Last week Google announced they are offering searchers the option to use SSL when they search. SSL stands for Secure Sockets Layer, and is a method of web encryption. When using Google’s new SSL page, your search terms, web history and other personal information will be encrypted, thereby improving your privacy.
With SSL, you can search and browse in full confidence, knowing that your personal information and browsing habits will never find its way to unscrupulous third-parties. When you click on a Google link, and visit an external site, because your browsing is encrypted, the site you visit will not be able to see that you came from Google – nor will they be able to see what you searched for. Advertisers therefore can’t use your personal information to provide you with ads for things you don’t need or want.
Sounds great, doesn’t it? And the more secure we can make the web, the better, right?
It is only once we consider the implications for the web businesses that we realise the sheer importance of such analytical data. It is only when this data is threatened to be taken away, that we realise that SSL encryption might not be in the public’s best interests.
Let’s see why.
Analytics is not all bad. Okay – it does let businesses collect information about your browsing habits, your search words, your referring URLs, your city and your number of return visits, which you could argue is more information than you would like to hand over.
But we need to realise that such anonymous information is central to the efficient allocation of online resources. It is only because we freely hand over such information to website owners, that websites are as user-friendly – and online prices are as low – as they are today. None of this would have been possible if web businesses were blindfolded.
Analytics provides a market – an invisible hand which allows resources to flow to the areas which deliver the best return. It prevents wastage, and helps to efficiently connect buyers to sellers.
To illustrate how the data you hand over is the lifeblood of such a healthy online economy, let’s imagine a world where SSL is standard across the whole internet. Every page is encrypted, and none of your data is handed over.
Suppose in this SSL world, a retailer of men’s and women’s gifts wants to know how his online marketing campaigns are working. He logs in to Google Analytics, and all he sees is a visit counter (2,500 visits), and perhaps some information on total sales (20) and total revenue ($10,000). He can’t see where these 20 sales came from; nor can he see which keywords generated those sales.
But he does know that 20 sales are coming from somewhere, so at least some of his online marketing efforts are working. And since he’s only spent $1,000 on his entire online marketing strategy, and is therefore making a healthy $9,000 gross profit, he keeps everything rolling along and heads out to lunch with his head held high.
Similarly, another gift retailer adopts a similar online marketing strategy. She generates exactly the same amount of visitors (2,500), sales (20) and revenue ($10,000), for exactly the same spend. Again, her gross profit is $9,000.
All good and well, you might think. But what could have been if keyword data was handed over to retailer 1 and retailer 2?
While working his way through a delicious Penne al Forno, retailer 1 hears talk that it is now possible to see keywords in analytics. In his excitement, he cuts his lunch short and hurries back to his computer to log into analytics. Immediately, he can see that half of his visits came from “gifts for men”, and half came from “gifts for women”. No surprises there – after all, retailer 1 sells gifts for both men and women.
But look at the conversion rates for each keyword! For whatever reason, the keyword “gifts for men” is delivering the majority of his sales, revenue and profit. “Gifts for women” is somehow failing miserably.
It doesn’t take long before retailer 2 also hears word of the great news. In her similar excitement, she also logs into analytics to find that the keyword “gifts for women” is bringing in the majority of her sales.
Retailer 1 then decides to take money out of his poor-performing “gifts for women” keyword, and invest it in the successful “gifts for men” keyword. Within a week, he has increased his his overall sales from 20 to 32, and his gross profit from $9,000 to $14,000, all for the same $1,000 spend.
Retailer 2 also decides to do some similar optimisation. She takes money out of the wasteful “gifts for men” keywords, and ploughs it into “gifts for women”. Her sales increase from 20 to 26, and her gross profit increases from $9,000 to $12,000. Again, all for the same $1,000 spend.
Retailers 1 and 2 don’t know it, but what they’ve done is extremely clever. Their individual actions (and the individual actions of thousands of other retailers) have helped allocate marketing spend to the most efficient channels. Both have seen a significant reduction in wastage, and large increases in profit.
Assuming the gift industry is competitive (which is largely true due to the sheer number of ecommerce retailers), these increased profits will gradually filter through to customers in the form of lower prices.
This ‘invisible hand’, or free market of online marketing, is only made possible with analytical data. Without years of such analytical efficiency, helping to connect buyers and sellers as quickly and cheaply as possible, there is no way online prices would be as low as they are today. There is no way I would have been able to buy a pack of six iPhone screen protectors with free delivery from Hong Kong for only $0.99.
Of course, everyone has the right to protect their privacy. Measures such as SSL will prevent third-parties from seeing your search terms, analysing your browsing behaviour and perusing your social media habits without your consent. And Google’s new SSL page is undoubtedly a response to our increasing desire to keep our online activities private.
But so long as measures are taken to ensure the information you hand over is anonymous and not personally identifiable, should we really demand this increased privacy? If letting advertisers build a database of anonymous stats is all it takes to improve the online experiences and ultimately lead to lower prices for consumers, is handing over anonymous data really such a bad thing? Perhaps we have forgotten what analytics and measurement has done for us, and need to realise that data collection and optimisation is actually in the best interests for everyone.