NEW YORK (AdAge.com) -- I had to ask: How the hell did they do that?
I'm no neophyte when it comes to targeting -- not only do I work at Ad Age, but I cover direct marketing. Yet even I was taken aback when, as an experiment, we asked a database-marketing company to come up with a demographic and psychographic profile of me based on publicly available information. Was it ever spot-on.
The company doing the analysis, which asked to remain nameless, used seven sources of information, including public records and census data, online-shopping data, catalog and retail-purchase history. From that it concluded my date of birth, home phone number and political-party affiliation: Republican (note: I was in high school when I registered). It gleaned the fact that I was a college graduate, that I was married and that one of my parents had passed away. It found that I have a number of bank, credit and retail cards at "low-end" department stores.
It knew not just how long I've lived at my house but how much it cost, how much it is worth, the type of mortgage that's on it and -- within a really close ballpark guess -- how much is left to pay on it. It estimated my household income -- again nearly perfectly -- and determined that I am of British descent (here, I fooled the company; I'm also Romanian and Colombian, but the record didn't show that). Oddly, what didn't turn up was my occupation or e-mail address.
But that was just the beginning. What followed was the psychographic profile the company was able to compile.
A deep dive
It correctly placed me into various groupings such as: someone who relies more on their own opinions than the recommendations of others when making a purchase, whether it's clothes or a car; someone who is turned off by loud and aggressive advertising; someone who is family-oriented and has an interest in music, running, sports, computers and is an avid concert-goer; someone who is never far from a web connection generally used to peruse sports and general news updates; and someone who sees health as a core value.
Scary? Certainly there will be people bothered by that level of detail and accuracy. I don't happen to be one of them. I wasn't necessarily bothered by the data as much as I was surprised and somewhat impressed by the depth of the profile the company was able to compile. Yes, I'm aware that there's a huge privacy debate going on about how much information is too much when it comes to direct marketing. But I agree with Steve Cone, CMO of ERewards/EMiles, who believes consumers want the companies they're dealing with to know everything about them -- so long as it results in better service and price offerings. "Consumers get angry when a company has a profile on them and doesn't seem to use that information and blasts them with useless ads," Mr. Cone said.
Amen! That's the part that chaps my hide. If I'm cool with marketers having that much data on me, the least they could do is send me an e-mail I deem worthy of opening. That seems like a fair trade to me.
Agency executives around the globe will tell you a high level of consumer information is a necessity to deliver consumers highly targeted and relevant ad messages. The contradiction agencies must contend with is trying to create those targeted ads while consumers continue to complain about privacy, calling for limits on the level of information marketers should have access to. But it's an argument taking on less heat in an age in which consumers readily volunteer information about themselves on Twitter, Facebook and other online forums.
In fighting this battle, agencies have realized that protecting all that consumer information is one of the keys to creating a longer and more meaningful customer relationship.
Regulations and responsibilities
"Over the last 10 years, businesses have understood the idea that data collection and use is a bilateral arrangement between the marketer and the customer," said Gary Laben, CEO of Knowledgebase Marketing, part of the WPP-owned Wunderman agency. "So to collect information just because you can and use it just because you have it are, frankly, practices of the past. Marketers and agencies have to treat customer information carefully, because customers have access to outlets like blogs or customer ratings , and the quid pro quo is that the marketer protect and use that information carefully."
Agencies follow a number of regulations with regard to protecting consumer data -- a litany of abbreviations and acronyms, a few which I'd never heard of before my experiment: Privacy Legislation, Fair Credit Reporting Act (FCRA), Gramm-Leach-Bliley Act (GLBA), Health Information Portability & Accessibility Act (HIPAA), Can-Spam Act, FTC Do Not Call and Security Legislation. Most also follow the Direct Marketing Association's Commitment to Consumer Choice.
Senny Boone, senior VP-corporate and social responsibility at the DMA, said the association also has a "strong" self-regulatory compliance model built around the "openness" of practices and policies with respect to personal data, "collection limitation" of personal data and making sure data are used properly.
Self-regulation is often criticized as not being a strong enough policy with limited oversight. Ms. Boone, not surprisingly, disagrees.
"The model works well because it's flexible, fast and not a cookie-cutter approach," she said. "It's an area where practitioners can take a look at the problematic areas and make changes to ensure that the guidelines are capturing those concerns. And it allows for a lot of innovation within the interactive-marketing space."
Tony Hadley, VP-government affairs at Experian, one of the world's-largest consumer-data collectors, said the company also conforms to all state and federal guidelines, and where law does not exist it follows the DMA Ethical Guidelines, which prescribe requirements for the collection, use and sharing of marketing information.
"If you look at polls, 90% or more of consumers are concerned about privacy and express some kind of concern," Mr. Hadley said. "Most companies look at privacy as good customer service. They want to treat their customers right and part of that is making sure they're meeting customer expectations about how they are using their data and securing it." Mr. Hadley believes the industry could be doing more, especially in the area of online behavioral targeting, and cited the new set of standards developed by the DMA, 4A's, Association of National Advertisers and IAB.
An executive at a top direct agency said the shop has implemented a number of internal measures to keep consumer data secure.
"Never store personally identifiable information with customer behavior data," the executive said. "This means don't co-mingle name and address [and e-mail address] with other forms of data."
Knowledgebase's Mr. Laben said regulations on what agencies can do with consumer data vary across the globe and that the agency has a group dedicated to understanding, interpreting, training and educating employees and clients on all of them. "The consumer is ubiquitous," he said. "They have expectations that no matter where they are, you will treat them consistently. Years ago progressive organizations realized that if consumers trusted them with how they would use their data, the information would be accessible and even provided by the customer. That's a concept we certainly train our employees and customers around."
I'm still not so sure the industry is holding up its end of the bargain. The theory is it can collect and protect all this information to give me meaningful offers. But if the direct world knows so much about me, why am I still receiving thousands of ads a month pitching products that are completely irrelevant to me?