Skirting the Line on Privacy

Originally Published: January 2005

Every year, marketers seek to improve return on investment. Battling against greater budgetary pressures, marketers continually seek more efficient targeting methods. The goal is to hit the right prospect with the right message at the right time – a marketing “perfect storm”. The trouble is this perfect storm is growing more and more difficult to achieve as traditional mass marketing becomes less and less effective. One of the newer marketing methods used to counteract this decline in effectiveness is behavioral marketing – delivering marketing messages to prospects based on recent behavior.

Early on, behavioral marketing was the promise of the Internet. These early online marketers claimed that the Internet would finally be the answer to one-to-one marketing – the idea of delivering a sales message to a targeted individual quickly and inexpensively. However, until recently, behavioral marketing was put on the back burner as the dot com bubble burst and advances in technology slowed. But over the last couple of years, behavioral marketing has seen a resurgence due to an increase in online ad spending, a greater number of traditional marketers allocating more of their budgets to online media, technical improvements that enable massive targeted advertising campaigns and the rise of contextual and paid search engine advertising.

Contextual and paid search advertising is the display of ads based on a set of keywords typed into a search engine. If someone enters “Bengals Jersey” into a search engine, a list of websites are displayed that feature Bengals’ jerseys. Along with the list of websites featuring the keyword, most search engines display “sponsored” or “paid” ads at the top and/or side of the page that are related to that particular keyword or phrase. On the other hand, behavioral marketing can go much further by monitoring your actions on a single site, on a network of sites or some programs track all web surfing with desktop adware/spyware software. The information gleaned from this monitoring gives marketers the ability to target prospective customers in real time.

For illustration purposes, let’s say the Ford website tracks visitors’ actions for the purpose of behavioral marketing. They can tell how often you visit the site, how long you visit certain pages and even predict what color of car you like most. With this and the many other pieces of information that can be gathered, marketers can fairly accurately calculate where you are in the purchase cycle. Say you have visited the Ford site twice in the last week, always visiting the Mustang page, clicking on “Build your mustang”, always building a black GT model and on your second visit, you clicked through to the financing page to check the day’s interest rates. This type of data gives marketers the instant impression that you are in the market to buy a black Ford Mustang GT in the very near future. As you click to leave the financing page, Ford, knowing your behavior and estimating that you are close to making a purchase, sends you an ad stating that if you purchase the Mustang today they will knock one percent off a five-year loan. This may just be enough incentive to drive you to action or to help you choose the Mustang over alternative options. Marketers understand the enormous advantage that this type of information yields. Moreover, when you compare this form of advertising to a commercial on broadcast television, you can see how the rate of return would be exponentially greater since you are communicating directly with a self-proclaimed buyer rather than shot gunning a message to millions of people hoping to find a possible buyer.

However, privacy concerns have begun to overshadow the benefits of some of the more intrusive forms of behavioral marketing. Some of the privacy concerns include: how much data is being collected, what sort of data is collected, is the data tied in any way to personally identifiable information, how the information will be used, who will control the information and will the visitor have the option to turn off the tracking. A recent study conducted by BURST! Media showed that only 23% of Internet users would welcome a website’s collection of non-personally identifiable information for the purpose of delivering ads that were more relevant to their interests. A major concern of many consumers is the collection of personally identifiable information. Most people are very uncomfortable if they even have an inkling that behavioral data is being collected and fear data falling into the wrong hands, allowing criminals to quickly and easily steal their identity.

Consumers’ privacy concerns do not end with website tracking either, as technological advancements in other areas of our society allow marketers to track our behaviors without our knowledge. Many retailers have begun using “Video Mining”, the use of video monitoring in retail stores in order to analyze who shops in the store, traffic patterns, what items draw shoppers’ attention, etc. For retailers, this information is priceless for determining where to place certain items, what items to keep in stock, how to display merchandise to attract the most attention and many other pieces of information that yield greater sales. However, like online behavioral marketing, consumers are showing resistance to “Video Mining” as they feel the technique infringes on their right to privacy. Adding to this resistance is the fact that many retailers do not disclose that shoppers are being video taped. Marketers stand by the lack of disclosure by saying that disclosure will cause shoppers to act less natural, altering their regular shopping habits and skewing the results of the mining.

While behavioral marketing has become a very effective tool for delivering highly targeted advertising messages, there is much concern when it comes to privacy issues. Consumer advocates argue that marketers should not collect any data on actual behaviors without the individual’s consent, while marketers continually strive to gather more and more accurate information in an effort to fine tune advertising messages and improve the cost-effectiveness of delivery methods. This fine line between consumer privacy and behavioral marketing has already been crossed when it comes to adware/spyware. Many legitimate marketers have taken great strides to distance themselves from those that install damaging adware/spyware on consumers’ desktops without their knowledge. Yet, many marketers would love to have the data that these programs collect. Therein lies the debate. How much data should marketers be able to mine, while protecting the privacy of consumers? Where do you draw the line?