Mark Cuban’s Facebook Data Ideas, and My Reply
Recently on his blog, Mark Cuban (internet and HD TV entrepreneur and owner of the Dallas Mavericks) wrote about his efforts to uncover intelligent uses for the profile data compiled by Facebook.com.
The post is here. You will tell right away that Mark is really a super-sharp guy.
Herein is my reply to it. I also left the reply on his page. Let me know your thoughts.
Mark,
Very smart, and companies like Acxiom often use self-reported data in their data aggregation models. They often compare this data against other sources for validity.
Two concerns. One is unfounded and misguided, the other very founded, and both are very real:
UNFOUNDED and MISGUIDED: Regulation. Privacy wonks in the government would likely quash this if it were added to additional ‘offline’ data sources… which is what is needed to make it really powerful data. Yet the government is so misguided, because most people want marketers to target messages better.
People never complain about the signal, just the tons of noise. If a marketer gets to people fewer, better offers, they love it… they would doubly love it if a marketer gave them something for the initial access to the data… just a recognition of its value. You see this every day at your favorite lunch time spot: “drop in your business card and win a free lunch.”
What is ironic about the privacy advocates is that they turn to the government for protection, and yet the government is the worst place to look.
Here is the perfect truth: Marketers build databases to sell you more stuff you want to buy, to the benefit of the marketer and the consumer. Governments build databases for one purpose only: enforcement action.
Need proof? In 1992, as a starving college student, I made $8,000 that year. Did I get a note from the government saying ‘hey H.J., you made so little money, here are all the benefits you are eligible for. Just come down to the office.’ Ah, no, I didn’t.
Now that I am successful, if I am literally five minutes late with my tax return, they will impose substantial penalties on me. If I am six months late, they’ll be siezing bank accounts. See my point?
FOUNDED CONCERN: The real concern with Facebook is the data integrity being compromised by fraudsters… this is especially true with Facebook. I read recently in Forbes that Lending Club, the peer-to-peer lending company, had built a software ‘widget’ to shuttle money around Facebook from lender to borrower and back again. As of publication, the default rates are 1% (not clear of total loans or total dollars, but I am guessing loans because that would be the less of the two most likely).
The point is, this whole Lending Club/ Facebook thing is setting itself up to be a hotbed for internet fraud. That means the data held within will likely be compromised.
One possible solution: extract all deadbeat borrowers from any marketing database aggregation. But even then, fraudsters might set up lender and borrower and make successful transactions just to see if that will yield better opportunities.
So therein is the quandry: use the data by itself, it could be risk-laden. Validate it with other sources, and the Feds come knocking.
Whatever you decide, good luck with this.
