Academic journal article The McKinsey Quarterly

Private Lives

Academic journal article The McKinsey Quarterly

Private Lives

Article excerpt

Are consumers selling their privacy too cheaply?

Not for long

An excerpt from Net Worth predicts the rise of the "infomediary"

The right to be left alone. Garbo craved it. Brandeis defended it. I And the Fourth and Fifth amendments to the US Constitution uphold it. In Olmstead v. United States (1928), Mr. Justice Brandeis declared, "The right to be left alone is the most comprehensive of rights, and the right most valued by a free people."

But protecting that right is becoming more difficult. Marketers expose the people of the United States to some 12 billion display ads, three million radio ads, and more than 300,000 television commercials daily. The unsolicited electronic junk mail known as "spam" now makes up about 10 percent of all e-mail around the world. An average US consumer is buffeted by roughly a million marketing messages a year across all communications media, or about 2,750 a day. Even worse, companies use private information ferreted out from daily commercial transactions, financial arrangements, and survey responses not only to inundate consumers with this kind of marketing rubbish but also to deny them credit and insurance.

Indeed, the very lingo marketers use to describe their methods of finding and influencing customers - military metaphors like "target," "campaign," "deploy," "blitz," and "capture" - betray an increasingly confrontational mentality about how companies should treat consumers. Telemarketers call them at home at all hours. Direct marketers stuff their mailboxes. Relationship marketers demand ever more of their personal information. Who can blame them for feeling besieged?

The rise of the Internet, which permits companies to get information about customers more easily than ever, has brought privacy to the center stage. Consumers and consumer protection groups, such as the Electronic Frontier Foundation, fear that businesses will use the opportunity the Internet has given them to capture information about unsuspecting people who visit their Web sites. By merging this information with a wide range of publicly available data (such as credit histories, phone bills, and medical records), those companies will accumulate vast databases of knowledge about their customers.

Lawmakers and advocacy groups in many countries are mobilizing against this threat. In the United States, for example, legislators at both the national and the state levels have sponsored comprehensive consumer health care bills of rights. Consumers are acting on their own behalf as well. Some of them ask marketers to remove their names from telemarketing and direct-mail lists. Others have taken part in "Buy Nothing Day" - a 24-hour consumer-spending moratorium sponsored (during the Christmas shopping season) by Adbusters, which vows to hold the marketing strategies of consumer product companies up to public scrutiny. Still other consumers provide false information to on-line registrations, surveys, and forms; participate in "TV Turnoff Week"; and give false information after joining focus groups.

These developments may well presage a broader consumer backlash. In a 1996 DIRECT survey, 83 percent of respondents favored a law requiring the inclusion of an opt-in procedure for names on direct-mail lists. Seventy-two percent of the more than 10,000 World Wide Web users polled in 1998 by Graphic, Visualization & Usability (GVU) wanted new legislation to protect their privacy on line, and 82 percent of them objected to the sale of personal information. A 1998 Business Week poll found that 53 percent of respondents wanted laws regulating the way personal information can be captured and used on line. That figure was three times higher than the proportion of consumers who said that the government should let trade groups develop voluntary privacy standards.

Recent warnings from trade groups and organizations that oversee corporations bear out these findings. …

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