In the modern globalized world, the economy has rapidly shifted a significant portion of consumerism online. Everything ranging from ordering products to marketing and interacting with businesses is done digitally through various platforms and social media. Therefore, the valuable commodity in this environment has become not so much the consumer traffic and sales but consumer data. Every online interaction allows corporations to collect massive amounts of data points on consumer demographics, online behaviors, and preferences. Businesses then adapt this consumer data to maximize profits through targeted marketing and other efforts which have come to dominate the modern e-commerce economy that has a tremendous economic and social impact. A major issue is that many consumers are not aware of the ongoing data collection, and there has been an increasing concern regarding the internet privacy of consumer data and the role that businesses play. Digital data collection by large corporations has had a negative impact on consumer online privacy as many barriers are eroded, but simultaneously, it has brought positive shifts to the consumer experience, with both of these conflicting elements strongly influencing modern social and economic realities.
Business Presence Online
Business presence online can be traced to the late 1990s when technological advancements led to the Internet becoming more widespread and there were increasingly more commercial uses of the internet. At first, businesses had websites but these were relatively rudimentary. In 1995, two major websites were founded that laid the foundation for e-commerce, Amazon and eBay. Both are fully online, with shipping physically occurring after an online transaction. These platforms began to grow exponentially and attract more sellers, both large and small businesses, to their network in order for customers to purchase things (Wiggington, 2018). This laid the foundation for e-commerce and the future growth of online business presence.
In 2004, Mark Zuckerberg founded Facebook, which fostered in the social media revolution in the digital age. By 2012, Facebook had 1 billion users and had overwhelming popularity. By 2020, Facebook will have 2.8 billion monthly active users, and alongside that platform, a wide range of other social media platforms have come into existence, including Instagram, Twitter, and TikTok, each with its unique form of content and sharing. Overall, it is expected that 4.41 billion people, or over half of the global population, will be using social media by 2025 (Issac 2021). As a result of the domination of these social media platforms, businesses have adopted the strategy of social media presence and marketing. Virtually any business, ranging from local shops to large multinational corporations, now has a social media presence in some form. Some have rudimentary basic information on the business and its products, while others have dedicated social media teams that create and post content for marketing purposes, to attract consumers, to interact with consumers, and the final objective, which is to drive sales for the business (Icha & Agwu, 2018).
The concept of digital presence quickly emerged, which refers to how a business exists and represents itself in the online space. That concept typically consists of various components which work together to generate the impression that a brand makes. The digital presence can be broken down into primary categories, which are the business website, social media presence, paid advertising, email marketing, and the content it produces across all of those elements (Tiago & Veríssimo, 2014). In the modern digital world, when the majority of daily activity is online, digital presence is invaluable. People search, read, interact, learn, work, watch, game, and many more, most often online. As a result, people are strongly influenced by what they see, interact with, and do online. A strong digital presence is necessary in a highly competitive market, with everything vying for a customer’s digital attention. Companies, particularly large ones, achieve that by spending millions of dollars on marketing and content, appearing in advertisements as people conduct digital activities (i.e., scrolling Facebook or watching YouTube), and being at the top of the page in any search engines when people search for specific businesses or thematic.
Whether the Internet user is intentionally searching for a business or product or not, Internet marketing and digital presence is important to drive qualified traffic. Greater exposure typically results in more leads or Internet users either clicking on the advertisement to find out more or specifically searching for that company or product online. Increased traffic then leads to sales, as will be discussed in the next section. It is important to note that due to the billions of users of the Internet and social media, they inherently generate more viewership combined than any other potential medium, including television, print, or in-person advertising.
Furthermore, unlike the other mediums, just as businesses have a digital presence, so do individuals. Especially through social media or general accounts such as Google or AppleID, the digital presence contains, at the very least, an individual’s age, location (either self-indicated or tracked via IP address), gender, and most likely race/ethnicity. Furthermore, modern technological tools can analyze social media profiles, search and watch history, and other means of online behavior to create a digital profile for each user that can hint at personal interests, political affiliations, how an individual spends their time, what type of lifestyle do they lead, and numerous other data points (Ziegeldorf et al., 2013).
That is an extraordinary amount of data on one individual, and when combined with millions of users, it generates highly accurate and extremely effective big data for sellers. This is only promoted by the various tools offered by the major social media and tech companies, which encourage the use of data for corporate purposes. There is an adage, “the Internet knows you better than you know yourself,” which is based on that concept of data collection because while a person may be aware of their preferences and actions, it is usually only in the moment. The aggregation of data at a massive scale allows to essentially profile a person extremely accurately, and then complex algorithms work to generate content and advertising that would be best fitting them (Kshetri, 2012). Social media platforms and search engines offer the data and the tools, and businesses pay tremendous sums to use these algorithms. In 2020, 97.9% of Facebook’s revenue ($86B) and 82% of Google’s revenue ($147B) came from advertising, highlighting the tremendous worth and use of this user data and the influence of these platforms on marketing (Isaac, 2021).
