Web Coupons, Privacy, and Price Discrimination

Suppose you’ve got a successful business, selling your product to a diverse set of customers. Life is good. But you’d like to increase profits even more. What should you do?

One option from the MBA playbook (among many) is to think creatively about your pricing. Maybe there’s a way to distinguish your customers from each other and charge them different prices. Perhaps you can charge higher prices to some of your existing customers without driving them away or charge lower prices to folks who aren’t yet buying from you, or a combination of the two.

Businesses have myriad ways of doing this but, not surprisingly, the web has opened up new vistas. Saturday’s New York Times has an interesting article about the extent to which web coupons can be used to distinguish customers, track their behavior, and optimize marketing and pricing strategies (ht Diana):

The coupon efforts are nascent, but coupon companies say that when they get more data about how people are responding, they can make different offers to different consumers.

“Over time,” Mr. Treiber said, “we’ll be able to do much better profiling around certain I.P. addresses, to say, hey, this I.P. address is showing a proclivity for printing clothing apparel coupons and is really only responding to coupons greater than 20 percent off.”

That alarms some privacy advocates.

Companies can “offer you, perhaps, less desirable products than they offer me, or offer you the same product as they offer me but at a higher price,” said Ed Mierzwinski, consumer program director for the United States Public Interest Research Group, which has asked the Federal Trade Commission for tighter rules on online advertising. “There really have been no rules set up for this ecosystem.”

The web thus offers new ways for companies to pursue the holy grail (from their point of view) of pricing: the ability to personalize prices for each potential customer.

Needless to say, this is sometimes bad news for consumers. After all, increased information can allow firms to jack up prices to consumers that the firms believe are unlikely to stop buying.

Less appreciated, however, is the fact that this can benefit consumers as well. For example, increased information can sometimes help firms offer lower prices to select customers who wouldn’t otherwise choose to purchase.

Without further information, it’s hard to know how such creative pricing will affect consumers in the aggregate. Except that the variety of prices will increase, making more of the marketplace look like the airline industry, in which it sometimes seems as though every seat was sold for a different price.

Google and Me, Part II

My existential crisis is over. As of last Thursday, Google is again including this blog in its search results. So, welcome to all the new readers who’ve come here after Googling information on the Eggo shortage and the debate about whether kids should get one H1N1 shot or two.

This is probably of interest only to other bloggers, but for the record: When I first started this blog, it took about six weeks for it to appear regularly in Google search results. After several months, the blog inexplicably (to me, at least) disappeared from Google’s results. As in *really* disappeared; as one friend pointed out, you couldn’t even find it if you searched for “Donald Marron blog”.  About eight weeks elapsed before it reappeared regularly in the first few pages of Google’s results.

My eight-week exile provided a nice natural experiment for evaluating Google’s importance. Not surprisingly, Google drives a good amount of traffic; readership is larger when Google knows about the blog. The more interesting impact, though, is a version of the Long Tail: with Google’s help, more posts find readers on any given day.

 

Google and Me

A strange this happened last week: Google misplaced my blog.

I’ve run all the usual diagnostics, and I can confirm that Google still knows that my blog exists. But it no longer appears in any of the searches – e.g., “natural gas price”, “unemployment”, “budget deficit”, or “brooke boemio” – that used to help new readers find posts on my site.

Things are so bad, in fact, that my blog doesn’t even come up when you search for “donald marron”. I feel an existential crisis coming on.

I presume this is just the result of some obscure algorithm tweak and that, over time, my posts will reappear in the ranks of the Google-worthy. But it’s fun to imagine that Google is mad at me for my posts criticizing the way it reports unemployment data.

I just checked and, no surprise, Google is still reporting the wrong data. If you search for “unemployment rate”, Google will tell you that the U.S. unemployment rate was 9.6% in August, when in fact it was 9.7%. Why the difference? Because Google is reporting an obscure measure of unemployment, not the one used by 99% of the world.

Voyaging Through U.S. Jobs

In honor of Labor Day, you may want to check out Job Voyager by Flare. It provides a graphical history of the rise and fall of different types of jobs in the United States from 1850 to 2000.

Here’s what you get for “Farmer”:

Farmer Jobs

Back in 1850, farmers accounted for more than 40% of reported jobs. Today, less than 1%.

If you click around, you will find that the decline in farmers has been offset by growth in a host of jobs, including clerical, retail, and nurses.

And economists? Well, we grew rapidly until 1990, and then tailed off. Perhaps the would-be economists ran off to Wall Street instead?

Economist Jobs

P.S. The Job Voyager charts were inspired by the famous Name Voyager charts that let you track the popularity of first names.