Online Marketers Tighten Privacy

Online privacy practices appear to be tightening, according to new findings from the nonprofit Progress & Freedom Foundation.

The findings, based on a survey administered by Ernst & Young, indicate that more Web sites are taking greater steps to safeguard consumer privacy and to offer opting out capabilities – especially in comparison to a 2000 study conducted by the Federal Trade Commission under former chair Robert Pitofsky.

For instance, among the most popular 100 sites, the number that collected personal information fell from 96 percent in 2000 to 84 percent in 2002, while the proportion using third-party cookies to track surfing behavior fell to 48 percent from 78 percent.

The nonpartisan Washington, D.C-based group, which studies the impact of the Internet and its implications for public policy, also found that a greater number of the 100 most-visited sites offered choice regarding whether information can be shared with third parties. That figure grew from 77 percent of the group in 2000, to 93 percent in the new findings.

The percentage of top sites offering consumers a way to opt-out of marketing messages also grew, to 32 percent. Only 15 percent of the top 100 sites profiled in the 2000 study offered consumers a way to opt out of mailings.

While relatively new, adoption of the WC3’s Platform for Privacy Preferences (P3P) looks to be expanding rapidly, although more established seal programs are seeing only tepid growth. About 25 percent of the top 100 sites have P3P-compliant privacy policies, while less than half of the top sites display privacy seals – about the same figure as the FTC found in 2000.

“The changes we have identified are evolutionary, not revolutionary,” said PFF President Jeffrey Eisenach, who co-authored the report. “But from a consumer perspective, they are all in the right direction.”

The news means that online marketers and advertisers are paying greater attention to advocates’ clamor on privacy issues, and consumers’ increasing concern about such matters. A number of recent studies cite Internet users’ concerns about privacy and information security as reasons for their reluctance to shop online.

In some ways, marketers’ apparent attention to privacy issues also comes as a result of independent decisions made by Internet technology players – for instance, Microsoft’s newest Internet Explorer includes P3P technology, meaning that it can block non-compliant sites from tracking consumers. That development in particular prompted groups like the Direct Marketing Association (The DMA) to issue an alert to members to bring their sites up to compliance, which in some cases entails reconfiguring their relationships with profiling third-party ad servers.

For advocates of industry self-regulation, the news is a win, though consumer advocates are likely to charge that the findings show more changes must still be made.

Meanwhile, a report from the DMA found that the vast majority of online marketers are acting on consumer privacy concerns by sending targeted email communications and offering consumers the ability to opt-out of email marketing solicitations.

The DMA’s “State of the E-Commerce Industry Report 2001-2002” surveyed nearly 700 companies involved in direct and interactive marketing, and 96 percent revealed that they provide their customers the ability to opt-out of future email offers. Additionally, most respondents (60 percent) indicate they do not rent third party email lists and 74 percent do not send non-targeted email when prospecting.

Other findings include:

  • The majority of Web marketers maintain an in-house email list. The likelihood of having an in-house email list increases with the size of company. However, small companies have more complete email addresses in their house files (65.5 percent) than medium (44.9 percent) or large companies (46.9 percent).
  • Business-to-business (B-to-B) marketers have a higher percent of email addresses and in-house email lists (a mean of 63.8 percent compared to only 37.8 percent for consumer marketers). Across the board, at least nine in 10 companies do not rent their housefiles with email addresses.
  • 64 percent of respondents reported they clean their email lists anywhere from several times a month to 1 to 3 months, and 65 percent clean their postal mailing lists with the same frequency.
  • B-to-B marketers are more likely to clean their email files several times a month (38 percent compared to 20 percent of marketers whose Web sites are targeted at consumers).
  • Small companies clean their email lists more often (58 percent clean their lists several times a month or on a monthly basis). More than half (53 percent) of large companies indicated they clean their in-house lists several times a month or on a monthly basis.

“An email campaign with the proper privacy and permission etiquette will drive traffic to a store or Web site, add to a company’s bottom line, and increase goodwill among customers,” said H. Robert Wientzen, president and CEO, The DMA. “The continued growth of electronic commerce depends on consumer trust. It is imperative that email marketers take action by placing greater emphasis on privacy and help build consumer confidence and loyalty.”

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