While big tech corporations such as Google profit by harvesting, analyzing and monetizing user data, they are quick to deny that they are “selling” the information.
In response to a federal lawsuit accusing Google of skirting California’s recently passed Consumer Privacy Act (CCPA); Google CEO Sundar Pichai stated in an op-ed that the search giant will “never sell any user’s personal information to third parties.”
If this is true, and Google isn’t selling user data, how are they profiting from the endless stream of information pouring in from their many products?
The Value of Data
Google controls just under 70% of desktop browsers, 62% of mobile browsers, and the OS on 71% of the world’s mobile devices. People perform 92% of their online searches via Google, and nearly 75% of Americans watch videos on YouTube. Google also runs some type of code on nearly nine out of ten sites and inside up to 95% of apps in its Play store.
The corporation gathers data about every single user’s clicks, queries, taps and movements from each of these sources. It then monetizes this data to earn considerable profits.
So how does Google turn all that information into billions of dollars without selling it?
The company monetizes what it learns about user behavior in two key ways:
It shares data directly with advertisers and asks them to bid on specific ads.
It uses harvested data to create individual profiles with interests and demographics, which allows advertisers to target people based on those characteristics.
The first method involves much of the behaviors most people associate with selling data. Google is heavily involved at every level in RTB (real-time bidding), the automated process of third-party ad placement. Via RTB, publishers essentially auction off ad space on their websites or apps, sharing sensitive user data with countless adtech companies. This data includes everything from device IDs and identifying cookies to geolocation and browsing history.
This is one of the reasons why knowledgeable digital marketers are able to craft effective campaigns that help businesses identify and engage their target audiences.
Real-time bidding isn’t the only way tech companies like Google share data with advertisers. Google lets its advertisers target users by email, name or device ID and engage them almost everywhere. Using Google’s Customer Match program, an advertiser is able to upload lists of customers they want to engage, and Google will begin serving these people ads.
Businesses can upload lists of “anonymous” phone numbers or device IDs, and Google will connect this information to actual people. Google will then begin serving ads to those individuals on their computers, phones, and TVs. Any person who engages with these advertisements will be directed to the advertiser’s landing page, where the website owner is able to collect geo locations, IP addresses, cookie IDs and more.
This Customer Match program allows companies to turn simple lists of key identifiers into profitable pipelines to actual consumers. Advertisers are able to leverage Google’s identity graph to acquire new data about their target customers in the process. And for all this, Google is paid, although the company insists that none of this qualifies as “selling data.”
The Bottom Line
Right now, personal data collection practices are under fire, as consumer advocates worry that big tech companies are putting people’s sensitive information at risk. While Google and federal agencies argue about the definition of “selling data,” there is reason to believe that tech companies will soon face restrictions on how they handle user information.
Whether that means paying users for their data or changing the way they monetize it, Google and other tech companies will have to evolve to stay profitable. At the same time, so will the countless companies that rely on Google data to create profitable targeted campaigns.
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