DMA: Data marketing is good for the economy, good for you

The direct marketing industry has more in common with McDonalds than you might think. Both can be bad for you, but only one is highly regulated.

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Yesterday, the Direct Marketing Association produced a 105-page report detailing the value of the Data Driven Marketing Economy (DDME), along with a couple of spiffy infographics. Written by academics from Harvard and Columbia, it describes in numbing detail how vital the buying and selling of our personal data is to the future of our economy and the safety of the free world -- and thus should be free from any government oversight.

Forgive me if I sound a mite skeptical. Data is, of course, like oxygen to the Internet. It would not survive long without it. But that doesn’t mean information can’t and shouldn’t be regulated.

First, you have to consider the source. The Direct Marketing Association is the umbrella lobbying/PR group that represents major purveyors of junk mail, telemarketing, mail order catalogs, email spam, Web ads and other assaults on our personal privacy. (Or, conversely, helpful marketing materials that enable consumers to make better choices in how they spend their money. See, I can be fair when I want to.)

Historically, the DMA has been staunchly opposed to any measure that restricts the activity of its member companies or offers some level of control to consumers. Thus it opposed the Do Not Call List, easily the most successful pro-consumer initiative ever enacted by our government.

For years it opposed anti-spam legislation. The DMA succeeded in watering down the CAN-SPAM Act of 2003 to the point where it is nearly useless, in the process pre-empting much stronger laws enacted in more than 30 states. When there was an outcry about tracking cookies in the late 1990s, the DMA spawned the Network Advertising Initiative in an attempt to “self regulate” the nascent Web ad industry. It has been fighting attempts to reign in data brokers and Web trackers ever since, using a variety of intermediaries.

So it’s not a great surprise that the DMA's argument can be summed up thusly: Data sales good, data regulation bad.

Junk Data vs Junk Food

According to the report, the Data Driven Marketing Economy generated $156 billion in revenue last year, employing more than 675,000 people. About 70 percent of that revenue stems from selling both personally identifiable and pseudonymous data.

Interestingly, those numbers are similar to the US fast food industry, which generated $160 billion last year and produced just over 4 million jobs. (Kids, if you’re reading this at home, remember: Slinging data pays much better than flipping burgers.)

But there are two big differences between Junk Data and Junk Food: The first is that you can choose to walk by Mickey D’s or Carl J’s without entering. If you do enter, you can probably order a salad with diet iced tea, and not the jumbo fat burger with extra bacon, supersized fries and a shake.

You don’t really have that choice with your marketing data. Yes, you can go to ridiculous measures to opt out of some marketing schemes, but you’ll spend a lot of time doing it and you’ll never be rid of them all. That is quite deliberate. Marketing companies need to offer opt outs to get the FTC off their backs, but nobody is requiring them to make it easy.

The other big difference: Junk Food is highly regulated. That’s because nobody wants to order a Mad Cow burger with a side of McBotulism. Junk Data, though, not so much. Unless they're a consumer credit agency or dealing with health care or financial data, marketers can pretty much do whatever the heck they want with your information, provided they stay within the bounds of their impossibly dense and ever malleable privacy policies.

Graphics 1, info 0

The infographics summarizing the report make other claims of the benefits of “responsible data driven” marketing, which are of varying dubiocity.

For example:

* Data sharing leads to lower prices. While it’s true the Internet has revolutionized bargain hunting, that doesn’t mean you’ll see lower prices. In fact, you may well see higher prices based on your data profile – especially if you use a Mac.

* Lack of targeted ads = the death of “free content.” Yes, they’re still beating this horse. It’s true that targeted ads offer two to three times as much revenue as untargeted ones, but it’s not at all clear those extra dollars are going into publishers’ pockets. Ultimately, sites may have to charge for content in any case, since the ad model seems to be floundering.

* Ads have greater relevance. This is true. They also have greater creepiness, as the same ads follow you from site to site, often for things you have no interest in buying. Personally, I feel stalked. Your mileage may vary.

* Online retailers can stock a broader range of products, which are also easier to find. Also true, but they don’t need your personal data to do this.

* Election campaigns are using vast amounts of data to urge people to vote. This is also true, but the level to which the Obama and Romney campaigns did this (but mostly Obama’s) also crosses the creepy threshold.

Stop me if you’ve heard this one

Of course, the DMA’s report wasn’t produced for you or me. It was produced for the staff members of sympathetic Congressmen and women, so that their bosses could hold them up in a hearing on proposed privacy legislation and wail “But what about the jobs? Isn’t anyone thinking about the jobs?”

Here is, quite literally, the money quote from DMA President Linda A. Woollery:

“The bottom line is that well-meaning but poorly-conceived legislation or regulation restricting the responsible use of data would harm the U.S. Economy,” said Woolley.  “It would impact billions of dollars in revenue and hundreds of thousands of jobs, make small business less competitive, and stifle overall innovation. In the end, it would hurt consumers by limiting choices and raising prices.”

That 105-page report says nothing about legislation or regulation, poorly conceived or otherwise. There is actually no evidence that giving us more control over our data – and make no mistake, it is our data – in any way harms the data driven marketing economy, or that it will raise prices, stifle innovation, or cost jobs. None, nada, zip.

If regulation does kill industries, why is there a fast food restaurant on every corner? Why isn’t Mickey D’s clamoring for the right to use pink slime instead of animal flesh in its Big Macs?

Because McDonald’s knows it needs consumers to trust that its products won’t make them sick. Those regulations actually help the fast food industry, just as they did the meat packing and pharmaceutical industries in the previous century.

Now the data industry needs to develop some trust. Consumers need to be confident that their data won’t be used against them or make them “sick.” It’s not going to get there by spewing out the same BS, even if it is dressed up in a bow tie and a scholars cap.

All we want is to ‘Have it our way.’ If they can do it with burgers, surely it’s possible with data.

Got a question about social media or privacy? TY4NS blogger Dan Tynan may have the answer (and if not, he’ll make something up). Follow him on Twitter: @tynanwrites. For the latest IT news, analysis and how-to’s, follow ITworld on Twitter and Facebook.

Now read this:

Web trackers are totally out of control

Further adventures in data mining, or welcome to my Lear Jet Lifestyle

Four reasons why Do Not Track turned into Do Not Trust

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