What Stays in Vegas (34 page)

“What was the reason that the ultra-sophisticated Total Rewards system is sending a Las Vegas resident emails telling him that ‘the Sin City sunshine is calling your name again?'” he asks. He is skeptical about the extent to which there is any loyalty in the gaming business and says customers just go where they get the best deal.

Total Rewards head Kanter says the company is not mindlessly spamming local residents. The company knows that if a local does not have to drive home, he or she might gamble longer, generating more revenue. “He may not appreciate that logic, but it's naïve to think that we did not intelligently arrive at the decision. Out of a hundred people that look like him, we'll get a few of them who will respond and at the segment level it's a good decision,” Kanter says.

Harrah's Kansas City manager Tom Cook says the company often falls short of using the personal data on gamblers to make very specific targeted offers. Loveman is surprisingly receptive to such criticism. “We may not catch that as well as I claim to catch it. He's quite right,” Loveman says. “The problem is that when you go onto
the system and try to do it, it's really hard and time-consuming. So pulling the data list and segmenting the data list geographically turns out to be a bitch, and so we don't do it very well, in fact, so we wind up messing that up.”

The CEO says the company does not react quickly enough to details of a customer's visit, and sometimes does not anticipate well enough what customers are doing. But overall, Caesars' deep dive into personal data has long paid off. “Certainly by any measure it is tremendously effective,” Loveman says.
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Over time, clever use of personal data has dramatically improved Caesars' bottom line in the Loveman years. When he joined Harrah's, clients spent just 36 percent of their gambling budget with them. Today, customers devote more than 60 percent of their gaming spending to Caesars. VIPs spend nearly 80 percent with the company.
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Microtargeting clients made his company a leader in the industry and cemented Loveman's rise to CEO in 2003. During his regnum Caesars became the world's biggest casino company, running more than fifty casinos,
⁹
up from fourteen, in seven countries.
¹⁰
When Loveman arrived they operated only in the United States. Now they employ sixty-eight thousand people, up from fourteen thousand.
¹¹

Rival casinos have embraced loyalty programs and gather granular data on wagering and other spending. Some gamblers belong to so many programs that they keep a stack of loyalty cards on a keychain ring. The forgetful among them attach a string from their pants to the ring as a reminder to remove the plastic slab before getting up from a slot machine. “What our marketing is intended to do is to give us an extraordinary share compared with what our position would normally provide, and that's how we measure ourselves,” Loveman says. “And we exceed our fair share in every market but one, I think, across the country.”

For years, casino rivals ridiculed Loveman and his management team as “casino nerds.” Go ahead, call him a nerd, propellerhead, or geek—he doesn't mind. “There are traditionalists in the business who view that as a pejorative notion. They say that with disdain,” he says. “But the industry has really come along in this direction.”

As Caesars embrace outside supplementary customer data, it is likely that other companies inside and outside the world of casinos will continue to do so. You may not visit casinos at all. But rest assured that those credit card offers you get in the mail, the frequent flyer and loyalty club offers, as well as other solicitations are based on sophisticated guesses about what kind of customer you are and what you might be interested in. Even businesses as diverse as the Walt Disney Company embrace the data-driven approach championed by Loveman and speak in similar terms. “What we say at Disney is that there is never too much data,” says Leon Gantt, manager of Disney World's information technology. “We want to have enough information to understand what they want beforehand and anticipate it.” The beloved company faces the same puzzle managers face across the economy: “We have these mountains of data . . . how can we use it without alienating clients while maximizing revenue?”

Opening the Secret Files

Things become more complicated with third-party data. From a consumer standpoint, the problem with such information has long been that these files constitute a black box. As with the Stasi files during the days of East Germany, the ordinary person has no hope of seeing the totality of what commercial data brokers such as Acxiom and Experian have assembled.

For some years, people could request to see just that part of their Acxiom file gathered from public documents, showing less interesting information such as their address and phone number. Yet almost no one was able to surmount the firm's onerous requirements to see even this fragment. The process required sending Acxiom a Social Security number, date of birth, driver's license number, current address, phone number, and email address, as well as a $5 check—and then waiting two weeks. From 2009 to mid-2012, between seventy-seven and 342 people per year had asked to see their files, with just two to sixteen annually providing enough information to get access, the company told a congressional panel.

Yet even then, the commercial dossier remained off-limits. That part of the file includes a description of one's general family and financial situation. It might list race, ethnicity, religious affiliation, education, political affiliation, occupation, and hobbies. Acxiom, as well as other leading data brokers, might know what credit cards you use, as well as some health topics of interest to you such as diabetes or arthritis. Knowing that all of that information exists in unseen vaults at companies people had no relationship with made a lot of them—at least those who knew about it—rather uncomfortable. And the mounds of data continue to grow: in a typical week, Acxiom processes a trillion transactions—twenty times the number of searches conducted by Google.
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In 2011, Acxiom embraced a change in direction by hiring a new CEO, Scott Howe, a former Microsoft executive whom Gary Loveman had taught at Harvard Business School. In interviewing for the position, Howe preached a new direction for Acxiom. The world was moving toward increased transparency and consumer control, and companies that ignore this trend would do so at their peril, he said.
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He got the job leading 6,200 people and moved slowly but deliberately toward cracking open Acxiom's doors to the public. After about a year and a half of internal reorganization Howe kicked off plans to allow people to see a part of their files instantly online. “Long before I came to Acxiom it had always bugged me that I did not know what data was collected about me,” he said. “I think it is bad business that companies lie or exploit or obfuscate the truth from their customers. That's not the kind of company that any of us want to work at.”

