One-way street

Nothing gives usually unflappable marketers that deer-in-the-headlights look like the mention of the word privacy. With horror stories circulating about the hacking of credit card databases, unsolicited sampling, and overly aggresive marketing to kids, many marketers see privacy protection as a major impediment to their already difficult jobs. However, if the behavior of the average consumer is any indication, smart marketers should be able to turn that impediment into an opportunity.

First, privacy is not that top of mind. “Worrying about privacy is like being environmentally friendly,” says J. Walker Smith, president of Chapel Hill, NC-based research firm Yankelovich. “Most people don’t really think about it in their day-to-day lives, but when you bring it up they’re likely to have vehement opinions.”

A 2002 Yankelovich MONITOR survey on consumer attitudes toward privacy found a large increase in negative opinions regarding marketing tactics over results from the previous three years. According to the survey, 66 percent of respondents said that collecting and supplying personal data by marketing companies is a serious violation of privacy. Seventy one percent of respondents said the sale of mailing lists without permission of those named is a serious violation. Sixty-six percent condemned unsolicited phone calls for the purpose of selling products or services.

But having opinions doesn’t necessarily translate into action. According to the Jupiter Media Metrix report, Online Privacy: Managing Complexity to Realize Marketing Benefits, seven out of 10 consumers say online privacy is a serious concern but only 40 percent actually bother to read online privacy statements.

Consumers’ lip service to privacy without following through is frustrating for marketers who need to address the situation. “It’s always been that consumers will say one thing but do another,” says Connie Rizzo, executive VP and managing director of DVC Interactive, Morristown, NJ, who points out that consumers readily give up e-mail but not personal data such as physical address and age. “However, you can bribe them into revealing personal information by giving them something as small as a $5 coupon or a sweepstakes entry,” she adds.

Rather than throw their hands up at that hypocrisy, marketers need to realize that’s the whole point, according to Smith. In his view, the issue isn’t so much about consumer anger over invasions of privacy, but the fact that most marketers don’t provide a fair-value exchange to consumers for their information. “Marketers use personal information to their advantage, not the customer’s,” says Smith. “Marketers promise a custom-shopping experience, but how many really deliver? Consumers will let you into their lives if you offer something they want.”

And that requires a different mindset from brands. “Marketers should approach privacy as a marketing touch-point while they have the chance,” says Jupiter analyst Rob Leathern. “Someday it will be mandated but in the meantime it can be used to differentiate.”

Brands need to pay more than lip service to privacy to see the benefits. “Marketers are saying, ‘Hey, we’re obeying the letter of the law’ but sharing information,” says Leathern. “That’s a short-sighted view of customer relationships.”

Ultimately, coming legislation may have less effect than market forces. Jupiter says the online industry may lose almost $25 billion by 2006 due to privacy concerns, up from $5.5 billion in 2001. “With marketers spending more just to achieve the same results year after year, their approach to the customer relationship will change as a way to control costs if nothing else,” says Smith.

Maybe there’s a happy median after all.