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Can Marketers Behave Themselves?
As empowered customers traipse across the Web, they leave ever-juicier bread crumbs of behavior in their wake. The government may step in to limit what marketers are allowed to scoop up.
For the rest of the May 2010 issue of CRM magazine please click here
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Is Big Brother watching you? Probably—but not the one you’re thinking of. Today’s surveying sibling doesn’t care if you buy into his political propaganda as much as he cares if you buy his products. 

The debate over marketing personalization and advertising targeted to consumers’ behavior is hardly new—search results for “behavioral advertising” date back at least as far as 2003—but a recent resurgence of criticism in Washington and in the media has revealed some interesting facts about what marketing personalization means for CRM. 

The number of people embracing mobile social networking, for example, may reach 770 million by 2012, according to a report by the Chief Marketing Officer (CMO) Council and AVG Technologies that examined social-community vulnerabilities. The figure is particularly compelling considering nearly 20 percent of respondents claimed to have been the victim of identity theft—and therefore understandably skeptical of the online flow of personal information. If the report’s projections are accurate—and the incidence of identity theft remains unchanged—then approximately 154 million people can expect to have their identities stolen by 2012.

Are the dangers that prevalent? A recent article in The New York Times suggested the possibility that Social Security numbers (SSNs) could be deduced by compiling and analyzing the standard biographical data posted by users of such popular services as Facebook and Twitter. SSNs, the article said, “are prized by identity thieves because they’re used both as identifiers and to authenticate banking, credit-card, and other transactions. [But] so far, this type of powerful data mining, which relies on sophisticated statistical correlations, is mostly in the realm of university researchers.”  

And yet Donovan Neale-May, executive director of the CMO Council, says that personalized marketing is worth the risk of stolen identities. The 5,000 global marketers represented by the council control approximately $150 billion of annual marketing spend, Neale-May says—and the group strongly advocates the need for marketers to gather customer data. 

Collected consumer information, Neale-May contends, produces better customer response and reduces wasteful unwanted or uninvited mailings. The information helps increase the relevance of those messages: The data is analyzed, meaningful insights are extracted, and predictive modeling is developed to show what customers intend to buy or are satisfied with. As an example of the benefits of a well-informed marketer, Neale-May suggests that mobile messaging might remind a senior citizen of the need to replenish medication that’s about to run out or expire. 

And yet Neale-May agrees that even the most beneficial application of personal data won’t eliminate the need for consumers to remain vigilant about privacy. “You always have to be mindful of what information you’re providing, how that information is being stored and protected,” he warns. “And be very sensitive to the fact that there are some very advanced surveillance systems out there—systems for utilizing algorithms to figure out things you wouldn’t expect could be figured out.”

As far as Alex Coleman is concerned, the burden of responsibility lies with those who are doing the tracking—not with those who are being tracked. Coleman is director of privacy certification at eTrust, which was established to provide consumers with information about online business practices and to help businesses better understand customers’ concerns. 

“If appropriate measures are taken to ensure that users are informed of the data collection and have a means to remove data or opt out from participation, then behavioral advertising can…actually enhance a user’s experience,” Coleman says. “However, often these measures do not exist. Often even the opt-out function is not executed correctly, and data is still collected and the opt-out only impacts the serving of ads.” Advertisers, he argues, should be obligated to inform customers whenever their data is being collected. 

The government seems to agree: In mid-March the Federal Trade Commission (FTC) held the last in a series of discussions on consumer privacy. According to the FTC’s Web site, the meetings were meant to “explore the privacy challenges posed by the vast array of 21st century technology and business practices that collect and use consumer data.”

These practices include social networking, cloud computing, online behavioral advertising, mobile marketing, and the collection and use of information by retailers, data brokers, third-party applications, and other diverse businesses. 

“The goal of the roundtables is to determine how best to protect consumer privacy while supporting beneficial uses of the information and technological innovation,” the commission’s site says. 

The FTC had yet to release a formal statement on the matter by press time—but, in the meantime, the inexorable flow of consumer data continues to accelerate. 


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