Austin Jaworski and Chloe Wojick and Othonas Economopoulos

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Economopoulos & JaworskiWojick

Austin Jaworski and Chloe Wojick and Othonas Economopoulos

Professor H. Culik

Date 4/22/17

English 1190-C1604

Digital Redlining and Marketing: the Process and the Benefiters

Redlining is relatively a new term created with the National Housing Act of 1934 which established the Federal Housing Administration. Redlining was named because of the red lines that were drawn on maps of where certain people lived with certain backgrounds. Before the term redlining was created, it was just discrimination against minorities. Redlining is the process of gathering information of people and discriminating by drawing lines in cities on where people could buy property based on ethnicity, race, and income. Thus, redlining in turn created the class system we have today. The class system was meant to keep minority groups from being able to purchase property outside their own zone by withholding of mortgage capital. On an online historical fact information website “1934–1968: FHA Mortgage Insurance Requirements Utilize Redlining” it states “Redlining is the practice of denying or limiting financial services to certain neighborhoods based on racial or ethnic compositions without regards to the residents’ qualifications or creditworthiness.” This lays out the frame work on large scale segregation based on a person’s type of background. This practice was intended to benefit the majority at the expense of the minority. Redlining has set back so many minorities in many ways regarding them as “Second Class Citizens”. Not allowing loans, mortgages, and purchase of property in certain locations was a the purpose of redlining it was a way to keep the minorities from rising out of poverty. Keeping people in poverty for so long has made it very hard to move out of poverty.

With the new advances in technology it has made a new form of redlining. “Digital redlining” has made it very easy and fast to gather data from people with the use of the world-wideweb. Now companies crave the use of digital redlining. It is easy to use, and helps the companies find what they are looking for in a quick manner. Redlining targets mostly minorities through race, gender, or income. “They know your name, your phone number, where you live, your buying habits and in many cases what you are interested in buying” (Morris and Lavandera). They will target these groups (or avoid them) based on what kind of product the company promotes. Digital redlining is an important tool to keep people in their class and not allow for advance from the lower income bracket. Digital redlining has in many ways revolutionized the way data is gathered and has took it to the next level.Digital Redlining with the use of the categorical system has harmed the lower income minorities groups in society.

The process of digital redlining for marketing is complex, but simple at the same time. In the digital era, the first step is tocategorize people intospecific cliques.Categorizing people through specific information allows for the formationof new cliques. The three main factors of categorizing potential customers are psychographics, behavioral analysis, and demographics. In an article “Customer Characteristics for Marketing” by Jeremy Bradley mentions psychographic as the concept of identifying customers by their personalities, values, and interests. Companies are looking for similar characteristics in people that motivates them to buy their products. Close to psychographics, behavioral analysis is seeking out the likely hood of potential customers. Questions asked when looking at this are: “Why would a customer buy from me as opposed to my competitor? What are the attitudes of my current customers? Are the cost of my products in line with consumer expectations?” (Bradley). By determining the cost of products, the companies can market their products accordingly. The biggest factor in determining how to categorize potential customers is demographics. Demographics is viewed as the basic building blocks for marketing. Commonly used filters of demographics are: race, ethnicity, age, and income level. The demographics is useful to categorize potential clients by lifestyle or innate characteristics. Second, is that people to use the internet, which most people have in the United States. An article from the Pew Research Center, “13% of Americans don’t use the internet”.The article describes the reason why adults do not use or have the internet.In a study in 2013, “19% cited the expense of internet service or owning a computer” (Monica & Perrin). This statistics from this research explains that a fifth of Americans are withheld from digital advertising and is subject to redlining.This begins to make digital redlining more specific for example if someone cannot afford to have internet then they are most likely not able to buy other products so that excludes lower income minorities. With their information being put onto the World Wide Web, data-broker companies like Epsilon, Zabasearch, and Acxiom can sort through the data and begin filing people through searches of keywords or related searches also known as a categorical filter. They can track where your location is, and narrow that down to what sort of groups you would most likely be in. The data-broker companies can determine your income, race, and age from the information they gather with your activities, including your interests, likes, and dislikes into their system. Data broker companies wait for other companies interested in for specific groups to come to them and then they sell alloftheir customer’s information to a potential marketer. Most often the groups are determined by distance from where a marketing company is, and by the income level of the neighborhood people live in.

