digitally numb

The Social Data Balancing Act

Is life so boring that you need to turn it into a game? Millions of people seem to think so and that’s why companies like Foursquare, Gowalla, Brightkite, Loopt and others are the new start up darlings. To the uninformed, these services appear to be similar to Facebook or Twitter, but only scarier, because you pretty much broadcast your precise geo-location every time you “check-in” somewhere in the offline world. Facebook may be busy spreading its social graph around the Internet, but foursquare and others are actually building a social graph in the real world (which probably explains why Facebook is also jumping onto the location/check-in bandwagon sometime soon).

Of course, none of these services are only about boasting about your active social life by broadcasting every place you visit. The gaming mechanics aspect of it turns routine visits to your gym of local coffee shop into a competition with others (and a marketer’s wet dream). The game encourages you to visit new places, add tips to places you visit, learn more about your friends and yourself. Users seem willing to share more data as they get more engaged with the services. This isn’t all about fun and businesses are seeing real value here. Just ask foursquare and their recent partners like the Wall Street Journal, Bravo, Pepsi, Time Out or the Financial Times. The loyalty and location-based marketing opportunities here seem endless. But where is all this heading?

Data!

Continuously improving the gaming mechanics involved (adding new badges, rewards, etc.) is going to be an important part of keeping users engaged and attracting new ones, but as the user base of companies like Foursquare grows (they recently crossed 1 million users), the real success of these businesses will hinge on their ability to mine the rich data that is being assembled by the minute.

A lot of people tend to think that the privacy issues here are less important because users proactively choose to broadcast their location by participating in such services. However, it all really depends upon what these services do with the data (or the social graph) they assemble. At this point they can pretty much do what they want, but as we’ve seen from recent examples, those actions are not without its consequences.

What companies like Foursquare decide to do with the data can either:

directly benefit their users: improve their understanding of their city, friends and themselves;
indirectly benefit their users: great marketing offers, discounts, freebies etc.; or
offer what appears to be zero user benefit: share it with third parties who may in turn do whatever they please (whether good or bad).

Is this a privacy issue? Yes and no. It’s what I prefer to call the social data balancing act. On one end of the scale is the value proposition for the user/consumer and on the other end is the value proposition for the business. Of course, the two value propositions are not mutually exclusive, but achieving the right balance is the hardest part.

Here are some of the data choices that lay ahead:

Enhance the consumer value proposition: Use the social graph data to generate a personalized analytics dashboard that provides rich insight and context into each users offline activities based on what they share on such services (places they visit, people they hang around with, emotions they feel). I’m not talking about the simple statistics and history they report now, but layering context and insights to identify patterns and make recommendations on how users can act on the data to improve their lives (e.g. recommended things to do or people to spend time with to make their day more enjoyable, based on previous behaviors). Think of it as a secure, user-specific performance dashboard that can help people optimize their lives based on data! Read this fascinating article from the New York Times about the potential value of a data-driven life.

Enhance the business value proposition: Mine the social graph data in the manner outlined above and assemble detailed psychological and behavioral profiles of all the users of such services with the goal of segmenting them into categories that can be packaged with data assembled from other sources (online and offline) to build rich profiles and insights that can ultimately be shared with marketers and other third parties for a price.

To be honest, it’s probably not even a question of choice. The real question is how all (or some) of the above will get done in a manner that balances competing interests, while ensuring the growth of the location-based social media business model. No matter how ridiculous the location trend appears to non-users, if you think about where all this is heading, you will realize that there could be some social value here. The bad news is that extracting that value will require some careful maneuvering through the murky and often stormy waters of privacy, consumer rights, responsible data use, the role of advertising, etc.

Let’s get this right

Social data will continue to grow no matter what, but we can use it to either enhance or disrupt our lives. If we somehow get this right, location-based social media businesses can not only be profitable, but can also create amazing consumer experiences that help their users live happier and better lives.

Ultimately, let’s hope we all come to realize that turning life into a game may not be that bad an idea after all.