Getting Ready for Privacy Principles

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Effective July 1, 1999, the Direct Marketing Association will institute a new set of privacy principles for consumer direct marketing. Although the principles focus on "consumer" marketing activities, they also act as a precursor for revised business-to-business practices.


Let's take a look at the new rules that directly affect how we market to consumers and perhaps to businesses as well.


In "The DMA Privacy Promise" final draft memo, the viewpoint of the DMA is that the new rules are "a good marketing practice that will further build customer trust in direct marketing and the effectiveness of direct marketing." Institution of the new rules is intended to show regulators that the DMA continues to dedicate industry resources, knowledge and clout in support of a strong self-regulatory program.


The practices for satisfying the privacy promise are segregated into four areas: notice, opt-out, in-house suppression and DMA suppression.


Notice: Marketers will be required to inform customers on their policies concerning the rental, sale and/or exchange of customer information. The notice is to include the choice to opt out of the sale, rental or exchange of their customer information. The notice should be provided soon after a prospect converts to a paying customer with at least a yearly follow-up. The notice can be given in a routine customer communication (either by mail, phone, fax, print or e-mail) and must be easy to find, read and understand.


Opt-out: Marketers and list compilers are required to honor individual consumer requests to opt out of the sale, rental or exchange of their individual information. This opt-out status will remain in effect for five years, unless the consumers specifically change their opt-out status.


In-house suppression: An internal suppression file is to be maintained and used to warehouse and suppress consumers not wanting to receive communications from an organization.


Mail Preference Service/Telephone Preference Service: Marketers that contact consumers are required to apply the MPS/TPS files as suppression files on external prospect files. (It is not required to apply these suppress files to your own customer file.) In addition, a proposed e-mail preference service file will be required for use with online prospect e-mail campaigns.


The DMA has taken excellent steps regarding the protection of privacy, however, there could be stumbling blocks ahead relating to the definition of a "consumer."


Using the small office-home office market as an example, who determines that individuals in this class are or are not considered "consumers"?


Is the PC cataloger that sells $3,000 systems preloaded with Windows NT to individuals at home address a "consumer" marketer?


This certainly is a gray area that will need further examination and discussion.


Another potential problem could occur as the new privacy rules graft themselves from consumer marketers to business-to-business marketers. For example, controlled-circulation publications, which are at the core of many hi-tech marketing campaigns, rely on the completion of extensive questionnaires. The collected data is used to drive ad-space sales, as well as generate list-rental revenue that is critical to a publication's bottom line. What happens when the publisher gives a formalized "notice" clearly stating the intent to rent the collected data?


Out of three randomly selected qualification cards, none stated that the data was being collected for list-rental purposes (as a matter of fact, the DM News list is available for rent, and its qualification card is clear of any such language).


Overall, getting business users to "opt in" is not going to be easy. It most probably will impact their revenue models and have a direct effect on marketers who rely on their list universes to drive their marketing programs.


Privacy always has been a concern among direct marketers. As our industry moves forward with new ways of protecting privacy, it's important as a marketer to understand the issues and the ways they can affect how you do business.


Roy Schwedelson is CEO of Worldata Inc., Boca Raton, FL, a list marketing, electronic marketing and database services company specializing in the hi-tech and microcomputer markets. He can be reached at roy@worldata.com.
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