Database marketers tell how you get on the lists
Think back to the five most recent purchases you made online. Can you remember, or do you even know, what happened to the personal information you entered?
Probably it was sold, says Ted Wham, president of Database Marketing for the Internet, a consulting practice that applies database-marketing techniques online.
Wham posed this question to a group gathered Tuesday at the Federal Trade Commission for a public workshop on privacy and consumer-data exchange. The FTC called the meeting to stay informed about how companies are gathering consumer information and what they do with it, not to find new enforcement targets or create policy proposals.
"There is a great trust deficit out there now," says Commissioner Orson Swindle, who may chair the FTC when the current term expires in September. The FTC's ongoing challenge is to balance the public's privacy issues with legitimate business concerns, the commissioners note.
Your Name Is Out There
Some 100,000 distinct mailing lists are available for purchase in the U.S., according to Wham. As e-commerce grows, so do consumers' concerns about the privacy of their personal information. Customers of both online and traditional businesses are learning more about how their names get on one of these lists.
Organizations that compile such lists acquire customers' personal information by accessing public records, conducting product surveys, collecting warranty cards, and purchasing mailing lists from catalogs or magazines, says Mary Culnan, a professor of management and information technology at Bentley College. Demographic information from state and local government documents, such as property records, allows companies to pinpoint wealthy areas where people are more likely to have disposable income. Warranty cards and magazine subscription lists reveal customers' spending habits and allow companies to focus their marketing effort on customers who have already demonstrated an interest in a particular kind of product.
"It is important to know if your customer is living in a rural area if you're trying to sell them a lawnmower. You wouldn't want to market it to someone living in an urban high-rise," says Elizabeth Brown, senior vice president of Claritas, a company that provides marketers with demographic research.
Social, Technological Changes
This is a relatively recent type of marketing effort, and reflects changes in American buying habits as well as the advance of technology lsuch as the Internet.
"Pre-World War II, buyers and sellers used to know each other and vendors could see who was buying what and why," says Johnny Anderson, chief executive officer of HotData, a "virtual warehouse" of business profiles and consumer demographics for marketing in e-business. But modernity and the Internet have empowered consumers with information and broken down the need to travel to stores, so businesses needed to find new ways to learn about their customers' preferences and habits.
"Business success is leveraged by the service it can give consumers," Anderson says. And when companies don't have a physical presence, they require alternative ways to target their audience.
"We compile all this information not because we're being nosy, but
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