<http://online.wsj.com/article_print/0,,SB110357897849105150,00.html> The Wall Street Journal December 21, 2004 MARKETING 'Video Miners' Use Hidden Cameras in Stores 'Video Miners' Use Cameras Hidden in Stores to Analyze Who Shops, What They Like By JOSEPH PEREIRA Staff Reporter of THE WALL STREET JOURNAL December 21, 2004; Page B1 BRAINTREE, Mass. -- Stepping into a Gap store at the South Shore Shopping Plaza on a recent evening, Laura Munro became a research statistic. Twelve feet above her, a device resembling a smoke detector, mounted on the ceiling and equipped with a hidden camera, took a picture of her head and shoulders. The image was fed to a computer and shipped to a database in Chicago, where ShopperTrak RCT Corp., a consumer research firm, keeps count of shoppers nationwide using 40,000 cameras placed in stores and malls. ShopperTrak, whose profile has risen this holiday season as appetite grows for more real-time shopping data, is a leader in "video mining" -- an emerging field in marketing research enabled by technology that can analyze video images without relying on human eyes. ShopperTrak says it doesn't take pictures of faces. The company worries that shoppers would perceive that as an invasion of privacy. But nearly all of its videotaping is done without the knowledge of the people being taped. "I didn't even know there was a camera up there," says Ms. Munro, a public-transit manager who popped into the mall on her way home from work to find a gift for her 12-year-old daughter. Using proprietary software to gauge the size of the images of people, a ShopperTrak computer determined that Ms. Munro was an adult, not a child, and thus a bona fide shopper. Weeding out youngsters is critical in accurately calculating one of the valuable bits of data ShopperTrak sells -- the percentage of shoppers that buys and the percentage that only browses. It arrives at this data, including the so-called conversion rate, by comparing the number of people taped entering the store with the number of transactions. Ms. Munro's visit was tallied up twice: once as a visitor to the Gap and once in a national count of shoppers. Gap Inc., of San Francisco, pays ShopperTrak for the tally of Gap shoppers. ShopperTrak sells the broader data -- gleaned from 130 retail clients and 380 malls -- to economists, bankers and retailers. ShopperTrak takes into account how much shoppers spend, data that it gets from credit-card companies and banks, and extrapolates outward to the entire retail landscape. "We can get sales and traffic figures that are identical to the government's, two months before they can issue their report," says Bill Martin, ShopperTrak's founder and president. Of the millions of shoppers videotaped daily in the U.S., many are aware that security cameras are watching to detect shoplifting. In some cases, stores post signs to disclose such monitoring. But there is far less awareness by consumers that they are being filmed for market research. ShopperTrak discloses its clients -- a list that includes Gap and its Banana Republic unit; Limited Brands Inc., of Columbus, Ohio, and its Victoria's Secret chain; PaylessShoe Source Inc., of Topeka, Kan; American Eagle Outfitters Inc., of Warrendale, Pa.; and Children's Place Retail StoresInc., of Secaucus, N.J. Several other research companies that videotape shoppers say they sign agreements with clients in which they pledge not to disclose their names. They say their clients want the taping to be secret -- and worry shoppers would feel alienated or complain of privacy invasion if they knew. Katherine Albrecht, founder and director of Caspian, a Cambridge, Mass., consumer-advocacy group, says consumers have "no idea such things as video tracking are going on" and should be informed. When she tells them about such activities, she says the response she often hears is, "Isn't this illegal, like stalking? Shouldn't there be a law against it?" There aren't any state laws forbidding retailers from videotaping shoppers for research -- although in New Jersey last week, Caesars Atlantic City Hotel Casino was fined $80,000 for videotaping the breasts and legs of female employees and customers with cameras intended for security. Some research companies' cameras, with lenses as small as a quarter, can provide data on everything from the density of shopping traffic in an aisle to the reactions of a shopper gazing at the latest plasma TV set. The cash register is a popular spot for cameras, too. But cameras can be found in banks, fast-food outlets and hotel lobbies (but not guest rooms). Video miners say their research cameras are less invasive than security cameras, because their subjects aren't scrutinized as closely as security suspects. Images, they say, are destroyed when the research is done. Robert Bulmash, founder of the Private Citizen Inc., of Naperville, Ill., which advocates for privacy rights, says that being in a retailer's store doesn't give a retailer "the right to treat me like a guinea pig." He says he wonders about assurances that images are destroyed, since there isn't any way to verify such claims. The pictures "could be saved somewhere in that vast digital universe and some day come back to haunt us," he says. Already, video images can be subpoenaed from retailers for law-enforcement purposes. Technology capable of matching a photo with an individual's identity, say from credit-card transactions, "has certainly arrived," says Rajeev Sharma, a Penn State University computer science professor who has launched a company that is creating shopper-monitoring systems. It isn't certain whether retailers are availing themselves of the know-how. Credit card companies currently aren't sharing individuals' financial information with retailers, he adds, but retailers have their own customer databases as the result of loyalty cards, store credit cards and other in-house programs. Theoretically, they could link a transaction at a cash register with the face of a shopper appearing on the videotape. Dr. Sharma's start-up, Advanced Interfaces Inc., of State College, Pa., is expected this week to launch a Web site, videomining.com, highlighting the company's patented "computer vision" technologies. In a pilot project conducted last year in the Philadelphia area, Advanced Interfaces set up nine cameras in each of two McDonald's Corp. restaurants to find out which consumer types would find a new salad item most appealing. The research was done without consumers' knowledge, says Dr. Sharma, who is Advanced Interfaces' chief executive. Seven of the cameras were already in place for security purposes and needed only to be reconfigured using Advanced's sensors. Two additional cameras were positioned in the ceiling directly over cash registers. By measuring the shapes of people's faces, the sensors were able to provide a breakdown of the fast-food customers by race, gender and age group, he says. The videos also revealed the length of time customers spent waiting in line or looking at the menu before ordering. Mr. Sharma declined to discuss the findings. All of the video was subsequently destroyed, he says. "Only the computers and no humans saw the pictures of the customers," Mr. Sharma says. Advanced is conducting similar consumer-behavior analysis this holiday season for three other retailers that Mr. Sharma declined to identify. Video mining is being spurred by digital video cameras. Unlike their analog counterparts, digital video cameras can be programmed so that the images can be quickly read by computers -- taking only hours to complete tasks that might have taken weeks for humans to do. In a recent assignment that Kahn Research Group, of Huntersville, N.C., completed for American Express Co., computers took only a couple of days to sift through 64 hours of tape. Kahn researchers hid four cameras near the checkout counter at a couple of supermarkets in Southern California to study whether American Express gift cards should be displayed off in a spot by themselves, or lumped with competing brands near the cash registers. Researchers were interested in customers' facial expressions and eye movements as they spotted the gift cards, and whether they walked to a display to pick up a card. Kahn cameras, each the size of a golf ball, were hidden behind the displays. The devices were programmed to detect fast-eye movement, smiles and frowns, says Greg Kahn, the company's CEO. The research, which involved filming 2,000 shoppers, was "really not invasive," Mr. Kahn says. "Nobody knew they were being recorded and our work didn't interfere with the store environment. Had we tried to interview people, the process would have taken much longer." And had people known they were being taped, he says, "I know many of the shoppers would have stuck their hands in front of the camera lens and refused to be recorded." A spokeswoman for American Express described the project as a "pilot program ... that's not for public consumption" and declined to comment further. It isn't clear whether the American public will be as tolerant of secret market research using videotape as they are of security cameras. There are 29 million cameras videotaping people in airports, government buildings, offices, schools, stores and elsewhere, according to one widely cited estimate in the security industry. -- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'