Jupiter Media Metrix today reports that although nearly 70% of U.S. consumers are concerned about their privacy online, only 40% read privacy statements before handing over personal information to
websites. Moreover, only 30% of online consumers find website privacy statements easy to understand, according to a March 2002 Jupiter Consumer Survey.
In a new Jupiter Research report entitled
"Online Privacy: Managing Complexity to Realize Marketing Benefits," Jupiter analysts advise companies to allocate dollars for consumer security and privacy education and to treat online privacy like
a strategic marketing initiative, rather than a compliance burden.
The survey reveals that 82% of online consumers are willing to provide various forms of information to shopping websites (where
they have not yet made purchases) in exchange for something as modest as a $100 sweepstakes entry. Consumers are most willing to offer email addresses (61%) and full names (49%), and least likely to
provide household incomes (18%) and phone numbers (19%).
Interestingly enough, the survey data show that 36% of users would provide a username and password to this site -- a potential concern
considering that other Jupiter data indicate that 53% of online consumers use the same username and password wherever they go online. Jupiter analysts have found that a majority of consumers seem
willing to give their personal information for small benefits because it is not always clear how their information will be used or how widely it will be shared, and the extent of this behavior varies
greatly among different brands, websites and applications.
Based on proprietary research and analysis of Consumer Survey data, Jupiter forecasts that as much as $24.5 billion in online sales will
be lost by 2006 -- up from $5.5 billion in 2001. Online retail sales would be approximately 24 percent higher in 2006 if consumers' fears about privacy and security were effectively addressed. With
poor online privacy practices, many companies will experience negative effects not only on their online sales over the next several years, but also in off-line sales that shift to more privacy-
sensitive competitors.
"Early promises of privacy self-regulation by interactive firms have not materialized, and the industry has ceded the initiative to legislators. Only immediate widespread
industry commitment to privacy best practices will limit further restrictive government regulation," Leathern said.
Jupiter Advice to Address Privacy Issues Jupiter analysts offer the
following advice to companies looking to increase consumers' confidence in conducting online transactions and sharing personal information:
Adopt a segmentation approach to identify groups of
consumers that are most likely to respond to Privacy Marketing. Jupiter defines Privacy Marketing as messaging directed at allaying consumers' privacy and security fears and differentiation based on
conservative data collection and use policies. Businesses should proactively communicate and promote privacy and security policies and capabilities. Emphasize transparency, security and
accountability in both online and off-line consumer communications. Create a privacy council with representation across business units and increase awareness of privacy and data issues at both
the senior executive and rank-and-file employee levels.