How the Internet Is Privacy and Profit PositiveImagine for a moment, that catalog marketing were a new medium for the direct marketer. Could this new medium become a full-fledged industry if there were strict privacy controls over the renting and selling of personal information? The simple answer is no. If there were no selling or renting ofpersonal information, there would be no list brokerage business as we know it. Without it, the only way to acquire new customers would be through printadvertising, which is expensive compared to list rental. Though some of that cost is likely to be passed on to the customer, it would most likely make catalog marketing, for example, too expensive. Thus the catalog industry would have a difficult time growing, if at all, based purely on return on investment.
Now it's the Internet's turn. The Internet community is more
knowledgeable about the acquisition and use of personal information.
As direct marketers flock there, they will be running straight
into a higher and stronger privacy wall than any
developing industry has seen before.With the Internet becoming more
prominent, can the direct marketer approach it in the same way
as he approaches other mature mediums, such as catalog marketing?
I propose that direct marketers can actually grow their businesses on the Internet and utilize privacy as an economic benefit. By privacy I simply mean informing a customer about what will happen with their personal information.
How can a direct marketer attain economic benefit in this situation? On the Internet, direct marketers have three ways to develop customer acquisition that are as effective or more so than e-mail rental and list rental:
2. partnerships with organizations that drive traffic to the site
3. transitioning your house file from a paper customer to an
electronic customer (this last point can be argued whether it is new
customer acquisition or not).
Banner advertising is the most expensive of the three acquisition methods. Implemented efficiently, such as utilizing key word searches on the search engines or leveraging at partner sites, it is an effective medium for new customer acquisition.
Partnerships with organizations that drive traffic to your site is the
most underutilized and least understood opportunity for new customer
acquisition on the Internet. There are many organizations that drive a
substantial amount of traffic that can be leveraged to drive traffic to
your site. For example, LL Bean could enter into a strategic relationship with Ford Motor Corp. to be the official outfitter for Ford. No money would change hands. Instead, the other company's graphic would be placed on the home page. This is more effective than banner advertising because both organizations build their brands together, have a value proposition for the customer, and drive new
customers to each others sites. Most important, little or no money changes hands.
The third way to acquire customers is to leverage your own
installed base. A percentage of customers will be on the Internet.
The reason I consider this new customer acquisition is that you may have
this customer on your house file for paper-based mailings, but she does
business on the Internet with another organization. This can be viewed as
new customer acquisition for your Web site or customer retention for your
So yes, there is an economic benefit to direct marketers and the direct
marketing industry in a privacy-controlled Internet. This is solely
because there are effective means for new customer acquisition on the
Internet that protect the customers personal information and still
What will this do to list brokers as the Internet allows increased
privacy constraints? It will leave them behind unless they reposition themselves to take advantage of the economic advantage of electronic customer acquisition.