E-Shoppers Choose Personalization Over Privacy

The battle lines have been drawn for one of the great e-commerce clashes of 2000. Proponents of online privacy and innovators of site-specific personalization are set to struggle with the big question: At what point does personalization become an invasion of an online shopper’s privacy?

It is a dispute not likely to be settled soon, as technology is creating ever-more sophisticated methods of gathering data about online consumers, while proponents of privacy push for laws that govern the online shopping experience.

Shoppers Opt For Personalization

While shoppers are very concerned about their privacy — particularly the sanctity of their identification-related information — evidence is beginning to develop that a majority of online shoppers do not mind their behavior being watched if it allows their shopping experience to be customized. However, these customers expect to be notified and to have the ability to opt out.

According to a survey conducted by research and information firm Privacy and American Business, using Opinion Research Corp.’s weekly CARAVAN survey, 68 percent of the Internet users surveyed said that they would provide personal information in order to receive tailored banner ads if notice and opt-out are provided.

The survey was underwritten by a grant from Net advertising giant DoubleClick and was conducted by randomly interviewing 471 adults who identified themselves as Internet users.

Sixty-one percent said that they favored receiving banner advertisements tailored to their preferences versus receiving random banner ads, while 58 percent agreed to having their visits to Web sites used to personalize banner ads to them, if notice and opt-out were provided.

Fifty-one percent surveyed agreed to having their online purchase information used to personalize banner ads to them, if notice and opt-out choice were provided, while 53 percent of users would be willing to have their offline purchase information from catalogs and stores used to personalize banner ads to them, if notice and opt-out choice were provided.

Fifty-three percent of those surveyed said they would not mind if the combination of personal information, Web site visits, and online and offline purchases were used to personalize banner ads to them, if notice and choice were provided.

Shoppers Seem To Back E-tailers

The study seems to back e-tailers and independent research firms who are watching online behavior to provide or facilitate customized shopping experiences, and not privacy advocates who say that this process is an invasion of privacy.

While shoppers do not seem to have a problem, there are many analysts who do. Forrester Research analyst Christopher Kelley is skeptical. “The whole idea is very Orwellian, just the sense that Big Brother is watching over you,” he said. “The problem with the Internet is becoming, for some customers, that the technology allows people to look over your shoulder at every turn.”

Personalization Versus Invasion of Privacy

The purpose for gathering the information seems to be the key determinant between acceptable personalization and invasion of privacy. The majority of consumers seem to like the practice if information is gathered to provide a custom online shopping experience.

It is also important to many shoppers that the site have a privacy policy that explains what information is gathered and how it is being used.

Should Government Join the Fray?

As for governmental intervention, the Federal Trade Commission (FTC) continues to exercise a hands-off approach, but that could soon change.

U.S. Congressman Edward Markey (D-Massachusetts) believes that it is time to show greater respect for the privacy of American consumers. “Ordinary Americans say ‘I want my privacy, and I don’t know why the government or corporate America doesn’t give it to me,'” Markey said. “There’s a looming confrontation on the cyber-political horizon that will ultimately determine the extent of the full privacy protections of all Americans.”

Toward that end, Markey introduced an electronic privacy bill of rights last summer that sets guidelines for e-businesses that gather data about their customers. The bill has three provisions:

The first grants individuals the right to know that information is being gathered about them. The second grants users the right to know whether information is going to be reused by the organization that is gathering it. The third gives individuals the right to block the gathering of information about them.