Some of the old guard at Acxiom scoffed at Howe's push.
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They recognized the pressure from privacy advocates and the threat of future government regulation. They had experienced similar spurts in the past and thought the scrutiny would pass. They saw no reason to change how things had always been done. But Howe pressed on. “I just could not work at a company, quite frankly, that it felt like we were not doing what was ethically right,” he said. “I couldn't feel good about coming to work every day and being branded as the biggest company that no one's ever heard of or, you know, the commercial equivalent of NSA or the supersecret spy guys.”

Scott Howe, CEO of Acxiom.

Source: Author photo.

In September 2013, Acxiom launched
AboutTheData.com
, a web interface that allows the general public to look up their data instantly. Howe knew that even after Acxiom spent millions of dollars on the project, the site could still be improved. But he thought it was best to go live quickly rather than wait years for engineers to design a perfect system.

Thousands went online to meet their digital doubles. What many consumers found was often not an all-knowing Big Brother but a world of imperfect replicas, sometimes as odd as the flawed Bizarro world of Htrae (read that backward) of Superman comics, where things are the opposite of Earth.

Rich Mirman, the first data guru hired by Gary Loveman, remembered how Acxiom had long tried to sell data during his time at the company. He and others at the time were never convinced of the utility
of such information, and seeing his own file did not change his outlook. Acxiom had accurately listed many of the kinds of things his household buys, but they completely misread who he is, saying he is single with no kids and a dial-up modem harkening to the Internet's earliest days. “How many single men without kids own a minivan?” he wondered. “They should have figured out that I was married with kids—the dial-up modem is just silly.”

Joshua Kanter found that Acxiom knew about his hobbies, purchases, and home, but a lot of the small details were wrong. It knew that he owned his beloved 2011 Audi A5, but it was way off on his income. Overall, he thought, his profile looked as it might have two decades earlier, when he was running his college painting business.

Acxiom thought Kyle Prall, founder of the controversial site
bustedmugshots.com
, was still a student and that he had a child. In reality, he had left school more than a decade before and had not brought any offspring into the world. Claudia Perlich, the East German–born data scientist who was too young when the Berlin Wall fell to have had a Stasi file, looked herself up only to receive a response that “we were unable to verify you.” I found that same response on my own file.

For casino entrepreneur John Acres, who wants to reinvent gambling by using personal information to make games more responsive to individual preferences, Acxiom knew nearly the correct square footage of his house, but his file was wrong on his household income, his vehicles, and the value of his home. “Nothing in there was very informative,” he said. “It was still pretty worthless.”

It's not that the emperor has no clothes. But the attire is more piecemeal and ragged than many had feared. Acxiom CEO Howe said his own file had six or seven mistakes, but noted that the errors come from data wholesalers supplying Acxiom with the raw material for what might be two thousand data points in an individual file.

Before going live with the site, Howe had worried that many users would opt out entirely, leaving Acxiom with less comprehensive files. But something surprising happened as people reviewed their
AboutTheData.com
files. Eleven percent corrected inaccuracies in their files (with political party the single item changed most often), leaving
Acxiom better, more valuable data to sell. Fewer than 2 percent of the half a million people who visited
AboutTheData.com
early on said goodbye for good. Howe had forecast that as many as 15 percent of visitors would use the new site to opt out.

“Managing your data or your preferences or your permissions should be something you think about as often as managing the maintenance of your car, or managing your yard, or managing your health care,” Howe predicts. “It is just going to be something that is part of everybody's routine because those that do it are going to have better experiences. They are going to have better offers, they are going to get unique content, they are going to get better information.”

Many users corrected their files for free. But what if consumers received cash or compensation in exchange for their information? Marketers would get the most accurate data because no one knows you better than you. Under such a system, companies would offer money, status, or special offers to make it worthwhile to share personal data. In the last few years, a number of companies have begun embracing such a model to empower consumers. Some of their founders have dramatic stories of their own.

18

The Not-So-Enriching Business of Privacy

Profiting from Privacy

Shane Green nervously unveiled his startup's website on November 11, 2011, at exactly 11:11 a.m. Place your private information on
Personal.com
, he told the world, and eventually companies will pay for access to your information and to market to you. Not pennies, but real money—at least $1,000 a year for the average consumer. On the day the site went live, Green felt pangs of doubt. “Oh, my God, do we really know what we are doing?”

Some Internet entrepreneurs and commentators thought he was committing a major blunder. Not only could he not safely store personal details such as passport information, medical records, passwords, and alarm codes, but what he was doing was potentially reckless, possibly vulnerable to hacking, the naysayers said. Things did not turn out as either Green or his skeptics thought they would.