Abacus Deal Is Quaint in Today's Data Era
It was the first online ad-privacy scandal.
In 1999, DoubleClick bought catalog-data firm Abacus for $1.7 billion. Privacy advocates flipped. They petitioned the Federal Trade Commission and scared DoubleClick into announcing it would not connect personal information from Abacus with online-browsing data.
If the deal happened today, the story would be different. It's not uncommon for offline data -- retail transactions, CRM data, loyalty-card data and more -- to be connected to digital data to enhance online targeting.
In pre-bust 1999, investor dollars were flowing and DoubleClick was years away from its acquisition by Google, still operating as a mere "ad network" -- an almost quaint term in light of today's data-driven marketplace and its behavioral targeting, social media and ad and data exchanges.
The concern when DoubleClick bought Abacus -- which it sold at a loss to Epsilon for $435 million in 2006 -- was that personally identifiable information would be linked with online info.
The industry was young, and DoubleClick failed at first to acknowledge privacy concerns. "DoubleClick was tone deaf in how they handled it," said Dave Morgan, founder of one of the first successful behavioral-targeting firms, Tacoda, and CEO and founder of Simulmedia.
It wasn't clear exactly what DoubleClick wanted to do with Abacus data, and the privacy scare and subsequent FTC investigation essentially crimped its ability to exploit the full potential. (The FTC eventually closed its investigation, noting that the company had not violated FTC rules.)
The Abacus scandal inspired the formation of the first big self-regulatory privacy organization, the Network Advertising Initiative, and influenced the industry to distinguish between personally identifiable information and non-personally identifiable information -- PII and non-PII. Today, digital-ad firms rely on third parties to "anonymize" the data, stripping PII from consumer profiles. (Though many on the privacy side are skeptical anonymization methods that actually prevent non-PII from being connected to PII.)
"The sort of things people were concerned about with Abacus -- the industry has kind of blown past that wall," said Justin Brookman, director of consumer privacy at the Center for Democracy and Technology. Firms such as DataLogix and Exelate, for instance, help advertisers target online audiences using anonymized offline purchase data.
The offline-online data connection that privacy advocates feared in 1999 is becoming commonplace, and is only the tip of the spear when it comes to data-driven marketing -- which we'll be exploring in a new newsletter, DataWorks, launching Tuesday. With this newsletter, we'll help marketers understand the new data universe and how to unlock its potential, as well as examine the consumer and regulatory concerns that accompany it.
Join us as we explore the next frontier in data. Who knows what shifts the next decade will bring?