Data access shake-up for direct marketing

Consumers could soon control how their information is used by companies. Alan Mitchell says marketers should embrace the changes, rather than panic.

If the direct marketing industry doesn’t watch out, two operational foundation stones of the industry could soon be dislodged. A privatised Post Office could start using the Postcode Address File (PAF) – a list of all postal delivery addresses and their postcodes – to maximise its profits rather than as a piece of national information infrastructures. And a Home Office proposal for a new electoral roll register that would allow citizens to stop their information being used for direct marketing purposes has the Direct Marketing Association (DMA) in a panic. The great direct marketing lobbying season is now open.

The PAF issue will probably pass. The Post Office will surely have to give some assurances about its use of this incredible asset. But the electoral roll is a can of worms. The DMA argues that the Mailing Preference Service (MPS), the self-regulatory mechanism which allows consumers to remove their names from direct marketing lists, is protection enough for citizens. But its argument doesn’t hold water. Change is in the air.

Far from being satisfied, for example, with the Home Office proposals, data protection registrar Elizabeth France argues that the new form should extend privacy provisions even further: the opt-out box should be replaced with an opt-in arrangement, and there should be provision to include things like credit referencing and mailing lists within its remit. It is a criminal offence not to give personal details on the electoral register, notes data protection spokesman David Smith, so there has to be “a very strong case” for companies to be allowed to use that information for commercial purposes without the individual’s consent.

No doubt some compromise will be patched up. But this issue is not going to go away. For decades, direct marketers’ core assumption has been that any information collected from or about consumers is the property of the organisation which collected it, and can be used at will by that organisation (within the constraints of existing legislation).

Now the tide of opinion is shifting towards a very different consensus: that information collected about consumers by organisations should remain the property of those consumers, and be used in ways they specifically consent to. As Smith comments: “We would like individuals to be able to make informed choices about the use of their data.”

Wise marketers will embrace this shift as a step towards permission marketing. The heart of successful relationship marketing lies in gaining an information edge on rivals, and the best way to do this is by reassuring consumers about data collection and use. Today’s list-trading culture flies in the face of this. As Seth Godin, vice-president of direct marketing at Yahoo!, says: “Permission rented is permission lost.”

UK marketers are aware of these pressures. Recent research for Richmond Events by the Future Foundation suggests that nearly one in five communications directors agree that we are moving towards an era when “it will be necessary to get consumers to agree to receive your messages”. Another 55 per cent agree this scenario is possibleâ and less than one in three say it’s either impossible or will never happen.

The trouble with both the Home Office’s proposals and the DMA’s MPS is that their all-or-nothing packages are too black and white. You either completely suppress your name, or not at all. Caveats and exceptions are impossible. You cannot, for instance, say no to more credit card mailings, but yes to special offers relating to golf.

Likewise, the data protection registrar’s suggestion that credit referencing be included in the opt-out would mean that a consumer wanting to avoid receiving junk mail might also find it difficult to get credit: both opt-outs get bundled together.

This is crazy, and it lags consumer expectations. According to recent NCR research into consumer attitudes in Europe, there are three broad groups of attitudes to consumer research. The first doesn’t care who collects what information for what purposes. Another group opposes any commercial use of personal information by companies (not big in the UK, but big in the Netherlands).

But the fastest growing group is that in the middle. This group’s attitudes are described by Bob Henderson, privacy vice-president (note the job title) of the data warehousing company NCR in San Diego, as follows: “Hey Mr Businessman, I know you are keeping a dossier on me. I want to know what’s in it, what you are using it for, what benefits I get from it – and I want to have a say in all of these things.”

This third group is opening up a huge opportunity for entrepreneurs. For example, in the US, organisations like BonusMail pay consumers to receive commercial e-mails. BonusMail filters out the interested from the not interested by letting consumers specify the subject areas which they are prepared to receive e-mails on, thereby making the service attractive to marketers who pay BonusMail to pass on ads for them. Services like these open consumers’ eyes to the value of their information.

According to Henderson, use of consumer information is now so great that as soon as the year 2000 has passed, there will be a frantic rush by companies “to change the ways they collect, process and distribute personal data”.

A key element of these changes, he predicts, will be the creation of “sophisticated matrix options” which allow consumers to specify what levels of information can be accessed by which sorts of people, in which form and for what purposes.

This may sound like an administrative nightmare, but matrix options already exist. Some US health organisations, for example, allow patients to stipulate which information is for their doctor’s eyes only, which data can be used for research purposes if kept anonymous, which information can be used by drug companies to keep patients informed of products and services which might interest them, and so on.

Consumers will soon expect organisations to offer matrix options, predicts Henderson. Both the electoral roll and the MPS should start evolving towards this goal.

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