no personal benefit. Why do we do that?

There is a considerable fight going on right now that is important for our kids as they emerge fully ensconced in the digital age. They will only know a world with social media, streaming video and online shopping. They, and the generation that follows, will also be comfortable in trading a little bit of their privacy for little to no value.

Privacy has become the new global exchange of currency and the value of that currency depends on the companies that are collecting it.

Social Currency

This is where the now old slogan “you are the product” hails from. Social media and search companies use personal data to sell highly targeted display ads. Visitors are measured in CPM and the value of each click depends on the amount of personal data that has been collected for each person. Give more data, click on more links, like more posts and get more “relevant” and tailored ads.

For social media companies your data is their lifeline. Something to think about as Facebook and similar companies start introducing services for children under 13 and home video conferencing products…


The postal code is a simple example of data as a utility. Understanding how to service customers better/faster/cheaper does a number of things that benefit everyone. In the case of online shopping, giving up a little data could help with finding the right product. Giving up your location for services like Uber, Lyft or DoorDash could help find your ride or local restaurants that you’ll like faster.

By giving up data to utility companies the goal is a transaction of some sort. Value for the customer in the form of a product or service that they are seeking. Utility companies don’t necessarily use your data as the product but as a means to improve theirs.

Blurred Lines

There used to be two camps. One that focused on selling ads, the other focused on selling product. That isn’t true anymore. Social media companies whose business has traditionally been selling ads are now moving into online stores while Amazon now derives 5% of their revenue from selling ads. This is where it gets tricky for consumers and businesses that use social and e-commerce companies to reach them.

They who control the data

Giving up small bytes of our privacy for value doesn’t seem that bad — provided that the use of that data is for the intended purpose. For example, we’ve all become accustomed to giving up our general location to see if our local Home Depot has inventory. This is much easier and faster than getting in your car, driving the 10KM to the store to find out the product you want is out of stock. Temporarily giving up a little bit of privacy currency eliminates the uncertainty. This is a value transaction. Focusing on the utility of using the data for the purpose of actually helping moves customers to share more. Keeping the “utility gained vs privacy lost” value high on the utility scale will guide the decisions needed to make a deeper customer connection.

The data exchange

If every bit of data has a value to some company, there needs to be a fair market exchange that happens when it is given up. Or at least there needs to be an option for that. In the same way that stocks are priced based on demand, perhaps data should be priced that way as well. We set the price of our data, we determine its value to us as it relates to its use. The social media services and retailers can then decide if the price is right to ask for it, to pay for it in cash or additional services. Can you see a day where Ikea asks for a postal code and in exchange offers up free assembly?

This isn’t a call to arms — you do with your data what you want to. We just need to get smarter about the amount and the value of the information that we freely throw out with no expectations of return. We take great care in managing every other aspect of our lives that provide a return — our homes, our jobs, our investments, our credit scores — but when it comes to our identity we give it away often and for free. What is your privacy score?

The next time the cashier asks for your postal code ask what you’ll get in return. A blank stare of discontent is my guess…and that isn’t enough for me.

Photo by ev on Unsplash