Companies that advertise on Web sites want to know if their advertising is successful. They can perform a click stream analysis; for example, Godiva Chocolate’s Webmaster can periodically examine their logs and determine the number of referrals from say, CNN. Or Godiva’s CNN advertisement could implement a cookie and receive data, immediately, about visits to their site.
To take this one step further, companies can hire an advertising firm, such as DoubleClick to deploy their advertising. If a user goes to any of the thousands of sites with a DoubleClick deployed ad, DoubleClick will also implement a cookie on that user’s PC and track the web sites and pages he or she surfs. DoubleClick will then deploy advertisements based on the information in that cookie, and do so over the thousands of sites within their network. So, for example, if the cookie reveals the user frequents a chocolate company’s site, DoubleClick will read this value in the cookie and display a Godiva ad, on any one of the thousands of sites within the DoubleClick network that particular user visits.
DoubleClick offers its clients an added service. Their Abacus subsidiary partners with several Web sites that require subscriber registration. This registration form requires the subscriber’s name, e-mail address, and other personal information. When this personal information is combined with DoubleClick’s cookie, the result is a tracking and profiling system that is keyed to the user, by name. Web surfing is no longer anonymous; if an organization is looking for people with, say, a certain medical condition or political affiliation, DoubleClick will sell it a list of names that meet the criteria.
Cookies and Data, Knowledge, and Information
The use of cookies is an excellent example of the real time intermingling of data, knowledge, information, and business process.
Date represents the state of the world, or in this case, the state of the visit to the Web site. Associating the cookie with an identifiable person becomes knowledge because the data in the cookie is now relevant and of economic value to marketers and others. This interaction between data and knowledge becomes information that can be applied in various ways, for example, marketing campaigns or government agencies seeking people who access illegal content.
Cookies and Knowledge Characterization
Abacus’ network includes search engines, e-commerce, and sites that provide access to Usenet. Some examples include:
- Search terms that are entered into the search engine AltaVista are sent to Abacus.
- Some sites that require personal information, for example, sites that are used to search for and rent videos, purchase goods or services, or access financial information transfer the information to Abacus.
- Various sites that require supplying personal information in order to access content, take advantage of a promotion, or enter a contest do so in order to sell the information to Abacus.
DoubleClick merges this personal information from Abacus with its own cookie allowing them to combine the users Web surfing profile directly to that individual. This has the potential to transform the Web from an anonymous environment to one where individuals are identified and their activities tracked. DoubleClick has the ability to provide this information to organizations that individuals have no relationship with, and without their knowledge or consent.
DoubleClick takes discrete data items, such as Web sites visited, pages accessed, and personal information, to develop a profile of an individual. By combing this tacit knowledge, knowledge the Web surfer believed only existed in his or her head, with the individual’s identity, it becomes explicit knowledge; knowledge that is expressed, categorized, and stored and retrieved in a computer. As this explicit information about numerous individuals is aggregated into categories, based on, for example, health or lifestyle, it losses its explicitness and is turned into a record in a file and becomes something to be sold, such as a mailing list. On the Davenport information continuum this mailing list, a collection of explicit knowledge that is marketed as data, moves away from the knowledge pole and towards the data pole, in other words, the explicit information on individuals becomes data that is put up for sale.
DoubleClick’s knowledge of a Web surfer’s identity, and selling it, turns an individual’s tacit knowledge into social knowledge. The individual Web surfer is probably under the impression that his or her Web activities are anonymous; this knowledge is tacit because he or she is the only one with knowledge of the sites and pages he or she are visiting. When this tacit knowledge is transferred, via DoubleClick to a business, it becomes social tacit knowledge. That organization has a powerful business advantage over its competitors because it can target its efforts directly to those who have demonstrated an interest in its products, services, or cause.
The updated information continuum model can be applied to DoubleClick’s use of cookies.
Data Knowledge
Data Routine Explicit Communal
Structures Knowledge Knowledge Knowledge
At the right pole, individual tacit knowledge is the Web surfer’s need; only he or she knows their interests and understands what they expect from their Web surfing experience. This becomes communal knowledge as DoubleClick categorizes and packages it with other individuals with similar interests. It moves towards explicit as it becomes generally available, for example, put up for sale. The purchaser of the information will abstract the information it needs, for example name and address, and enter that information into its database, becoming data structures.
