Commentary

New Efforts To Merge Online And Offline Data Revive Old Privacy Issues

More than 10 years ago, DoubleClick's plan to acquire Abacus and marry online cookie-based data to offline data set off a privacy furor that resulted in congressional hearings, litigation and an FTC investigation. The pressure grew so intense that DoubleClick had to retreat from its plan and promise that it would keep online and offline data separate.

In the last year, however, several data brokers have announced plans to mesh offline and online information without attracting anywhere near that sort of scrutiny. Most recently, this week eXelate and Nielsen announced they had forged a deal that will allow eXelate to add Nielsen's PRIZM codes to Web users' cookies.

Here's how the arrangement works: Nielsen currently uses data from Equifax to obtain data about households. Those households are then placed in one of 66 marketing segments, such as "kids and cul-de-sacs" -- comprised of upper-middle class, suburban residents, ages 25-44, who work in white-collar jobs and have young children.

Nielsen then provides that data to e-commerce companies, who have users' personal information, including street addresses. The e-commerce sites will match individual users with their PRIZM segments, and sell that information to data brokers like eXelate -- minus consumers' names, email addresses or other so-called personally identifiable information. eXelate will add users' PRIZM codes to their cookies, enabling advertisers to reach people in specific marketing buckets at a host of online sites. Additionally, eXelate will be able to add information about users' Web histories, so that a marketer can target, say, a "kids and cul-de-sacs" user who has recently visited a car site.

eXelate is hardly the only data broker that's marrying online and offline information. Last November, Nielsen announced a similar arrangement with DataLogix. Meanwhile companies like ClearSight Interactive are coming up with ways to merge online and offline data. ClearSight is readying a plan to target users in particular neighborhoods by merging their IP addresses with their postal addresses (gleaned from registration data collected by publishers).

Data brokers stress that their information about consumers is anonymous, in that no names, email addresses or postal addresses are exchanged, but privacy advocates question whether detailed individual profiles can ever truly be anonymous.

The data companies also emphasize that Web users also can opt out of the programs -- though it seems unlikely that most consumers follow evolving online advertising techniques closely enough to understand what's happening.

What's really remarkable isn't that companies are merging online and offline data, but that this business model seemingly developed under the radar. Even as the FTC has been holding hearings about online privacy and lawmakers have been talking about new legislation, few policymakers have specifically addressed this issue.

But that's situation might soon change. Already privacy advocates are saying that companies have crossed a line by collecting and using data without making clear to consumers what's happening.

Jeff Chester, executive director of the consumer advocacy group Center for Digital Democracy, tells MediaPost these new business models provide yet more evidence that companies should only collect data about consumers if they opt in. "Interactive advertising needs to be designed to empower individual consumers and not manipulate them," he says. "There's nothing wrong with this system if they have meaningful, informed consent."

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