Marketers for companies create content and advertising campaigns and choose demographics and behaviors that they believe are best and most likely to generate traffic and sales. It is a beneficial system for everyone because the data aggregators, in the form of Google, Facebook, etc., get paid more per each ‘click’ or essentially traffic to the business, while businesses themselves benefit from the exposure and increased sales. Therefore, while there are non-targeted ads attached to specific content, the majority of advertisements, recommendations, and search results that are presented online to each individual are based on some aspect of their digital profile and behavior pattern (Lee & Cho, 2019). In turn, these are controlled by complex algorithms aimed at maximizing people’s time spent online and profitability through both direct sales and delayed interest in products and services through exposure. As well known, if exposed positively to the marketing of products, even if one does not purchase them right away, the individual is likely to recognize the brand the next time they are in need of that product or service and more likely to select it over competitors (Ruckenstein & Granroth, 2019).
The primary issue that arises from this is the concept of privacy. The large majority of Internet users are not aware of the extent of the data that is collected on their profiles and activities. However, in most cases, it is completely legal as there are no federal privacy laws prohibiting such activity of collecting and utilizing data for advertising purposes. Most often, business terms and agreements include provisions that authorize the tracking of data while using their online services, websites, or platforms. The information can also be stored in databases and shared among companies and even be leaked to nefarious actors (Zarsky, 2019). There is also evidence that data collection can be even more invasive, such as analyzing private messages or listening from devices such as smart speakers or smartphones (which are also connected to popular social media and search engines in a variety of ways).
To every extent, privacy has become virtually eroded in the digital age, and businesses have taken significant advantage of this with hyper-targeted advertising to drive profits. It can be considered a type of psychological warfare; once the control of the data is lost, either intentionally being provided or not, the individual is subject to profiling and targeting by any kind of influence campaign, ranging from the latest Christmas sale to dangerous socio-political advertising. Businesses have a massive impact on social media and internet browsing due to the internet’s ability to have exponentially large amounts of viewership. Therefore, businesses have a huge presence online and they are exploiting user data for corporate benefit.
Role in the Digital Economy
Electronic commerce (e-commerce) can be defined as the buying and selling of goods or services on the Internet through the use of a variety of data, systems, and tools available to both buyers and sellers. Some of these tools are known, such as secure payment encryptions or data analytics tools for sellers to help better manage and market their business (Tsagkias et al., 2020). E-commerce is the primary objective of the majority of business presence online, but in some cases where online purchases are not applicable or impractical, it is meant to either market, provide information, or drive consumers to the primary website of the business.
If any businesses were not actively present online before, as the COVID-19 pandemic hit in 2020 and subsequent lockdowns ensued, they began to actively enhance their digital presence. Many SMEs which were brick-and-mortar prior to the pandemic shifted their business online by the best means possible, while the crisis also led to many smaller entrepreneurs opening up online businesses. There was a rise of as much as 48% in e-commerce services during this time (Lobdell, 2020). Since then, as the world has adapted to remote working, virtual learning, and doing things online, e-commerce has become fundamental to the economy. Approximately 69% of Americans and 82% of Canadians have used e-commerce, with at least 25% doing so on a regular basis once a month. The average spending per online shopper in developing countries is between $1,200 and $1,800 (Ouellette, 2022). The shift online has affected virtually all industries, and even though brick-and-mortar shops and services continue to exist, they attempt to supplement with a strong online presence and some element of e-commerce
E-commerce provides a range of benefits for businesses, consumers, and the general economy. E-commerce has significantly altered the structure of the market, it brings access to the market closer to full competition. That is beneficial because it leads to the highest possible optimization of resources and production to achieve profitability. The nature of the market is such that it promotes choice and competition for consumers. E-commerce favorably affects economic variables, such as leading to higher economic output due to spending, but also higher wages, standards of living, expansive marketing, increasing sales and growth rates, and better quality of goods. E-commerce is associated with increased productivity, the promotion of innovation through various avenues, and, generally, creating of a better experience for consumers (Khalil, 2018).
By engaging in e-commerce, consumers inherently present significant data about themselves, their behavior, and their preferences to the business or platforms where they choose to shop. Unlike physical locations, online shopping can track demographics in real-time, creating optimal consumer profiles for the business. Furthermore, once signing up online for an e-commerce website, an individual directly exposes themselves to marketing via e-mail listings and other means of direct communication. Once in the digital realm, it is the business’ most optimal goal to maximize profit from the consumer’s shopping (Thiebaut, 2019). Therefore, the platforms will attempt to recommend products based on searches, email listings will seem tailored to the individual, and social media advertisements will offer to visit the websites where one has recently shopped.
