User behaviour, not personal data is the new gold
3 min read

User behaviour, not personal data is the new gold

Understanding why people do what they do, over who they are gives you an unfair advantage.

We continue tumbling towards what is likely to be a recession. Tech company valuations have tanked and every day layoffs are announced, which makes one wonder: what is the real thing that makes the tech industry valuable?

This question is important because right now it seems that speculative money is leaving the sector and fast, so wherever the price floors will end up being will have to be determined by something real. As ephemeral everything digital is, by real I mean something that is valuable enough to be traded for real money.

The simple answer might be IP and code and hardware, but I would argue those are part of the tech infrastructure. What we want to find is the lifeblood that circulates, commodities that are chased by top dollar wherever they appear.

If you look at the question this way, then your answer is data. "Data is the new oil" was the mantra of our latest boom period, and accordingly everyone was worried about our personal data, the disregard of our right to privacy with a lot of talk about the emergence of surveillance capitalism.

But my problem is that personal data and the focus on privacy might have missed the point. People's personal information is valuable of course, but it's a finite resource that's capped to the number of humans on the internet.

Intertwined with the data question, there was always a more infinite resource - online advertising runs the internet after all, and the name of the game in that sector is attention or eyeballs. The more attention you can grab, the more money you can trade it for from advertisers.

But attention in itself is raw. As an advertiser, you don't just want any attention. You want attention that's in the mood to buy what you are offering, and in order to find that, raw human attention has to be refined somehow, otherwise, you'd just spend your money on radio or television ads.

As we know, the internet killed the television star, and for a straightforward reason, primarily: computers are much, much more interactive than television ever could be.

When it comes to watching television, you only really get a little information on your viewers: what shows they like, for how long, and how big is the average household watching those shows.

When it comes to computers, you can measure everything. The entire consumer software industry runs on ruthless optimization. What are people doing on our app or website? What are they trying to achieve? Do they use it more if we put this button there or if we prompt them to do X, Y, Z?

At this point you might be thinking - wait, that's just usage data and UX optimization. How does it become a valuable commodity?

In order to grasp that, think of its distant cousin - trackers used in advertising. The great worry of the privacy protectors was that the trackers were after who we are. They weren't and aren't. They care about what we do on the internet: what pages we visit and what articles we read, and they optimize what ads they show us based on how we behave.

The underlying principle between the two is the same. These systems gather data on user behaviour, then prompt the user into some kind of desired behaviour.

If you look at our current tech landscape this way, the weirdness of it all starts to make more sense.

Let's think of a simple, innocent example even. Sharing pictures and videos of our cats was one of the first killer use cases of the internet. But the sort of person who posts about their cat (or likes cats enough to interact with cat content) is also the sort of person who's likely to buy cat stuff, which can range from quality food to all sorts of toys and forts and veterinary care and the like. Being a cat person also means fitting a whole lot of buyer personas for Big Feline, and you show enough videos of cute cats to kids and soon they'll grow up to be one as well.

Companies like Meta and TikTok are not extremely valuable because they have all our private data. It's not because they hold an unprecedented amount of human attention either. It's because of their supreme ability to capture and influence human behaviour, and lending that power to whoever is willing to pay for it.

In essence, they have proved that large swaths of the human population can be convinced to do stuff for points on the internet.

There was a saying that the point of television programming is to help the viewer settle in a buying mood for whatever advertising was running between shows. The point of consumer software then is to keep people engaged enough so they surrender their behavioural information willingly, so that we may accurately assess what ads would work on them.

Within that context, data might be the new oil, but behaviour data is the new gold. It is after all a tradeable commodity, one that is produced in infinite amounts for free by billions of people simultaneously. All the code and the IP and UX wizardry - that's just operating the gold mine.