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Volume 1, Issue 3 An interesting article by Leslie Miller and Elizabeth Weise, USA TODAY on data mining as published online on Monday, November 8, 1999. Remember that I'm looking for people to contribute to this newsletter. If you have something relevant to say, please drop me an email at: dennis@mcdougalldigital.com **************************************************** FTC studies 'profiling' by Web sites. Most Net users know that the sites they visit can track their movements, watch what they do and use that data to more effectively market products and services. But even most savvy surfers don't realize they're also being tracked by companies they've never heard of as they go from site to site. Nor do they realize that these companies are compiling ever-expanding dossiers of them, some with the ultimate aim of matching names and addresses to online actions. The prospect disturbs the Federal Trade Commission enough that the agency is looking into such "online profiling" at an all-day meeting Monday in Washington, co-organized by the Commerce Department. "I don't want somebody putting together a profile of what books I considered buying, what music I listen to, what travel plans I'm thinking about," FTC chairman Robert Pitofsky says. Many Web users "would regard this as an invasion of privacy," he adds, but "it's hard to complain, because you have no idea it's going on." The trackers: a growing breed of online advertising companies such as DoubleClick, Engage and MatchLogic. The vehicles: those ubiquitous "banner ads" across the tops of thousands of Web pages. The ad companies drop tiny ID tags on users' hard drives and follow them around the Web through the network of sites each company serves, which may number more than 1,000. The companies compile detailed profiles of where people surf and what they look at, even if a surfer doesn't click on a single ad. The companies say tracking is necessary to better target messages to consumers who are most likely to be interested. But officials will grill companies about the kinds of data they collect, how it's used and who has access, to determine the potential privacy implications. If the FTC decides that current law is not adequate to protect consumers, it could recommend new legislation. Unlike some other large Internet businesses, "these companies haven't been under a microscope. They've been very behind-the-scenes," says Deirdre Mulligan, an attorney with the Center for Democracy and Technology. "There's not a lot of information about what they do and what they have." Competition changes the game Officials say that such extensive surveillance could have a chilling effect on e-commerce. "Consumer confidence drives our agenda," says David Medine, the FTC's associate director for financial practices. "If consumers know their anonymous wanderings are no longer anonymous, are they going to be comfortable browsing the Internet?" Privacy groups think not. "Online profiling doesn't give the individual control of when a company gets their information," says Andrew Shen of the Electronic Privacy Information Center, which wants new federal laws to protect personal information online. "Companies shouldn't just take it when consumers aren't looking." Until recently, most ad networks insisted that they did not try to match up surfing logs with public records, mailing lists or other information that could tie surfers' identities to what they do online. But in an increasingly competitive Internet environment, some now do. They include 24/7 Media, which touts its use of direct-marketing lists along with numerous online tools such as "cookies" (the byte-sized data files placed on hard drives by Web marketers to identify visitors), Internet protocol (IP) addresses and other means to track users. "If we look and find those people have children, we can serve them ads from companies that have products for them," 24/7 senior vice president Michael Rowson says. "It's the ability to deliver the right message to the right people." "If I'm interested in looking at cars, the ads they serve me are more likely to be something I want to see," says Kevin Wandryk of AdKnowledge, which also uses cookies. "But there's no way for us to link those to individual users." Enterprising companies have come up with ways. One example is DoubleClick's NetDeals, a sweepstakes Web site that requires only that users give their name, address and e-mail address to be entered. That information can then be linked to users' online profiles, giving DoubleClick, the holy grail of personalized marketing for at least a few consumers, a name to go with a profile. DoubleClick spokeswoman Jennifer Blum says information is not shared with advertisers, but it is used to focus the ads that surfer sees. Many privacy watchers worry that the matching of real names with surfing records will escalate dramatically when DoubleClick's acquisition of a real-world catalog database company is completed Nov. 23. Over the summer, DoubleClick, which has 1,500 sites in its ad network, announced it was acquiring Abacus Direct, which keeps 88 million personally identified five-year histories of consumers' purchases from a wide range of catalogs. Statements on DoubleClick's Web site suggest it plans to merge its surfing information with Abacus' real-world records of catalog shopping, but not before notifying the public by updating the privacy policy on its Web site. Privacy advocates argue that such notifications are meaningless. "Even if there's a notice somewhere on a Web site, how is the consumer to know?" says Jason Catlett of Junkbusters. When surfers visit a site, they have no way of knowing that DoubleClick supplies the ads, let alone that it's tagging and tracking them around the Web. Privacy experts say linking real names to "anonymous" information collected online is not as difficult as it might sound, thanks to new data-analysis techniques that use mathematical algorithms to compare databases and seek patterns. An erosion of confidence
Such techniques, called "data mining," allow companies to "identify things
in data that are really amazing," says privacy lawyer Mulligan, adding that
the implications go well beyond marketing. These companies "have a
wealth of information
Other privacy advocates agree. The information is "only one subpoena
away from your employer, a divorce lawyer or law enforcement," says
Evan Hendricks, editor of the newsletter Privacy Times. " The whole
thing contributes to a lack of trust in the Internet."
Several recent studies suggest public confidence in the Net may already be
eroding:
A report issued by Jupiter Communications in August found that
64% of online consumers are unlikely to trust a Web site, even if it
prominently features a privacy policy. An Ernst & Young survey with Technometrica, out last week, says 49% of Net users are uncomfortable providing personal information. A report Oct. 27 by Forrester Research finds 90% of online consumers want the right to control how their personal information is used after it is collected, and that half are willing to call on the government to regulate privacy.
But the marketing industry wants to protect its flexibility to explore the
unprecedented potential of the online medium. Target marketing research
company @Plan released a study Friday saying that although 93% of
Internet users believe the information collected about them is a threat to
privacy, 63% say the industry, rather than the federal government, should
regulate the collection of that information.
A survey sponsored by DoubleClick, to be presented Monday,
emphasizes a finding saying 61% of consumers would rather see ads
tailored to their interests than not.
But the study, done by Alan Westin, publisher of the industry newsletter
Privacy & American Business, also notes that two-thirds of 1,011 Net
users surveyed were "very concerned" about the misuse of their
information: 83% said that before users participate in tailored ad
programs, they must be allowed to see their profiles and remove items
they don't want in them.
Hoping to head off restrictive laws, a group of online ad companies plans
to give the FTC a self-regulation plan today that provides Web-site
notices to surfers, plus an opportunity to opt out.
Five privacy groups called on the FTC on Friday to halt profiling by online
ad networks, "pending an expedited investigation into the practice."
Not all networks think online profiling is the only way. Microsoft's
LinkExchange, for one, says it doesn't use cookies and doesn't track
visitors' behavior.
Instead, it categorizes the kinds of sites in its network and lets advertisers
target by category; it also does surveys to gather demographic information
about viewers, spokeswoman Skye Ketonen says. "We want to be really
careful about privacy and respecting someone's travel on the Web."
Contributing: Will Rodger
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