ONLINE PRIVACY: Loss of confidence?

DoubleClick’s bad press could hurt e-commerce

The recent hubbub surrounding Internet advertising company DoubleClick literally made online privacy concerns front-page news. Now online catalogers are hoping that the company’s bad press won’t turn off consumers and prospects to online shopping altogether.

In November, DoubleClick announced its intentions to mesh its data about online buyers with the offline buying profiles from cooperative consumer database Abacus, a DoubleClick subsidiary. Then, in January, a California woman sued DoubleClick, alleging that the company infringed on her privacy by capturing data about her from the Internet. Meanwhile, the Michigan and New York attorney general offices began legal proceedings against the firm, and the Federal Trade Commission launched an investigation into its practices.

In response, DoubleClick said in March that it would postpone merging the consumer data. “We made a mistake in trying to link [offline] names with Web usage before the government and the industry had agreed on adequate, self-regulatory guidelines,” says Jonathan Shapiro, senior vice president of Abacus Online for DoubleClick. But the company’s plan is only on hold, he notes, and has not been altogether dropped.

In the wake of greater privacy awareness, consumers haven’t been staying away from online shopping sites in droves. But some catalogers have noticed increased privacy concerns among their customers. “We frequently have customers ask that their information not be shared with any third party,” says Jan Lajoie, secretary/treasurer of Naturally Northwest, a Medford, OR-based cataloger of products and food from the Pacific Northwest.

Granted, consumers were worried about online privacy before the latest turn of events, says Eric Schmitt, analyst at Forrester Research in Cambridge, MA. “But now they are a bit more suspicious of online marketers.” Even though data buying and selling “have been going on for years” in the offline market, consumers find online data capturing “more sinister,” Schmitt says, because they’re unsure of precisely what information they’re even giving up. “It’s one thing to know that a marketer has bought a DMV list and found the age of your car; it’s another when a marketer buys data that say you spend 20 minutes each night on the New York Knicks Website.”

The ‘Net effect?

Not surprisingly, DoubleClick’s Shapiro doesn’t think consumer confidence has been shaken. “In 1996, consumers were afraid to shop online because they were concerned their credit card information wouldn’t be secure,” he says. “Since then, e-commerce has boomed, and security measures have not changed since 1996.”

But Lajoie fears that “we may see a slowing in the conversion of traditional phone and mail sales to ‘Net sales” resulting from heightened privacy concerns.

“We’ve continued to see an increase in the conversion rates for e-mail marketing campaigns, but there could be a dip in conversion to buying online if marketers aren’t careful,” agrees Kathy Williams, senior director of professional services at Palo Alto, CA-based e-mail solutions provider ClickAction.

Indeed, many catalogers, such as Janet Thompson, vice president of catalog for gifts cataloger/retailer San Francisco Music Box Co., contend that it’s up to the marketers to assuage consumers’ concerns. “It took a great leap of faith, thanks to some strong ‘Net merchants, to bring the online customer confidence to the level it is at now,” she says. “Online merchants must assure their customers that their privacy is secure.”

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