Personalization Vs. Privacy Debate Heating Up

  |  October 31, 2001   |  Comments

A face-off between privacy advocates and mass marketers is expected to soon come to a head.

The fight is becoming more vocal between those who want to build great databases of customer information on the Internet, and those who want to keep the Web private.

The face-off between privacy advocates and mass marketers has been gathering steam as the Internet has become a mainstream communications vehicle and as new technologies make it possible to identify users and, ostensibly, manipulate Internet content to deliver better-targeted services.

The latest battleground involves the Federal Trade Commission's planned review of children's online information privacy and surfing habits. (Advertisers, in general, view studying children as a way to promote their future consumption, even if the goods and services the companies are promoting are actually intended for older buyers.)

With that, and several pieces of privacy-related legislation having already been passed this year -- including an anti-terrorism bill signed by U.S. President Bush last week -- in addition to the quickly escalating concerns about national security, the issue has been thrust into the spotlight.

"At this critical juncture, consumers' confidence and trust will be won or lost by businesses both large and small, depending on how we act now using personal identification information," said Michael Miora, senior vice president of the ePrivacy Group, and managing director of its Los Angeles office.

Part of the controversy stems from the uproar in 1999 over online advertising company DoubleClick's acquisition of direct marketer Abacus Direct Corp., which made it possible for DoubleClick to link cookies that track users' Web activity anonymously with people's names and addresses in Abacus' database -- with users' only being able to tell this was happening by sifting through the firm's privacy policy. (DoubleClick ultimately abandoned the idea, amid complaints from consumer activists.)

Drawing from that example, several industry insiders and critics agree that users' wishes should be respected, and that Web sites should give users a choice to opt-out of having their purchasing or subscription information stored and used.

Brad Templeton, chairman of San Francisco-based Electronic Frontier Foundation (EFF) added that destroying customer records makes it impossible for those records to be subpoenaed, thus providing the ultimate in user privacy. He said the model of "putting a quarter in a box to anonymously buy a newspaper" still holds merit in the Internet privacy debate.

But online marketers say consumers at this time don't seem to be overly concerned about the privacy issue. A May 2001 consumer survey from the Personalization Consortium, an industry group, found that 56 percent of respondents say they are more likely to purchase from a site that allows personalization, and 63 percent are more likely to register at a site that allows it.

The survey also showed that 82 percent of consumers are willing to provide such personal information as gender, age, and ethnicity, if the site will remember their preferences and personal information.

At this juncture, though, "most of the tracking that goes on now is anonymous," said Dave Yovanno, vice president of sales and marketing at online ad network and server ValueClick.

Yovanno added, however, that it is difficult to derive important customer information -- such as whether someone is male or female -- by the anonymous method of caching information about a user's Web activity in a cookie.

"Where personalization like this really becomes important is in customer relationship management and customer retention," Yovanno said.

Senior editor Christopher Saunders contributed to this story.

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Dana Blankenhorn

Dana Blankenhorn has been a business reporter for more than 20 years. He has written parts of five books and currently contributes to Advertising Age, Business Marketing, NetMarketing, the Chicago Tribune, Boardwatch, CLEC Magazine, and other publications. His own newsletter, A-Clue.Com, is published weekly.

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