AOL’s Got Your Numbers (Should You Be Allowed to Use Them?)

During AOL’s heyday, Meyer Berlow was the rainmaker. He developed strategic partnerships with corporations looking for access inside the walled garden populated by AOL’s wealth of customers who never ventured to the outside world of the Internet. These strategic partnerships were primarily integrated, interactive advertising relationships. He gained a reputation as a hard-nosed negotiator who struck one-sided deals with complicated financial terms.

The Industry Standard wrote about Berlow and his team of negotiators in late 2000. It made sitting across the table from them sound like an excruciating experience. That said, Berlow can be credited with striking some of the richest deals in Internet history and helping to drive AOL stock into the stratosphere.

Since the merger of AOL with Time Warner, AOL’s business unit slumped. Subscription growth slowed, and the industrywide ad sales decline finally caught up with one of its largest players. Accordingly, AOL Time Warner’s stock price dove from nearly $50 a year ago to just above $10 as this column is being written.

Jimmy de Castro replaced Meyer Berlow as rainmaker. One way he hopes to make a difference is with advertisers. His official title is president of interactive services. It would appear his stance toward advertisers is markedly friendlier than that of Berlow’s. In a USA Today interview last week, de Castro said, “Before, we told them [advertisers], ‘This is the way you’re going to do it, and you’ll pay us this amount.'” The article said de Castro was making personal visits to identify the individual needs of partners. He indicated one way AOL may try to meet advertisers’ needs is through sharing customer data.

Think of the wealth of customer data AOL captures and therefore has the capability to share with advertisers (within the bounds of its privacy policy). When signing up for AOL, Customer X provides name, address, and phone number. She selects an AOL email address and designates speed of service (dial-up, DSL, or cable). All this qualifies as validated, self-reported data.

As Customer X uses AOL and explores inside the walled garden, patterns develop that can be used to infer her interests. Some AOL content areas are visited repeatedly: travel, business/finance, home improvement, and scuba diving. Over time, this observed data creates a robust lifestyle profile. If Customer X signs up for the AOL Wallet, transaction data is captured from purchases at AOL’s shopping partners: plane tickets, books on business consulting and personal finance, and diving equipment. This data is valuable. It shows where Customer X is willing to spend her money.

It’s likely advertisers would salivate at the opportunity to make truly relevant offers to AOL customers based on self-reported, observed, and transaction data. A travel agent would offer a Grand Cayman scuba diving vacation package to Customer X, with airfare priced as originating from the airport closest to the Zip Code in which she resides. The same travel agent would offer an entirely different vacation package to Customer Y, based on his unique AOL customer data.

Ad media would also be shaped by customer data. Because Customer X accesses AOL through a high-speed cable modem, she would receive a pop-up ad featuring streaming video of a Grand Cayman underwater dive excursion. Conversely, Customer Y accesses AOL through dial-up and, therefore, would receive a pop-up ad sans streaming video.

The travel agent could take the promotion further using observed data captured from the pop-up. If Customer X clicks through on the pop-up but does not purchase the travel package, banner ads on subsequent Web pages could entice her with an additional discount or value-add for purchasing. Finally, an email could be delivered offering her one last chance to purchase prior to expiration (assuming she’s given AOL permission to send email from third-party partners). Sharing customer data from AOL members with AOL advertisers creates marketing opportunities to the nth degree.

A marketer’s utopia? Or George Orwell’s vision of 1984? Big Brother is constantly watching. When does utilizing customer data to enhance the user experience, provide valuable information, and deliver targeted advertising cross the line into invasion of privacy? This is a gray area. How gray? Charcoal.

I want to hear what ClickZ readers think. As a marketer, do you think the use of customer data — self-reported, observed, and transaction — is ethical? Legal? Useful? As a consumer, would you find targeted advertising annoying? Intrusive? At what point does utilizing customer data cross the line into invasion of privacy? Does it matter if the product offered changes from a Grand Cayman vacation to something more personal, like a trial prescription for Viagra or Prozac?

Please send your feedback. ClickZ will post comments for readers to access (and protect your privacy in doing so).

I’m eager to hear your thoughts.

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