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The Emergence of the DarkNet and What It Means for Marketers

by Andrew Delamarter & Leala Abbott, HUGE / August 23, 2013

Note: This blog entry is available in English only.

The conventional wisdom for several years now has told us that privacy is dead. The benefits of online sharing outstrip the drawbacks of lost privacy, and Millennials, a digital-first and -only cohort, are willing to bare all (sometimes literally) to the world.

The reality is more complicated. While social sharing is more popular than ever, especially among Millennials, several developments might contribute to a renewed interest in buttoning up online: overreach by marketers and governments–reports of NSA snooping into phone records and online activity have blanketed the news in recent days–and perhaps most importantly for marketers focused on Millennials, the enthusiastic embrace of Facebook and other social networks by parents.

If recent history has been a time of Peak Surveillance, the privacy pendulum might be swinging ever so slightly away from the apex now. This development coincides with a tech breakthrough: Privacy-protecting digital technologies previously available only to governments, large corporations, and high wealth individuals are filtering down to the smartphone-equipped public. For the first time, regular people can create transactional, private and secure online identities distinct from their ‘real’ selves.*

One can imagine an emerging world–the DarkNet–where people have both their “real” online identity–with a physical address, LinkedIn profile and credit union checking account–and other, “secure” digital identities (we call them SecDents) that make use of unbreachable, encrypted communications and crypto-currency wallets for financial transactions to participate politically, socially, economically and intellectually in society without any connection to their real identities. Of course, the chances that the mainstream public will go off the grid are slim, but it’s instructive to note the options that are becoming available (Bitcoin is probably the most well-known currently).

The implications of the DarkNet–or at least a Darker Net–for marketers are potentially enormous. Part of the promise of recent digital and social innovations has been the new ability of businesses to learn tons of valuable and insightful information about their current and potential customers. The loss or compromise of that data could undermine recent marketing progress–not to mention budgets.

Brands that adapt first to this new environment will be well positioned to profit in a new world of more anonymous commerce, communication, and community.

Renewed Interest in Privacy Driven by Aggressive Marketing, Government Overreach and Millennial Independence

Several factor are–or potentially could–motivate people to become more vigilant about their online privacy, including adopting new tools to create SecDents.

First, advertising technology called remarketing has proven alienating to online consumers. Remarketing, which lets advertisers follow someone around the Internet with a display ad, based on a previous search engine query, specific site visit, or other online action by the user, has increased in popularity in recent years. Marketers like it because of how it targets actual consumer behavior, but it comes at a price: as users see remarketed erectile dysfunction ads chasing them across the web, they become increasingly aware of exactly how much corporations know about them.

It’s not just marketers intruding on privacy. We now know that the government, through the NSA and other agencies, has been monitoring and collecting phone records and data connected to the online behavior of individuals for years. As the average Joe becomes more aware of such data monitoring and collection–helped along by groups like the Electronic Frontier Foundation and widespread media coverage–adopting SecDents might become an appealing option.

The final and perhaps most significant indication of a renewed interest in online privacy is how Millennials are navigating the digital world. On the one hand, teens and preteens led the charge into social (over)sharing, giving birth to the pervasive privacy-is-dead meme.

But consider where the kids are heading now. The rapid spread of SnapChat–the picture sharing app that auto-deletes photos after ten seconds–shows that young people increasingly understand the need to keep some things secret, or at least to control the visibility and content of their communications. The migration of Millennials away from Facebook to the more anonymous Tumblr may be another sign. And the outcry raised by young Tumblr users in the wake of news that Yahoo! was purchasing the platform–driven by fears of more corporate control and increased advertising–only underscores the point.

Millennials are in the vanguard of mainstream online behavior: they were first on Facebook (after college students invited to the join in its earliest days), followed by their parents. A Millennial move towards greater online secrecy could represent the beginning of a larger shift that warrants additional research.

Implications of a Darker Net for Marketers

Marketers are already confronting the implications of a more shadowy Internet, specifically the phenomenon known as DarkSocial and DarkSearch. Ironically, at the same time that users share and interact more online on proliferating social platforms, from Facebook to Google+ to Pinterest, and search and surf on mobile devices and apps, the amount of actionable referral data available to marketers is in decline. The Atlantic’s Alexis Madrigal, who coined the term “DarkSocial,” estimates that 69% of the publication’s social traffic is dark–meaning users who access content by clicking on a link emailed or IMed to them. Marketers don’t know where these users came from or what exactly drove them to their website.

Similarly, as awareness of privacy issues has increased, cloud services like Google and Apple are proactively stripping referral data out when sending users to third party sites via search. TheseDarkSearch visitors, like their DarkSocial counterparts, also end up in the “direct referral” bucket of analytics reporting, indistinguishable from the geography-less visitors who typed your domain name directly into their browsers to visit your site.

In the near-term, brands will have to confront a potentially darker Internet, as the roadblocks to data-driven marketing thrown up by DarkSocial, DarkSearch and an emerging DarkNet increase. There will be real consequences, including in investments in marketing, if it becomes more difficult to quantify customer engagement.

In the longer-term, we may see a nascent e-commerce system more familiar to science fiction fans (and current users of services like Silk Road, the online illegal drug marketplace). Imagine a future Amazon.com-like e-commerce site where all profiles are anonymous, all payments utilize crypto-currencies, and all deliveries of physical goods use inexpensive, multi-hop services that conceal the ultimate end delivery address behind anonymous dropboxes. Not just for illegal drugs, but for everything.

In this science fiction-like world, brands would need to adapt to an environment where they might not know anything other than the service or product they have been contracted with to provide. Credit scores may emerge that are independent of real world identities. The actual identity, location, and ownership of physical goods may become difficult or impossible to establish. More work will need to be done to determine the likelihood of such a scenario, including looking at how many users opt out of third party cookies on their web browsers (the most common, currently available tool for bolstering privacy online).

“For there is a single general space, a single vast immensity which we may freely call Void; in it are innumerable globes like this one on which we live and grow. This space we declare to be infinite, since neither reason, convenience, possibility, sense perception nor nature assign to it a limit. In it are an infinity of worlds of the same kind as our own.” – Giordano Bruno, On the Infinite Universe and Worlds, 1584

*For the average Internet user, the following tools can ensure “good enough” privacy that secures communications and shields online activity and financial transactions from employers, parents and corporations: Tor, an anonymizing Internet service; Bitcoin, the crypto-currency that can be stored in a digital “wallet;” and smartphone apps like SilentCircle for secure mobile communications.

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