Cookies and Knowledge Binding
The use of cookies to gain immediate knowledge of what content people are accessing at a Web site, as well as DoubleClick’s information about who specifically is accessing the site, are indicative of late knowledge binding activities.
Late knowledge binding organizations are characterized by the application of knowledge late in the process, a short lead-time between specification and execution, high ambiguity and uncertainty, and a turbulent environment. These organizations emphasize tacit knowledge that is externalized into explicit knowledge. A software application that takes action based upon environmental conditions is an example of late knowledge binding.
The use of cookies falls into the late knowledge binding category; the feedback is immediate and the response to the Web surfer is also immediate, and it is based upon the action of a computer program. For example, a user visits a financial site, accesses a mortgage calculator, and requests a list of interest rates from various lenders. An advertising agency cookie can use this data to deliver advertising mortgages or other financial products during the current visit, or visits to other sites at other times.
If DoubleClick can associate that data with the knowledge of the user’s name and address, it can do more than deliver appropriate banner ads. It can sell the user’s information to financial firms who would then target specific information and deliver it directly, either via e-mail or through the postal system.
In terms of knowledge binding, this information comes fairly late in the process. The marketing organization will have created the solicitation in advance; all that’s needed is a name and address of an interested person. If e-mail is used to deliver the offer, the cycle time is measured in terms of router hops, essentially it’s real time.
It is generally understood, that e-commerce sites operate in a fast changing and turbulent environment. It has certainly increased the speed that companies can do business
The individual’s tacit knowledge that he or she is looking for a mortgage along with other personal information is externalized into explicit knowledge. DoubleClick will see that anyone willing to pay for this individual’s tacit knowledge that it has captured, will get it.
This entire process is automated. The organization purchasing the information can use an agent that accesses the individual’s credit information, score it, and send out the appropriate solicitation.
With detailed information about customers or potential customers businesses can do more than sell, but cross- and up-sell very effectively. In general, having multiple customer relationships result in greater customer loyalty to the company (or a higher switching costs). Gaining this knowledge electronically minimizes costs as compared to the traditional means of gathering market intelligence.
Knowledge System Model
The appropriate knowledge system model is the network model (E-LB). This emphasizes explicit knowledge (the Web user’s surfing profile matched to his or her name) and late knowledge binding with information flowing horizontally, from the user, to DoubleClick, to the organization interested in individuals matching a specified profile.
Summary
Companies are becoming differentiated based upon what they know. Companies that differentiate themselves based upon their products, or whether they are a manufacturing or service firms is becoming obsolete. Xerox isn’t calling itself a copier company, but “the document company”. IBM sells “solutions” rather than computers and software. Manufacturing a good product or providing a unique service isn’t enough to sustain competitive advantage. Competitors can duplicate any other firm’s efforts by hiring the competitor’s employees or reverse engineering products. In many cases a new product or service serves as a prototype to competitors.
If a firm has access to its customers (and potential customers) hidden tacit knowledge; knowledge of products and services that customers may be predisposed to purchase based upon interests, lifestyle, and prior purchases, it can convert that knowledge into communal knowledge within the company, and it will not be easily duplicated by its competitors. This will become the factor that will differentiate a company from its competitors.
The information DoubleClick delivers to its clients illustrates this concept. Through its use of cookies it can analyze surfing and purchasing history and discern a pattern. This can reveal the goods and services of interest, the social and political issues of concern, income level, hobbies and interests, and possibly lifestyle. With traditional forms of market research, people may be reluctant to reveal information that may be potentially embarrassing, but on the Web, with the presumption of anonymity, these same people will feel comfortable exploring their interests and making relevant purchases. DoubleClick gains access to an individual’s tacit knowledge, and by doing so electronically and in real time, does it with immediacy and at a fairly low cost.
An organization that uses this information has a competitive advantage over those that do not. It can target and deliver its marketing campaign with far more precision and at a lower cost than competitors.
DoubleClick’s clients use of the information gained by cookies is an excellent example of the real time intermingling of data, knowledge, information, and business process. Web surfers do not realize they are making overt their tacit knowledge about themselves and that information is sold to marketers and other interested parties.
When a business purchases this data it becomes explicit and communal knowledge within that organization. Increasingly, goods and services are seen as commodities and organizations will differentiate themselves by knowledge and learning the tacit knowledge of their customers will find they have a differentiator that will be difficult for their competitors to duplicate.