All That Glitters is Not Gold: Digging Beneath the Surface of Data Mining

This article develops a more comprehensive understanding of data mining by examining the application of this technology in the marketplace. In addition to exploring the technological issues that arise from the use of these applications, we address some of the social concerns that are too often ignored. As more firms shift more of their business activities to the Web, increasingly more information about consumers and potential customers is being captured in Web server logs. Sophisticated analytic and data mining software tools enable firms to use the data contained in these logs to develop and implement a complex relationship management strategy. Although this new trend in marketing strategy is based on the old idea of relating to customers as individuals, customer relationship management actually rests on segmenting consumers into groups based on profiles developed through a firm’s data mining activities. Individuals whose profiles suggest that they are likely to provide a high lifetime value to the firm are served content that will vary from that which is served to consumers with less attractive profiles. Social costs may be imposed on society when objectively rational business decisions involving data mining and consumer profiles are made. The ensuing discussion examines the ways in which data mining and the use of consumer profiles may exclude classes of consumers from full participation in the marketplace, and may limit their access to information essential to their full participation as citizens in the public sphere. We suggest more ethically sensitive alternatives to the unfettered use of data mining.