The peculiar business of one-to-one marketing

The peculiar business of one-to-one marketing

Advertising is a paradoxical business. The role of the advertising expert is to gain the trust of the audience. The audience, of course, knows this, and is suspicious. If, as a recent McKinsey study showed, only 5 per cent of consumers trust ads, it should come as no surprise. It is an equivocal relationship.

When 200 ad executives converged on Procter & Gamble's headquarters this week for a summit on the future of advertising, consumer trust topped the agenda. Speaker after speaker outlined a vision of consumer-driven marketing. Procter & Gamble advertising VP Denis Beausejour called the new marketing "transparent, tailored and time efficient".

Advocates of the new science -- variously called permission marketing, connections marketing and collaborative marketing -- argue that the rules have changed. They say consumers are willing to trust marketers to a much greater extent than anyone had thought, and are willing to give them more information about themselves than traditional advertisers would expect -- as long as they're approached in the right way. This idea lies at the heart of a host of Web marketing innovations, ranging from programs like CyberGold that reward consumers with cash or points for personal information to affinity programs that use information like consumers' travel interests to send out tightly targeted e-mail offers.

It is nearly impossible to find a marketing executive in the country who does not support the principle of building trust-based relationships with consumers -- relationships governed by strict privacy policies. It's only in practice that the issue becomes cloudy.

Consider GeoCities. Earlier this month, seeking to avoid a lawsuit from the US Federal Trade Commission, the company agreed to revamp its policies on disclosing customer information.

The information GeoCities collected included users' income and level of education. On its registration forms, the company told new members it would "not share this information with anyone without their permission, but will use it to gain a better understanding of who is visiting GeoCities".

However, as outlined in the FTC's complaint, the company treated as "permission" the simple failure to check a box that would let the user opt out of marketing offers. Everyone else was considered to have opted in. According to the FTC, GeoCities sold the information to companies that included Netopia, Infobeat, Egghead and CMG Information Services. (GeoCities denies any wrongdoing, but a representative declined to comment on the specific points at issue.) What's most interesting here is that, like virtually every other Web company, GeoCities gave lip service to the rules of permission marketing. The company had a policy on privacy; it just failed to follow that policy.

Further investigations and calls for regulation from the US Congress and the European Community loom on the horizon. But many advertisers have taken an odd lesson from the privacy firestorm: They've decided they are underappreciated.

While consultants and Web gurus spent their time at the Procter & Gamble conference pushing privacy and trust buttons, many executives at marketing companies and traditional advertising agencies see the solution less in changing policies than in changing perceptions. Privately, some dismissed the government's involvement in marketing policies as uncomprehending and incomprehensible. Said one senior media executive, "The FTC is just a force of nature."

The talk in the hallways and conference rooms focused on how marketers could rehabilitate themselves in the eyes of consumers. Says Larry Lozon, director of GM's Cyberworks marketing unit: "It's ironic that the marketing people have an image problem."

Meanwhile, the technology of direct marketing on the Web progresses quickly. Companies like New York-based Thinking Media have developed software that will let advertisers query a database of consumer information on the fly before throwing a personally tailored advertisement onscreen. Such advances lend urgency to what might otherwise be a theoretical problem.

Industry groups like the Fast Forward Steering Committee, a new coalition of advertisers and ad industry associations that was announced at the P&G conference, and the Internet Advertising Bureau are developing standards for online advertising, such as what information sites can gather about Web site visitors and how site visits will be measured.

Advertisers are able to collect, use and sell a great deal of consumer information -- more information than most consumers realize. Using that data effectively, however, is a subtle exercise. "Consumers don't like to be surprised," said an agency-side executive in the US. Despite all the official talk of privacy, the surprises for consumers are just beginning.

That leaves the strongest advocates of permission marketing, like Yoyodyne chief Seth Godin, predicting a dangerous road ahead. "We don't have an image problem," said Godin. "We have a reality problem."

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