Pulse of the Profession

Data Privacy – Risk or Opportunity?

The initial public offering of Facebook prompted discussion of how the company will justify its behemoth stock market valuation over the long term.  In a canny, but apparently unrelated move, GM announced that it no longer considers the cost of advertising on Facebook justifiable.  The piquancy of this announcement was muted somewhat when the auto manufacturer also disclosed that it would not be advertising on the 2013 Super Bowl but the question nonetheless remains: why do hundreds of millions of people voluntarily surrender their right of ownership in their own data production to Facebook and sites like it?

Daily, exabytes of so-called data exhaust stream out of the tailpipes of human interaction to be sold to advertisers in a bizarre form of metaphysical carbon capture.  Is it conceivable that individuals will one day be able to extract a fee from social media sites for the right to monetize their emotional waste?  Or will we see the establishment of a data “utility” in which users agree to mutually pool their data exhaust and sell it directly to advertisers, effectively dis-intermediating existing social media players?  Arguably, managing their data exhaust is something people are willing to job out to these sites for now, but it might take only a few highly visible data outrages for them to change their minds.  Social media companies and their advertisers will need to be more vigilant than they have been so far to ensure that this data exhaust doesn’t create a smog of privacy violations that people refuse to tolerate.

The Wall Street Journal has also, laudably, made a big deal of data privacy over the past two years, particularly with respect to super cookies and other tracking software.  A September 26, 2011 story by Julia Angwin about the rise of the chief privacy officer cites GE and HP, among the usual suspects, as leaders in this new field.  Are IP addresses and device identifiers personal data?  The FTC isn’t sure yet but European governments have taken the lead in trying to protect citizens’ private data, forcing global companies to look closely at their practices.

To our eyes, this is an area in which companies can create reputation-building impact by embracing high standards for personal data use, transparency about their practices and easy to use problem/resolution pathways.  Appointing a chief privacy officer is not a bad place to start.  Scott Taylor, HP’s CPO, quoted by Angwin, thinks companies need to take a clear look at consumer expectations about personal data use in marketing.  He says that companies should start by asking themselves the question: “if you think about the delivery of this project, is there anything that might surprise the data subject?”

The New York Times Business section ratcheted up the pressure even further recently with an article entitled “You for Sale: Mapping, and Sharing the Consumer Genome.”  A detailed infographic on the front page creates an awe-inspiring map of how Acxiom, “the quiet giant of a multi-billion dollar industry known as database marketing” gathers and integrates online data about us as individuals, our hopes, dreams and desires.  The article later goes on to describe a proprietary classification system created by Acxiom which “assigns consumers to one of 70 socioeconomic clusters and markets to them accordingly.”

The ostensible battlefront is the ability of consumers to obtain complete information about their personal data held by database marketing companies such as Acxiom.  We believe, however, that, in the long run, marketers, not marketing infrastructure companies, will need to come to terms with the reputation risks and the reputation opportunities represented by rental and ownership of our data exhaust.  Great companies will understand the delicate trade-offs involved and will develop and implement robust and transparent data privacy practices that speak to real consumer needs rather than hiding behind dense legalese. If this doesn’t happen, it may not be many years before consumers create tollgates at the entrance to their personal data streams.  Over the lintel will be inscribed the words – “Please deposit $5 to market to my digital persona.  Fees higher during peak evening browse times.”

Peter Hirsch is executive vice president/director of reputation risk at Ogilvy Public Relations. The opinions expressed in this blog do not represent the views of Ogilvy Public Relations or any other entity with which Mr. Hirsch is affiliated.

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