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Data security worries affect buying behavior, study finds

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Both b-to-b and b-to-c marketers would do well to beef up their data security practices, according to the CMO Council.

The group today published preliminary results of data security research it did with its Business Performance Management Forum in conjunction with Opinion Research Corp. The findings are drawn from the consumer portion of a larger study the CMO Council will release in September called "Secure the Trust of Your Brand" that will have input from marketers as well.

The study aimed to understand the degree to which information security shapes a brand's value, and it could give direct marketers—whose entire livelihood depends on the quality and integrity of customer and prospect data—some much-needed insight.

Findings point to increased data security concerns among respondents, as well as the significant effect data security has on their buying behavior. Some 40% of consumer respondents said they have stopped a transaction online, by phone or in-store due to a security concern.

Ninety percent of survey respondents in the U.S. said they were concerned about personal data security. Close to one-third (30%) said they have always been concerned about security, and almost half (48%) said they have become either "a little concerned" or "more concerned" about security recently. Twelve percent of respondents were characterized as "very concerned" about security recently.

However, early results from 25 quantitative interviews with marketers and C-level executives in the CMO Council study revealed little concern over how information security affects brands.

"They were saying they didn't know the effect of [data security] breaches on brand trust, and they said they weren't even sure if it had enough effect to warrant doing anything about it," said Scott Van Kamp, editorial director of the CMO Council. "They weren't convinced it was a huge issue. Once they see this data, they may change their minds.”

Separately, the Federal Trade Commission reports that about 10 million Americans become victims of identity theft each year, and a USA Today story in December cited at least 130 reported security breaches in the U.S. in 2005, which exposed more than 55 million Americans to potential identity theft. So far this year, more than 700,000 personal data records have been lost, hacked or stolen, according to a CMO Council tally of notable breaches in 2006. In one of the most recent cases, an Ernst & Young employee's laptop containing Hotels.com customer data was stolen in Texas. That computer contained 243,000 customer records.

"I'm not sure what [the marketers in the CMO Council survey] are thinking. It's always top-of-mind for us," said Scott K. Wilder, group manager, small business division for Intuit. "I think it is something marketers always need to be aware of. Being sensitive to users’ information is right up there in terms of priority. It should always be top-of-mind, whether you're dealing with traditional media, like direct mail, or online media. I think as marketers, your value proposition is letting users know their information is safe."

Symantec and Factiva, a Dow Jones and Reuters company, are underwriters of the research. Factiva for its part is currently conducting a media tracking study on some of the companies hit hard last year by security breaches, specifically tracking how the media coverage affected sales. Those data will also come out in the fall.

The fall report will also include case studies of companies whose data has been compromised, including Choicepoint, a consumer data broker whose data breach in February 2005 was well-documented in the media and became a flashpoint for the entire data security issue. Choicepoint paid a $10 million fine to the FTC in January.
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