Targeted Marketing and Online Privacy

Have you noticed that lately, the moment a notion or product pops into your head, you suddenly start seeing ads related to it in the margins of your web browser? Okay, you probably weren’t just thinking about it, maybe you did a web search or mentioned it in an email, but it is still eerie.

Companies now have the ability to look at your browsing history and other online activities and mine that data for clues about you and your purchasing habits. In turn, they use their intel to serve you targeted ads. Facebook is notorious for serving ads about pregnancy and baby equipment to the newly married, for example.

Some people appreciate these directed ads, figuring that if they are going to see advertising, they might as well get ads for relevant products. Others are annoyed and find it mildly creepy, while a third group are outraged at what they feel is an invasion of their privacy. In fact, 73 percent of consumers surveyed said that they object to being tracked online. It is often said that if you get a something for free (à la Google or Facebook), you aren't the customer, you're the product. The question is -- for those companies in the business of selling data, what are the CSR implications of doing so?

Privacy is a form of security -- we trust that private data will remain secure from prying eyes. If private date is exposed without the owner's consent, that's a form of theft even if it is only used to produce targeted marketing.

In order to target marketing effectively, advertisers must track where computer users go and what they do online. In today’s world, that feat is often accomplished by cookies -- tiny files that are saved in your computer linking it with a remote website. When you return to a website you’ve been to before, the site’s software searches for the cookie on your computer, and when it finds it, it then knows who you are. They can then link that information with their own records of your previous transactions, as well as any other information they might have collected about you from databases, or third-party providers.

This can also be useful. If you have purchased items through this website, it could be helpful to be able to look at your past purchases, perhaps to order more of the same, or if you have decided to return the item. Most people don’t mind this so much, but it’s when those ads start popping up that people feel that a line has been crossed.

Companies, or as advertisers call them, brands, have been gathering information for a long time to specifically tailor their messages to consumers. In the past, information like your age, your location, and your field of work were used to place you in a cohort, from which some general tendencies of your buying behavior might be inferred.

Of course the Internet provides a far richer data set for these purposes. For detailed information on who is collecting what from your online activities, you could visit any of the following websites.

• AccessMyLibrary reveals what information companies collect from your purchasing habits.


• The Federal Trade Commission provides instructions on how to opt-out of different forms of direct marketing.


• The Direct Marketing Association is the industry group’s representative, extolling the benefits of direct marketing.

What recourse is there for those who don’t welcome this kind of intrusion? There are ad-blocker programs that can prevent pop-up ads from filling your screen. Many browsers have these built-in. A user can also disable cookies in their browser settings. But this disables the useful tracking functions along with the annoying ones.

Consumers fight back

This disenchantment with ads, particularly those that attach themselves to social media, helps to explain the sudden surge of interest in Ello. The site works by invitation only and the stated mission, according to CEO Paul Budnitz, is to be profitable without selling user data.

 

The European Union recently proposed changes to their data protection laws that would give individuals more rights and more control over who gets to see what in their data and what can be done with what is seen. Among these reforms would be “the right to be forgotten.” Staunchest opponents want tough laws restricting, “any form of automated processing of personal data intended to evaluate certain personal aspects relating to a natural person or to analyze or predict in particular that natural person’s... personal preferences, reliability or behavior.”

Targeted marketing and corporate sustainability

Absent legislation, companies will likely continue to sell data -- it's a lucrative way to boost the bottom line. Is it a Corporate Social Responsibility (CSR) issue? Given that CSR starts with materiality, and materiality is determined by stakeholders, and stakeholders include those people who interact with your product, be they customers or products, we at TriplePundit give a resounding "yes." Customer privacy vis a vis targeted marketing is a key sustainability issue for companies that engage in it. We haven't seen it pop up in these company's sustainability reports, but we believe it should be there. Customers clearly care, given the number of initiatives that are popping up to help individuals take back control of their data.

 

One example is Network Advertising Initiative’s (NAI) Opt-Out tool. Visiting this website will bring up a list of all the companies that are currently using cookies to provide targeted advertising to your computer. When I visited I received 83 names, the vast majority of which I had never heard of. Eliminating these will not stop ads from coming, but they will no longer be targeted based on my online activities. Other browser tools include privacychoice, which makes TrackerBlock and TrackerScan, and PrivacyCheck, which is specific to Facebook. Another option for Chrome users is to use Google in Incognito mode, which can be toggled and off. This mode deletes browsing history, cookies, and extensions, which should eliminate most tracking.

Whether it will be better or worse remains to be seen. Says Marc Groman, President & CEO of Network Advertising Initiative (NAI), a successful solution must, “bake in privacy by design and ensure that there is transparency, notice, control, choice and accountability.”

For companies, who are more concerned than ever about protecting their online reputations, this can be a challenging business. Given the variation in individual preferences, the need for agility, and the tools to offer the flexibility and responsiveness that today’s customers demand. Companies like TRUSTe now offer integrated Data Privacy Management Platforms to help address these issues. Companies that care about sustainability would be wise to consider them.

Image credit: Sagie: Flickr Creative Commons; Pixabay