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|556 PART 3 Designing a Customer Value-Driven Strategy and Mix
Consumer privacy: The ad industry
has agreed on an advertising option icon online social media, mobile phones, and other digital technologies, Congress in 2013
that will tell consumers why they are
seeing a particular ad and allow them to online, as well as geolocation information, photos, videos, and audio recordings.” The
opt out.
Digital Advertising Alliance
databases to “microtarget” their selling efforts. Most marketers have become highly skilled
at collecting and analyzing detailed consumer information both online and offline. Even the
experts are sometimes surprised by how much marketers can learn. Consider this account
by one Advertising Age reporter:57
I’m no neophyte when it comes to targeting—not only do I work at Ad Age, but I cover direct
marketing. Yet even I was taken aback when, as an experiment, we asked the database-marketing
company to come up with a demographic and psychographic profile of me. Was it ever spot-on.
Using only publicly available information, it concluded my date of birth, home phone number,
and political-party affiliation. It gleamed that I was a college graduate, that I was married, and
that one of my parents had passed away. It found that I have several bank, credit, and retail cards
at “low-end” department stores. It knew not just how long I’ve lived at my house but how much
it cost, how much it was worth, the type of mortgage that’s on it, and—within a really close
ballpark guess—how much is left to pay on it. It estimated my household income—again nearly
perfectly—and determined that I am of British descent.
But that was just the beginning. The company also nailed my psychographic profile. It cor-
rectly placed me into various groupings such as: someone who relies more on their own opinions
than the recommendations of others when making a purchase; someone who is turned off by
loud and aggressive advertising; someone who is family-oriented and has an interest in music,
running, sports, computers, and is an avid concert-goer; someone who is never far from an In-
ternet connection, generally used to peruse sports and general news updates; and someone who
sees health as a core value. Scary? Certainly.
Some consumers and policy makers worry that the ready availability of information
may leave consumers open to abuse. For example, they ask, should online sellers be al-
lowed to plant cookies in the browsers of consumers who visit their sites and use tracking
information to target ads and other marketing efforts? Should credit card companies be al-
lowed to make data on their millions of cardholders worldwide available to merchants who
accept their cards? Or is it right for states to sell the names and addresses of driver’s license
holders, along with height, weight, and gender information, allowing apparel retailers to
target tall or overweight people with special clothing offers?
A Need for Action
To curb direct marketing excesses, various government agencies are investigating not only
do-not-call lists but also do-not-mail lists, do-not-track online lists, and Can Spam legis-
lation. In response to online privacy and security concerns, the federal government has
considered numerous legislative actions to regulate how online, social media, and mobile
operators obtain and use consumer information. For example, Congress is drafting legisla-
tion that would give consumers more control over how online information is used. In addi-
tion, the FTC is taking a more active role in policing online privacy.
All of these concerns call for strong actions by marketers to monitor and prevent
privacy abuses before legislators step in to do it for them. For example, to head off
increased government regulation, six advertiser groups—the American Association
of Advertising Agencies, the American Advertising Federation, the Association of
National Advertisers, the Direct Marketing Association, the Interactive Advertis-
ing Bureau, and the Network Advertising Initiative—recently issued a set of online
advertising principles through the Digital Advertising Alliance. Among other mea-
sures, the self-regulatory principles call for online marketers to provide transpar-
ency and choice to consumers if Web viewing data is collected or used for targeting
interest-based advertising. The ad industry has agreed on an advertising option
icon—a little “i” inside a triangle—that it will add to behaviorally targeted online ads
to tell consumers why they are seeing a particular ad and allowing them to opt out.58
Of special concern are the privacy rights of children. In 2000, Congress passed the
Children’s Online Privacy Protection Act (COPPA), which requires online operators
targeting children to post privacy policies on their sites. They must also notify parents
about any information they’re gathering and obtain parental consent before collect-
ing personal information from children under age 13. With the subsequent advent of
extended COPPA to include “identifiers such as cookies that track a child’s activity
main concern is the amount of data mined by third parties from social media as well as
social media’s own hazy privacy policies.59