Warning: ads claim to know who we are

Many of us these days spend more time sitting in front of the computer and internet than in front of the TV. Many of us have also realized that this does not mean less annoying advertisements.

BUT, what many of us do not realize, is that this also means more targeted advertisements. Yes — ad agencies know who we are and what we like, even behind our screens. With this information, marketers can customize their ads and sell clarinets to musicians, kayaks to outgoing and extroverted individuals, and football season tickets to sports fans.

Collecting and targeting consumer data

The American V12 and PYCO groups are examples of these types of companies that sell consumer information to ad agencies. These agencies, in turn, can use the data to increase their revenue by targeting distinct customer segments, optimizing the value of every digital marketing campaign, and reaching the most relevant and responsive online audiences.

V12 is a group that continuously processes individual-level data, compared to agencies that use household-level data to target advertisements. According to a study in 2015, V12 claims that compared to other similar American companies, they provide the most comprehensive information regarding key elements such as individuals’ income, gender, dwelling type, marital status, presence of children, ethnicity, home ownership, internet buyers, etc. V12’s footprint databases can map IP addresses, email addresses, and mobile phone numbers to these offline consumer characteristics and records. This offline consumer data can be grouped according to 12 audience categories:

• Automotives
• Buyers
• Entertainment
• Finance
• Sports and fitness
• Lifestyle and pursuits
• Travel
• Demographics
• Community and Languages
• B2B professions
• Consumer packaged goods
• PYCO personality profiles

Most of V12’s data sources come from self-reported questionnaires and surveys. This information allows businesses and ad agences to decide what and how to market to particular population groups. Automotive data, such as the auto’s class, model, manufacturer, model year, and fuel type, is a prime starting point to understanding consumers. For example, it can provide ad agencies more specific information on consumer’s socioeconomic position, and thus what they can afford or are more prone to purchase. Information on dwelling types can, for example, allow home improvement businesses to display ads of potted plants to apartment renters, while displaying ads of lawn equipment to rural home owners. In addition, personality profiles can provide agencies with information regarding consumer likes, dislikes, trigger points, purchasing behaviour, motivators, and influences. PYCO develops these personality profiles by pairing consumer names and addresses with 320 data points, such as demographics, geography, interests, and other individual attributes, to assign individuals a personality type based on the Myers-Briggs Type Indicator (MBTI), a personality scale developed shortly after the Second World War.

The MBTI — did we judge it too soon?

The MBTI is based on Carl Jung’s theory of psychological types, which differ according to the ways individuals prefer to use their perception, i.e. the ways of becoming aware of things, and judgment, i.e. the ways of coming to conclusions or what has been perceived. Isabel Briggs Myers and Katharine Briggs developed the MBTI to identify basic preferences along four dichotomies, based on Jung’s theory of differences in perceiving and judging, in order to assign individuals one of 16 personality types.

Individuals are classified according to a combination of 4 preferences, according to four dichotomies of cognitive functions:

The 4 letter combinations represent the most to least dominant functions in an individual. For example, a type ESTJ individual is dominant extroverted thinking, second introverted sensing, third extraverted intuition, and fourth introverted feeling. PYCO developed a proprietary algorithm that uses 320 data points to assign consumers one of these 16 personality types.

BUT, does the MBTI have much validity and reliability? Is Jung’s theory even really plausible?

The answer to both questions is no. Firstly. the MBTI shows very low convergent validity. Another commonly used psychological test of personality uses the Big Five personality construct, which is composed of extroversion, oppenness, agreeableness, conscientousness, and neurotocism. A study that looked at correlations between the results of the four dichotomous MBTI scales and the five scales of the Big Five showed showed extroversion-introversion and sensing-intuition were strongly associated to extraversion and openness, respectively. Thinking-feeling and judging-perceiving were weakly associated with agreeableness and conscientiousness, respectively, whereas neuroticism was largely absent from the MBTI. The results also indicated that there is no support for truly dichotomous preferences or distinct personality types — rather than the expected bimodal distribution of scores for the scales, studies actually find distributions similar to that of a normal distribution. Thus people seem to not be “types,” but more “degrees” of personality characteristics. Furthermore, a factor-analytic study shows the study’s weak construct validity, as it found six different factors associated with the results, rather than the MBTI’s supposed four dimensions. In addition to issues of validity, reliability of the MBTI tends to be low. Test-retest reliability studies show that people tend to obtain different personality types in only five-week intervals. To top off the skepticism, Jung’s psychological types theory was not based on any controlled experimental studies; rather, he used subjective observation, introspection, and anecdotes.

Despite the questionability of the MBTI, V12 and PYCO continue to use it to help ad agencies customize and target campaigns according to personality types. V12 has over 200 million individual records, 200 platforms, and provides its data to hundreds of firms. It was also mentioned in SmartCEO as one of New Jersey’s fastest growing companies, and in March 2016 announced its new partnership with the UPS Store. In other words, it seems to be doing well.

So it seems V12 and PYCO sales speak larger than any poor validity and reliability results. Does this mean there may be some validity to the MBTI test? Probably not. V12’s success probably derives mostly from their other data sources such as automotive records, which are easier and more objective to compile.

What does all of this mean for consumers?

BE AWARE. Companies want to make money and they claim to have the tools to develop ways to sell us more things — the things they think we want. But remember, desire doesn’t imply need.

References

V12 Group — Premium Data Provider. (n.d.). Retrieved March 20, 2016, from http://www.v12groupinc.com/

Bachrach, Y., Kosinski, M., Graepel, T., Kohli, P., & Stillwell, D. (2012). Personality and patterns of Facebook usage. Proceedings of the 3rd Annual ACM Web Science Conference on — WebSci ‘12.