Privacy concerns slow E-marketers
Legislation, privacy software hamper data collection and distribution

Public concern about the privacy of online information is the top issue dominating the attention of Internet marketers these days. Privacy protection legislation and software that helps users surf the Net anonymously, will make it harder for marketers to identify potential consumers and target their messages.

Although Internet marketing is still in its infancy here in Canada, many believe that it is an ideal medium for companies to establish one-to-one dialogues with their customers.

This is true for advertisers who, if they know some basic information about people visiting their sites, can target ads specifically tailored to their interests. Direct marketers that can compile or obtain targeted E-mail lists can also benefit by using them to send new product information to actual or potential clients. Unlike printed advertising, electronic messages cost nothing to print and mail, and can be sent instantaneously throughout the globe.

The problem is that there is a raft of personal, tax, medical and other information available on databases throughout the land, and people just don't trust the custodians of that information to apply the proper safeguards. E-marketing's potential is being tested by new measures that address Canadians' increasing concerns regarding the privacy of that personal information.

In Canada the Personal Information Protection and Electronic Documents Act, received royal assent in April of this year, and will be implemented in several stages beginning on January 1, 2001. It will cover all Canadian companies by January 2004.

It is based on the Canadian Standard's Association's Moral Code for the Protection of Personal Information, which now forms the core of the legislation. The act requires that marketers obtain consent to collect, use, or transfer information about an individual, or to use that information for purposes other than the original purpose that it was collected for.

It also requires that companies identify what the information will be used for, collect only information that is necessary for those purposes and that companies give individuals access to all information collected about them.

"Although the law seems pretty straightforward, complying with its provisions will be time-consuming and expensive," said Susan Vogt, a marketing lawyer with Gowling, Strathy and Henderson. "There are also many unclear areas such as the definition of the word "consent." Does it mean express consent, or is an opt-out clause, such as that required by Quebec legislation, enough?"

The other headache confronting marketers is privacy software packages such as Freedom, -- produced by Montreal-based Zero Knowledge Systems Inc. -- as well as similar products made by Persona Inc. and Privada Inc. These packages allow users to surf the Net anonymously and can make it difficult for marketers to understand who is visiting their sites, and thus effectively target messages to them.

But aside from the fact that they cost money, these packages can be a headache to install and many Internet sites will not allow visitors using privacy software. It is thus likely that the immediate impact of such software will be limited. On the other hand if Microsoft incorporates substantial privacy protection features into upcoming versions of its Windows operating system, that that would be another story altogether.

Ironically, industry observers believe that the new privacy legislation will ultimately benefit direct marketers. The argument goes something like this: eased public concerns about online privacy will lead to greater confidence in the Internet. More people using the Internet, makes it a more attractive marketing medium. For this reason, the Association of Canadian Advertisers was one of the biggest boosters of the new federal privacy legislation.

"Advertisers need to move closer to a model called "anonymous profiling," said Bob Reaume of the ACA. "They don't need to know the identity of people they are advertising to, they just need some basic information, and from that they can infer what kinds of products that person will be interested in."

The same phenomenon applies to privacy software. The existence of this software, even to non-users, gives consumers the choice as to whether they want information about themselves disclosed to marketers.

Just the fact that software is available, could boost confidence in the Internet of those Canadians that care about privacy in theory, but not enough to actually go out and spend $50 to ensure that privacy.

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