Date posted: 09/06/2017 4 min read

The uncanny age of data

The mindblowing power of big data is shaking political structures and changing the way businesses reach customers.

In brief

  • A profound shift is taking place in the way organisations are using data to shape the way they communicate.
  • Businesses can leverage insights from data to ensure their communications are as relevant as possible to potential customers.
  • Big data was used to influence results in both the Brexit referendum in the UK and the 2016 US presidential primaries.

By Tim Dean.

It was September 2016, just seven weeks before Americans were due to go to the polls to elect a new president, and a well-dressed gentleman with carefully combed wavy blond hair took the stage at the summit in New York devoted to public-private partnerships.

It’s not the kind of scene where you expect a presentation that will blow your mind. But for many who witnessed it – either in the auditorium that day or watching later on YouTube – that’s precisely what it did.

The man was Alexander Nix, CEO of a relatively young data analytics company, Cambridge Analytica. He was there to talk about how his big data technology had been used in the recent US presidential primaries.

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But what his presentation really revealed was a profound shift taking place in the way organisations are using data to shape the way they communicate with those whom they wish to influence.

Cambridge Analytica had just finished working with one of the Republican primary contenders, Senator Ted Cruz. As Nix pointed out in his measured Oxbridge accent, when Cruz had announced his presidential ambitions many months earlier, he was far from being a favourite. In fact, only 40% of the electorate had even heard of him compared to more than 80% for his leading rival at the time, Governor Jeb Bush.

Yet after employing Cambridge Analytica’s technology, Cruz went from holding only 5% of the Republican vote to winning 35%, placing him second only to the juggernaut of Donald Trump.

And although Cruz had dropped out of the race by the time Nix gave his presentation, he mentioned in passing that his company’s services had just been recruited by one of the two presidential candidates in the upcoming election. “And it’s going to be very interesting to see how they impact the next seven weeks,” he said.

It was indeed interesting. The candidate who hired Cambridge Analytica was none other than Donald Trump.

We know who you are

Show me the last ten things you’ve “liked” on Facebook, and I’ll be able to tell you whether you’re male or female. Show me 50 “likes” and I’ll be able to pick your age to within a couple of years. Show me 100 “likes” and I’ll be able to describe your personality in detail.

In fact, give me access to all your Facebook “likes” and I’ll be able to predict with uncanny precision which political party you voted for at the last election, whether you drink or smoke, what ethnic group you’re from, whether you’re married, even whether you’re gay.

With the right algorithms, I could probably tell you things you didn’t even know about yourself and I could certainly tell you things your friends or partner don’t know about you.

And that’s just from “likes”. Imagine what I could learn about you if I had access to your entire Facebook profile, not to mention your Twitter, Instagram, Tumblr and other social media feeds.

Over the past decade or so, we have effectively uploaded our personalities onto the internet and even the portions obscured from the public by privacy settings are still transparent to the social media platforms themselves.

Facebook is already well aware of the value of our personal data; in the last quarter of 2016 alone it reaped US$8.81b in revenue from the data freely given by its roughly 1.86 billion monthly users.

It’s data like this that Cambridge Analytica purchased or mined in order to target the political messages of Ted Cruz and Donald Trump.

Oh, and the company also had a hand in Brexit by working on the successful Leave campaign.

Beyond demographics

Using this wealth of data, Cambridge Analytica was able to go beyond the traditional metrics of demographics, where individuals are bunched into broad categories such as age bands, gender, ethnicity or socio-economic status.

These traditional categories are not only broad, they’re mainly based on extrinsic features, such as where you happen to live, rather than intrinsic features, such as your personality or individual preferences.

As Nix says in his presentation, demographics has its limitations when it comes to getting a message through to individuals.

“The idea that all women should receive the same message because of their gender, or all African-Americans because of their race, or all old people, or rich people or young people should get the same message because of their demographics, just doesn’t make any sense,” he says.

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Instead, Cambridge Analytica used its vast repository of data to delve deeper.

“Clearly demographics and geographics and economics will influence your worldview, but equally important, or probably more important, are ‘psychographics’. That is an understanding of your personality, because it’s personality that drives behaviour, and behaviour that obviously influences how you vote.”

According to Nix, Cambridge Analytica was able to build an individual profile, comprising 4,000 to 5,000 data points, on every single adult in the United States. This enabled the company to build a personality profile for each one and determine which messages would resonate most strongly with each.

This is what Cambridge Analytica calls “behavioural microtargeting”. And it’s set to change the way not only political parties but also businesses think about advertising.

Target market

“Blanket advertising – the idea that a hundred million people will receive the same piece of direct mail, the same television advert, the same digital advert – is dead,” says Nix.

“My children will certainly never ever understand this concept of mass communication.”

Rather than posting billboards or running blanket television ads, Cambridge Analytica helped the Cruz campaign send precision targeted messages to individuals. In fact, a single household might received two pieces of direct mail on the same issue addressed to different occupants, and each pamphlet would carry a different message based on that individual’s personality.

“Today communication is becoming ever increasingly targeted,” says Nix. “So you’ll no longer be receiving adverts on products and services that you don’t care about. Rather you’ll only receive adverts that not only are on the products and services – or in the case of elections, issues that you care about most – but that have been nuanced in order to reflect the way you see the world.”

More information

“Today communication is becoming ever increasingly targeted,” says Nix. “So you’ll no longer be receiving adverts on products and services that you don’t care about. Rather you’ll only receive adverts that not only are on the products and services – or in the case of elections, issues that you care about most – but that have been nuanced in order to reflect the way you see the world.”

The question is: how can you make the most of that data? And is it worth delving deeper into something like psychographics?

The key is using data to make sure your communications are as relevant as possible to potential customers, says Murray Love, who is on the senior leadership team for analytics and insights at Quantium, which has offices in Australia, New Zealand, South Africa and India.

Quantium works with its partners – including Foxtel, News Corp, NAB, Woolworths and MCN – to help them use data to better understand their customers and how to reach them.

“If I don’t have a cat and I see a cat food ad, that’s not only wastage but it’s more annoying for me,” says Love.

“But if I’m into motorbikes, and I see an ad for a motorbike, then that’s more relevant to me. So there’s a positive from the advertiser’s point of view as well as for the customer.”

Facebook already has tools that can help you drill down to very fine levels and target highly-specific groups. So if you know that your target audience is males between the ages of 25 and 35 who like surfing and live in affluent suburbs, then Facebook can help you hone in on just them.

However, according to Love, there’s a trade-off between scale and relevance when using big data.

“The challenge for a lot of marketers is they want to talk to a lot of the relevant people but they still need scale.”

This means it’s not always efficient or cost effective to go down to the individual level. Rather, it’s a matter of determining what level of detail best suits your business’s needs.

“People go from talking about targeting half the population right down to the personalised one-to-one approach, but there’s a lot of opportunity in between,” says Love.

The best way to start is to engage with a data analytics company and see what insights they can draw from your existing data, and heed their advice on how detailed you ought to go.

Otherwise, keep an eye out for what political ads you start seeing online or via mail. After all, Cambridge Analytica has already met with representatives from the Australian Liberal Party.

Tim Dean is a philosopher and science writer based in Sydney. This article first appeared in the June/July 2017 issue of Acuity Magazine.