Marketing has been big drive for digital redlining to continue. For marketing to help a business succeed it needs to have accurate information about the clients and what class they fall in, this is where digital redlining factors in. An article on CNN.com called “Why big companies buy, sell your data” explains why "Companies like Acxiom are trying to get intelligent about what you might be interested in and who you are. Such that we can deliver more relevant advertising to you, and we can deliver offers and products and services in which you might have interest,"(Morris and Lavandera). Digital redlining today has become a process of gathering a person's information by using thecategorical systemto filter through information and selling the data to another company for their target market. This transaction gives the companies knowledge of where their clients are and what they are looking for. With this data already gathered the companies save money and time on advertising. This helps them spend less time advertising in areas where people are less likely to buy their products.The categorical system and marketing defeats the purpose of bringing potential new customers from the lower income minority. Lower income minorities are left out from the chance of being able to buy products based on stereotypes, because of a person a location they live in.

So, with digital redlining being such an important part in marketing for companies, it sometimes hurts the low income of society. This doesn’t give them the same chances in life.. This affects all of the lower income minorities in a negative manner, but this also affects the majority and big companies in a positive way. The majority has more freedom to move up in society and are given more choices. In the article “Sounding the Alarm” by Cmaadmin has focused on the way that a shipping company has used redlining to alter their business “Kozmo.com has been accused of racial discrimination because its Web-based delivery system appears to systematically avoid serving African American communities, despite their close proximity to the upscale white customers they do serve.”The majority is not affected by redlining the same way as the minority group is. Digital redlining and marketing systematically limits the minorities available options. This is a major setback for minority groups that do not have the access to resources for luxury.

Digital redlining is used to benefit in marketing and business. Most notably, the companies will benefit from redlining. They use the process to locate their potential customers, and find a marketing radius that will maximize profits, while spending the minimum amount of money for marketing. Companies also benefit from this activity because they do not have to spend time and money advertising to people with a smaller buyer’s mentality and can focus on where the most money lies. Another group that benefits is the majority of the population. They have greater amounts of options and are advertised to the most. Advertisements around them are more diverse and allows them access to purchase with greater opportunity than the less wealthy. Minorities are targeted by digital redlining the most. It is used to limit what is available to them. Smaller companies cannot use digital redlining to their advantage by buying information for their customers because they cannot afford it. While the larger companieshas a greater chance to be able to acquire the information gathered by digital redlining to better their business and go further. There are not as many options to these select minorities. Big companies focus on lower income people rather than luxury companies would because of their low income and amount of money available to spend. Knowing that information can suggest where to open shop.

Redlining was used to segregate people based on a person’s background. Since the technological advances occurred, a new form of redlining has emerged. Digital redlining has changed over time, but it has also turned into one of the biggest marketing mechanisms available for companies to use customer information to maximize their revenue. Digital redlining has become a process that uses the categorical system to find specific information that will affect the way that a specific group will be targeted. Also, with the help of technology it has increased the speed at which data is gathered. Thus, with the increase of speed the whole process has become a money-making opportunity for the data broker companies. This allows for much of the wealthier of population to benefit while the lowerincome minorities are struggling because they are not given the same chance to get the things as someone from the majority. Redlining affects everyone every day, so has marketing, but it has seen a big change over time. Within the last fifty years redlining has turned digital. Now with the ever-growing advances in technology it is increasingly worrying how marketing will be in the next twenty years.

Works Cited

"1934–1968: FHA Mortgage Insurance Requirements Utilize Redlining."Fair Housing Center of Greater Boston. Gallager Design, n.d. Web. 01 Apr. 2017. <

Anderson, Monica, and Andrew Perrin. "13% of Americans Don't Use the Internet. Who Are They?"Pew Research Center. N.p., 07 Sept. 2016. Web. 05 Apr. 2017. <

Cmaadmin. "Sounding the Alarm on Electronic Discrimination."Diverse. N.p., 23 May 2001. Web. 04 Apr. 2017. <

Lavandera, Jason Morris and Ed. "Why Big Companies Buy, Sell Your Data."CNN. Cable News Network, 23 Aug. 2012. Web. 01 Apr. 2017. <

Writer, Leaf Group. "Customer Characteristics for Marketing."Chron.com. Chron.com, 12 Nov. 2012. Web. 20 Apr. 2017. <