Facebook is usually one of the first companies to suffer the slings and arrows of privacy advocates, but during a Wednesday morning seminar at the Cannes advertising festival, it was the executive chairman of another online advertising monster, Google, who painted a picture of a not-too-distant future that could give the shakes to anyone concerned about safeguarding their identities.
With the explosion of so-called location-based advertising, as well as marketing outfits like Groupon that are training consumers to jump at flash-advertising offers, people seem to be more willing than ever to trade their personal information for an apparent economic benefit.
Noting the increasing presence of The Cloud -- that is, the growing collection of data stored in remote computers accessed over the Internet -- Google's Eric Schmidt outlined a scenario under which shoppers could buy products and services in retail stores using only their phones.
"Let's think about it," he said to Andy Berndt, the chief creative officer of the search giant's in-house ad department Google Lab, who was interviewing him. "I'm here at Cannes, I want to buy a t-shirt because it's hot, and I'm walking down the street. What I really want is my phone to understand my brand preference. And I'm walking down the street and (the phone receives information that says:) on the left you can get this particular brand at 20 per cent off, and on the right there's another brand at 30 per cent off. The phone does the euro-dollar calculation for me. I choose, based on the information that comes up on the phone, and maybe it makes a recommendation based on my past history...and then I turn left or I turn right, I walk into a store and I say, I want the t-shirt. Somehow, it already knows I want it, I tap my phone on the pay terminal -- so I don't even have to get a credit card out -- and they hand me the shirt.
"Now, how big a market is that? Many, many, many billions. It's probably a trillion dollar market over time, given the scale of retail commerce and so forth. And Google is the first company, to my knowledge, to be able to integrate all of that together. What I just described for you is the Android phone, the Google Wallet with a series of affinity cards, credit cards and so forth, the cloud services behind it, settlement systems with the various card authorizers -- including here in Europe -- the offers mechanism (for discounts), and then very, very targeted advertising.
"You say, how does Google make money? We make money on the ads. We don't make money on the transaction -- we're in the ads business. How valuable is an ad that gets somebody to walk into a store and buy the product right here? You can imagine it's a very, very good business for us -– and for you all as advertisers as well."
Simon Houpt