A button to buy, personalized prices and “apartheid marketing”

A button to buy, personalized prices and'apartheid marketing'

Those who lived in the areas marked in red in Philadelphia in 1936 did not get a bank loan to buy a property. Source: US National Archives, see Wikipedia

Open letter to the founder of Facebook

Dear Mark Zuckerberg,

Facebook made a profit of 30 percent in 2010. I would like to congratulate you on that: For an entrepreneur at the tender age of 26, this – six years after starting out – is a super achievement.

I would be interested to know how you managed to create this piece of art. Unfortunately, you don’t want to reveal exactly that and even make your investors sign a non-disclosure agreement (- and I always thought the social norm had changed and there were no more secrets?)

Thus, humanity is forced to speculate: If you keep it simple, you could say that you offer your customers the opportunity to advertise – in much the same way that the retailer in the daily newspaper. This, however, completely ignored the possibilities of the information society. After all, you probably know your hardworking members better than they know themselves – and can even analyze their mental changes over time.

Looking into people’s heads

Technology does amazing things: Google, for example, can identify employees with the help of a mathematical formula, which. Google HR brags: "So we can look into people’s heads before they even know they might want to leave."

If an employer can make such predictions – then Facebook will probably know similar things about leisure activities, friends, vacation plans, investment decisions, life attitudes and much more from the (love) lives of its members.

This knowledge needs to be converted into cash. You will not achieve this by offering the members of the stamp collecting group the special stamp with Helmut Kohl’s likeness. To do this, you need to use the knowledge of ‘target marketing’, analyze the buying behavior and offer the lady shoes at the exact moment when the sticks break off.

But that’s still not the end of the story: Michael Reiss and Martin Koser from the Chair of Organization at the University of Stuttgart described how it works in 2003 – three quarters of a year before your network was founded: "From Mass Customization to Mass Personalization – Electronic Personalization from Communication to Pricing to Distribution" – as the title in "io newmanagement" reads. Scientists were already of the opinion at that time:

1:1 marketing is the long-term goal of sophisticated individualization, whereby a customer-centric marketing approach takes the place of marketing homogeneous customer segments: individual profiles replace market segment data.

Furthermore, they believed that "mass personalization of services on the Internet is possible while taking data protection and privacy aspects into account". And in the following sentence, the astonished audience is advised to individualize customers according to their "Customer Lifetime Value" more or less in person. From today’s perspective, however, they were also astonishingly naive:

However, it must be expected that a considerable proportion of customers will not be able or willing to use this channel (the "e-channel"), even if (price) advantages are associated with it.

Well, you’re always smarter afterwards – they didn’t know Mark Zuckerberg yet: In 2010, goods worth 18.3 billion euros were sold online in this country.

"If one of your friends just bought a Nikon camera, yours could be more expensive"

A lot can be gleaned from these goods and services – especially when they are discussed on Facebook: Is it a nature boy who sleeps in a tent even in frosty weather or a bio-muslim boy in Jesus slippers, a chic chick who invests a considerable part of her disposable income in fashion, perfume and jewelry or a photographer who spends every free minute on the hunt for sparing motifs?.

The goal of the entrepreneurs – according to the Stuttgart scientists: "The aim is to make the best possible use of the customers’ individual willingness to pay". Dan Kaminsky knew this a year ago:

If one of your friends has just bought a Nikon camera, yours could be more expensive, because statistically it is likely that you have received a recommendation from him.

New German heibt the word of mouth now "Social Shopping" and is said to be on the rise. Especially if this is driven by applications like the "Diesel Facebook Cam": The guys and girls can take a picture of themselves in the dressing room and upload the pictures directly to Facebook. Great! Less social and more mischievous is Kaminskys’ second example: "If your family is celebrating a wedding, the price of your plane ticket could go up."In the same way, delivery services could raise their prices for the (walking) disabled. The list of anti-social extortion tools and methods does not claim to be exhaustive.

Personalized prices

Compared to real-life stores, personalized prices work especially well in virtual department stores. Because such a personalized price will not be shown to a second customer under any circumstances. It’s no wonder that retailers are jumping on the bandwagon – the REWE Group recently announced that it will sell groceries online this year. The fact that Germans are less price-sensitive today than they were two years ago may also have had a favorable effect on retailers.

At least that’s what Nestle claims to have found out in a study. And of course it stands to reason that the companies maintain their own stores directly on Facebook in order to intercept the customer on the spot. A year ago, 230 "stores" were allegedly already operating in Germany alone. That’s why the "like" button must now become a "buy" button.

The Federal Commissioner for Data Protection, in concert with his European counterparts, points out that online advertisers were only allowed to place cookies on users’ computers with their consent. Whether this will elicit more than a muddy smile from you? In view of the prospect of fat customer profiles, I dare to doubt it. Allegedly you don’t even bother to adapt your data protection regulations in this country to German law.


Ignorance and resistance to advice can lead to overstretching (and rubbing) of the bow. In the case of Facebook, this would probably be the case when it became known that Facebook profiles were being used to prevent people from buying products or using services, in a similar way to Schufa. In the USA, such a practice was introduced in the thirties of the last century under the heading of "Redlining" known. At that time, the residential areas of low-income people were red-lined to exclude them from mortgage loans, insurance, jobs or even supermarkets. This has particularly affected people of color.

In the information age, this practice "Weblining". The effects of this phenomenon are also known in this country: The retailer Kik, for example, used information from Creditreform to fire people who could possibly make long fingers in the future. Doctors treat patients in the "basic tariff" of private health insurance allegedly "third class" because they fear losses through this clientele.

And the socially disadvantaged have nothing to laugh about in the health insurance companies themselves: "If an insured person costs more than he brings in, a red dot appears on the screen of the responsible clerk, and he is treated a little less friendly", Ellis Huber, CEO of Securvita Betriebskrankenkasse, reported years ago. The list of possible disadvantages in the state, economy and society can be extended at will. The public outcry can be massive in individual cases. The various sinners quickly find themselves in the public pillory.

If the public were to identify Facebook as the sole source of such "apartheid marketing," the number of its members would probably decline rapidly, and you could only dream of 30 percent profits.

With social pits

Joachim Jakobs

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