Hi,
I’ve always been sceptical of these ADS everywhere that offer “free” benefits for little tradeoff like Honey for example (before the whole thing went south).
It made me wonder where is the money coming from? They’re even spending money on advertising to us. Surely they’re not reaching out to give us free stuff out of the goodness of their hearts?
I grew up with the notion that nothing is really free, someone is paying for it. So my first thought is could it be a case of “if the product is free, you are the profuct”.
Maybe collecting people’s data or something…but I’m not very business savvy to figure it out.
What are they getting out of this? Out of shopping receipts?
Comments
> Maybe collecting people’s data or something…but I’m not very business savvy to figure it out.
No, you got it in one, it’s data collection.
Your data. Shopping habits, targetted advertising, etc. There’s a digital profile of everyone, and adding to that database is big money.
You are exactly right; you are the product. If companies know exactly what people from certain demographics are buying, they can both better tailor ads to that specific demographic and save money by not wasting money advertising to people who aren’t likely to buy their product.
Data brokers sell the info to hedge funds to trade on, because it’s more granular information than quarterly reports from companies.
Like for example if they see an uptick in people buying cereal they might increase their investment in milk futures or something
With Honey, aside from all the funny business, the base model was that they would have affiliate deals with sellers where they got a kickback if you bought something using their coupon.
“If it’s free, you are the product” holds true. It’s not always just about selling your data. In this case it’s also about selling, to the merchants, access to you as a customer. It’s like how the Apple App Store makes money. If you’re an app developer and put it on the app store, you’re essentially paying apple (via their 30% cut or whatever it is) for access to their customer base.