Verizon’s Mobile Marketing Missteps

“Your privacy is important to us,” begins a Verizon Wireless notice sent this month to customers. To maintain that privacy, the carrier instructs customers to call a toll-free number to opt out of a plan to share customer information with Verizon “affiliates, agents, parent companies…and their subsidiaries.”

Jason Devitt, an entrepreneur in the mobile arena, took one look at Verizon’s notice, including its customer agreement terms and conditions, and hit the blogosphere. “Get Ready For More Advertising On Your Cell Phone,” warns Devitt, cofounder and former CEO of Vindigo, which sells advertising and premium content for mobile devices.

Devitt’s now CEO of Skydeck, a start-up working in quasi-stealth mode to develop mobile services, so he’s got an agenda. He emphasizes that he welcomes mobile ads but has a beef with Verizon: it failed to be crystal clear about how it intends to use customer information, including phone call records, now and in the future.

To its credit, Verizon Communications established a tech and telecom blog for which nine company executives comment on (read: put their spin on) news and trends affecting Verizon and its customers. Verizon’s moderated blog offers critics a place to flog the Fortune 100 company.

“Let’s be clear: Verizon Wireless does not sell personal customer information to third-party advertisers. Period,” blogged Jim Gerace, Verizon Wireless VP of corporate communications. In the blog, he insists Verizon wants the option to share customer information with its affiliates so customers receive information, for instance, about bundled offerings of Verizon Telecom and Verizon Wireless.

Problem is, Verizon’s reputation for protecting privacy is tainted by a report that it handed over the numbers dialed by customers (call detail records) to the National Security Agency, “USA Today” reported last year. This month, Verizon told congressional investigators that it provided customers’ telephone records to federal authorities in emergency cases without court orders hundreds of times since 2005, the “Washington Post” reported.

A look at recent missteps and struggles involving Verizon Wireless, which has over 62 million customers, points to multiple challenges in the mobile marketing ecosystem that businesses must address. Here are some measures to consider.

Woo the Customer

One blogger responding to Verizon’s privacy notice summed it up best: “Why not let users OPT IN instead of OPT OUT. All it takes is sending users a note explaining exactly what affiliates you’re offering to share information with, what kind, and how it will benefit the consumer.” By taking this approach, the carrier would let consumers know what they’ll get in exchange for permitting information to be shared.

Establish Consistent Policies

Last month, Verizon Wireless initially denied, then approved, an abortion rights group’s request to use the carrier’s SMS (define) to send text messages to supporters. Brian Reich, director of new media at branding and consulting firm Cone, told ClickZ that mobile carriers fail to understand what political and advocacy organizations hope to accomplish with text messaging campaigns — a far cry from voting for an American Idol.

Don’t Hide Behind the Fine Print

This week, Verizon Wireless agreed to change the way it markets its wireless Internet usage plans and reimburse $1 million to over 13,000 customers whose service was cut off for excessive use of an unlimited Internet plan, according to New York attorney general Andrew M. Cuomo. His office accused Verizon of prominently marketing its NationalAccess and BroadbandAccess wireless plans as unlimited, without disclosing it prohibited downloading movies or playing online games. On its policy blog, Verizon displays both the old and new ads.

Bear in mind these incidents are being played out amid contentious and far-reaching issues involving Verizon as well as other telecom and cable giants. Chief among them: the debate over so-called Net neutrality and the FCC’s planned auction of the 700-megahertz spectrum band.

Companies such as Google, eBay, and IAC are pushing the federal government for Net neutrality, to prohibit telephone and cable companies from charging a premium for bandwidth-intensive sites or establishing a priority for some applications over others. Telco and cable critics contend that without federal intervention, the giants will discriminate in favor of their own search engines and streaming video — while slowing down or blocking their rivals.

The FCC’s planned auction is generating a lot of buzz; the band is considered prime property for wireless broadband services. Incumbent phone companies and Google are among those expected to bid on the spectrum.

While recognizing privacy is important to consumers, Devitt says there’s another threat to interactive’s future. “The big barrier to innovation, in my mind, is that it’s extremely difficult for media companies [and] start-ups to launch any kind of service, premium or advertising-supported, because you need the permission of the carriers to do so,” says Devitt. “That’s a much bigger obstacle to market adoption and innovation than any issue around privacy.”

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