Profiling and Privacy Can CoexistIn recent weeks, much has been made of profiling on the Internet. A cacophony has arisen before the Senate Commerce Committee in Washington attacking the practice as an unprecedented intrusion into citizens' privacy that only federal legislation can control.
But those clamoring for federal legislation must recognize some longstanding practices in the business world.
Profiling has been greatly misunderstood. It is simply the accumulation and manipulation of demographic data about consumers, silently derived while their computers are connected to the Internet. When you visit certain Web sites for the first time, "cookies" are placed on your hard drives. These cookies collect and record data based upon where you have gone within that Web site. They create anonymous profiles and compile characteristics of you as a user. The owners of the Web sites then put their electronic arm into your cookie jar and retrieve the nuggets needed to target messages to a certain type of person who has visited their Web sites. They use that data to customize e-mails and ads they think respond to your typical surfing and purchasing behavior.
That suddenly sounds scary to so-called consumer advocates like Sen. Richard Bryan, D-NV, who said at a recent Senate hearing, "If local shops did things like this, we'd all be outraged."
Would you really be outraged, senator?
Where do you shop? At your local mom and pop store, where they know your name and tastes? Or at larger grocery, convenience and department chain stores? Do you use a bonus card at your grocery store? Do you belong to a health club? Do you rent cars? Fly in planes? Subscribe to magazines? Buy through mail order? Have cable or satellite TV? Ever cashed a check at a retail outlet? Do you have a credit card? Are your purchases scanned through a UPC reader? Or, worst of all, have you ever bought something advertised in an infomercial, or called a 900-telephone number? Wow -- does someone have a profile on you!
Well, senator, if you suddenly find yourself outraged by a much milder form of data collection on the Internet, then you long ago missed the right moment to be outraged.
Marketers have been collecting data on you from the moment you made your first purchase. They've been manipulating and selling it to other people ever since. And that is a long-standing practice in the business world. A robust economy allows marketers, large and small, to target consumers with offers they're likely to want, or maybe even need. This whole process is uniquely helpful to small start-ups looking for efficiency in their sparse marketing budgets. Do abuses occur? Sure -- and they're quite adequately addressed by state and federal regulators under existing consumer protection laws.
Sen. John McCain, R-AZ, recently said, "Absent legislation, meaningful enforcement, and airtight coverage, online profiling will eviscerate personal privacy."
Eviscerate! It sounds like it's going to hurt a lot next time I surf the Web.
Now I'm all for airtight legislation, which makes it so much easier to advise clients and chart their future. But when did the U.S. Congress become a global legislature? When did the House or the Senate gain the authority to enact laws to protect privacy from data marauders hiding in Europe, in the Caribbean or anywhere else offshore?
Senators, please. Businesses have been accumulating data on consumers as long as professional politicians have accumulated data on voters. Voter polling and consumer profiling -- both try to find out what people want, and sell it to them. You'll continue poring over Census data, soliciting contributions via the Internet and compiling data banks on your campaign supporters -- that's a reality of your business. Why is the basic business maxim "Know your customer" any different than Abe Lincoln's electoral advice, "Make a perfect list of every voter"?
The Internet just gives marketers, as well as politicians, another way to target consumers. The anecdotal abuses that you like to recite at congressional committee hearings make for good sound bites, but the truth is that the American marketing community does an incredible job of self-regulation in the offline world. It can do the same in the online world. The last thing legitimate marketers want is someone "eviscerating" their consumers. And where self-regulation falls short, the Federal Trade Commission and other federal and state agencies can step in -- not with special legislation, but with the broad powers they already possess.
The Internet provides a way to embrace world commerce and communication without respecting old national boundaries.
In the new reality of global business, Sen. Bryan and McCain, you and your colleagues should take a breather and read the tea leaves on your computer screens. Consider whether you really want to enact legislation that will harm only U.S. e-tailers, knowing that there's not a thing you can do about what the rest of the world does.