Companies collect personal data such as email and physical addresses, billing information, and others, typically storing it after it is analyzed. However, once again, consumers have to agree to the terms and conditions in order to use e-commerce, essentially signing away any privacy rights. Furthermore, recent years have seen an excessive number of data breaches among major companies, ranging in severity, which exposes consumer data to nefarious actors who can use the data for fraud (Thiebaut, 2019). The lack of strong data and privacy laws, along with businesses completely disregarding consumer privacy to drive profits, is generally unacceptable, and as e-commerce becomes an essential aspect of the economy, it should be regulated.
When speaking about the sociocultural aspect of this topic, it is clear that social media holds one of the most important pillars of the modern world. Therefore, the importance of social media privacy remains an important factor that should be considered in the social world. Furthermore, businesses hold significance in the socio-cultural environment as well, therefore, social media privacy should be reconsidered in the aspects of corporate presence in the internet world.
Businesses strongly benefit from e-commerce, especially those that exist purely online, as it reduces the need for physical retail locations. Through the Internet, businesses can expand their customer base and have access to a wide range of markets because geographic location becomes irrelevant as long as the product can be shipped or the service offered remotely. E-commerce generally has lower operational and start-up costs and provides an opportunity to showcase a much wider range of inventory than in a physical location. Furthermore, e-commerce brings the benefit of data, helping to effectively track consumer tendencies and apply targeted marketing while also effectively managing inventory to reduce costs (Ram & Sun, 2020).
At the same time, consumers benefit greatly from the e-commerce revolution. The whole aspect of data collection discussed earlier does have some consumer positives. It allows businesses to efficiently create and stock products that would gain popularity. It helps businesses to suggest products or services that the consumer may want, and that level of personalization is difficult to achieve in any other context. E-commerce generally offers lower prices on products as the lower costs of running the business are passed down to the consumer. As mentioned, there is a greater showcase of goods, meaning a wide variety of product choices for the consumer. That is combined with informed decision-making, as consumers can read reviews and research products in real-time, which is difficult to do in the process of physical shopping (Kumari, 2021). Finally, e-commerce holds the convenience factor; it is comfortable, can be done from any location on any mobile or computer device, and it saves time, as a large majority of shipping occurs within three days to the doorstep.
The violations of privacy have had significant socio-cultural impacts in many ways. First, a significant majority of Internet users believe that their online activities are tracked and monitored by both companies and the government. As little as 9% remain very confident that businesses are doing everything to protect their data. For many, this created significant concern, confusion, and feeling of lack of control over their own privacy. Some businesses in particular, such as those dealing with healthcare, relationships and sex, banking and finances – have much more sensitive data at their disposal, yet they continue to collect, utilize, and sell it. Many have accepted this current reality as the status quo of the digital world, while others attempt to limit online interactions to the most essential. However, the social impact can be felt, and businesses with big data are increasingly coming under fire as legislators are pressured to update laws on privacy to meet the digital age standards.
There are also severe social consequences of this data. For example, the big data collected from Facebook was infamously used by Cambridge Analytica for political campaigning purposes, vehemently violating ethical and civil boundaries. During the 2020 pandemic and recent racial tensions in the U.S., big data was used by businesses and ideological organizations to target populations in order to spread misinformation about ongoing events. Businesses played a direct role in this as they benefit from the extensive collection of big data and support the system which ends up largely hurting the consumer more than benefiting them (Shamsi & Khojaye, 2018). Consumer data is transforming businesses, and companies are inherently responsible for managing the data they collect. There are means of establishing social trust that companies must take, ranging from implementing better internal security to adopting transparent customer-centric practices (Wertz, 2021). Big data benefits consumers in some ways undoubtedly, but the privacy of their data benefits everyone as well, so as the digital age progresses, there are significant reputational risks for businesses to consider as well as limiting the social impacts that the data may have.
In the digital age, business has largely shifted online to social media and eCommerce, which companies use effectively to drive sales and marketing. The interactions with consumers online results in the collection of a wide range of data, which holds tremendous value, but it leads to deteriorating privacy barriers. Consumer privacy has been violated and despite the various benefits of online presence, it has led to the erosion of trust in society. The digital economy, which is the big data economy, has been driven forward by consumer data, which they had neither accepted to give nor were the consumers advised. Instead, social media platforms and big businesses chose to pursue their own agendas for profit’s sake. There are no easy solutions as the system had already been built on these privacy concerns, but stronger regulation and holding businesses to respond with user data are essential first steps into the digital future.
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