• by Steve Smith , Staff Writer @popeyesm, April 24, 2009

When I first heard of Business Week reporter Stephen Baker's book about the new world of data mining, "The Numerati," it seemed a must-read for anyone interested in behavioral targeting. So imagine my surprise when the first character to pop up in Baker's book was Dave Morgan, former chair of Tacoda and longtime evangelist of BT. Starting the book in Dave's New York office, Baker writes, "The advertising entrepreneur is flush with details about our ramblings online. He can trace the patterns of our migrations, as if we were swallows or humpback whales, while we move from site to site." Morgan is scratching his head over why romantic movie lovers were keen to click on a car rental banner.

Baker's fascinating drill down into the world of data hunters and gatherers is one of the first accessible looks into the complex trails we leave behind us in a new digital world. I caught up with him by phone last week to see how he puts behavioral targeting in the context of the much larger, looming world of data collection. He seemed almost bemused by the recent fixation of regulators and advocates on BT. "If they are really concerned about behavioral advertising, then they are really behind the times," he says. "Behavioral targeting seems to me to be innocuous."

If you want to see the most significant tracking device of the next stage in data mining, check your pocket, says Baker: "If you are concerned about privacy consider the kind of tracking that could be done with cell phones." Baker wrote a story in Business Week in February about "The Next Net" that explains how companies like Sense Networks are mapping movement data from cell phone users. Telcos are handing this data over to the company, which then feeds geo data into a computer that starts assigning people to "behavioral tribes" based on how they move and where.

"You are just a dot in this system," says Baker. "As you move around and take on the colorings of your tribe, they can start to look at where people like you hang out on certain days, weeks and hours of the day and begin to target advertising based on that."

It is these offline behaviors that are of greatest interest and value to the emerging numerate, Baker says. Customer loyalty cards are bound to become a real center of interest because they can be combined with other technologies, again, to track physical movement. "They are increasingly going to have RFID chips in them so [retailers] can see where we go," he says. "This is already happening at conventions and trade shows where they are building it into the badges to see which people go to certain booths."

Baker thinks of the next stage of real-world behavioral tracking as a projection into reality of the tracking that has been possible online. "It is easy to see how people navigate through a Web page," he says. "That same type of tracking is moving into the brick and mortar world. People want to see how people move through a city, through a trade show, through a department store."

But as all of us leave behind so much digital data, and reveal so much of ourselves, will we have to become Numerati ourselves to manage the data and protect ourselves? Hardly, says Baker. He actually sees a market opportunity for companies to help users manage their data and exercise control over which companies do and don't get to use it. We don't all need to manage our cookies and prune our profiles at behavioral targeting networks. Just as Microsoft and Apple created operated system layers that demystified the personal computer for the non-geek world, he sees space for companies to act as data managers for us. They will help us dole it out to the companies we trust.

Baker himself is less frantic and suspicious of these developments than many journalists who cover the digital scene. While the world of digital behavioral tracking is about to explode as most devices include some sort of geo-location capabilities, he sees the upside first and suggests that digital technology is overcoming the irritations of anonymity in a post-industrial urban world. "If you think about the way our grandparents lived, they probably lived in a community where people knew them and knew what they were like and could give them something closer to customized service than what we get in a supermarket. So being known isn't necessarily a bad thing," he suggests.

"Some people don't want to be treated like ants and black dots but be treated by people who know them, This is the computer age's response to that. It is saying we can start to figure you out and give you customized service. So on the one hand you have customized service and on the other you have targeting. Targeting sounds bad. Customized service sounds good."