The Internet Economy will only Survive with Proper Privacy Disclosure

I recently wrote a post in What’s Your Tech entitled: Google vs. Facebook: It’s all about Privacy.

My background is in database marketing and I am a firm believer in full disclosure to the consumer. This has been the practice for any one-to-one communication regardless of channel. It’s the reason why loyalty programs, direct mail even telemarketing have been strong purveyors of communication and insight.  Transitioning this principle to the internet should not change the principles. In fact, given the amount of information that people are creating and sharing on these social platforms should leave all of us to question how some of this information will be used.

Two additional news items came to light in the last few days:

Given the amount of media scrutiny on this issue, Twitter is actually taking a proactive step in identifying apps that may have access to user information, specifically DM, and taking steps to properly inform users within the OAuth session. At the same time they are mitigating any future access from apps by eliminating the DM data. Smart move and good for Twitter for staying under the radar on this one!

The bill (SB 242) would prohibit Facebook and other social networking sites from publicizing users’ addresses or phone numbers without their explicit consent.” Not surprisingly , Facebook, Google, Twitter, Skype, and Yahoo, among others have banded together and denounced the bill calling it unconstitutional and hurting tech companies and negatively impacting the internet economy .

I don’t buy it. In fact I think the more these platforms keep from the consumer, the harder it will be to garner performance from advertising.  I also disagree with the argument that the common user does NOT understand how they’re data is being used, nor do they care.  The amount of media attention to this topic has certainly been enough to convince the people around me that they have to really manage what they share and don’t share. Why not give the users the benefit of the doubt? Are companies afraid that “consumer knowledge” will render their platforms less attractive to marketers?

Coming from the banking industry and from a country that is relentless in protecting user information, while there are limitations there’s an even larger negative impact on the business: reputation and eventually…. churn. From a customer viewpoint, “If you protect my information and you are up front with me about how you use it, I will trust you more”. I’ll take it one step further….”I will tell you about the things I like, don’t like, when I want to hear from you and in what channels”.  “If you go behind my back and you use my information that I haven’t given you permission to use, then our trust is broken and I will have one foot out that door”.

I worked for Yahoo! and I know the billions of ad dollars to be made is in tracking user behaviour: what they search for, where they spend their time, how recently … all this in order to offer targeted ad messages that provide real relevance for the user. To do this, cookies were absolutely essential. But Yahoo! was also adamant that external networks didn’t infringe their own cookies on the Y! user base so from that perspective they were “protecting” their users. Yahoo! openly disclosed this in their Terms of Service.

But Yahoo! and many of the Internet giants need to be more transparent in their disclosure and more user friendly.  Do-not-call List or Permission Marketing has NOT killed Telemarketing, Direct Mail or Email marketing. In fact the opposite is true: The final opt-in base may be smaller but the performance will be better. This will also hold true for the web.

What’s your opinion on this?

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