Data concerns need addressing for online to prosper

The use of data by direct marketers has always been a bone of contention for many. “How did they get hold of my details?” is a question many consumers ponder with varying levels of anger on a regular basis upon receiving a communication.

Russell Parsons

Those trading in physical direct marketing, however, have never been subject to the same level of scrutiny over their use of data as practitioners in the online world are.

The pressure was ratcheted up this week, firstly by the Office of Fair Trading, which launched a call for evidence to assess the extent personalised pricing - brands tailoring online prices to consumers based on what they can afford to pay - is taking place.

Elsewhere, it was announced Online Behavioural Advertising (OBA) would fall under the auspices of the Advertising Standards Authority from next February, meaning the advertising networks behind online brand ads will have to explicitly state to customers they are collecting data to target them with online advertisements or face censure.

Both personalised or customised pricing and OBA, ads presented to consumers based on browsing history data, have proven controversial. Guardians of data protection argue consumers’ online history is being co-opted without permission.

Those operating in the space argue such data use is advantageous to both businesses and customers. Personalised pricing is said to bring in much more money than offering the same discounts at random. It also tailors promotions according to demographic so customers do not have to wade through an excess of offers, offering shoppers a more personalised experience, it is proffered.

In OBA’s defence, using consumer data in similar ways is meant to improve positioning of ads in front of people with a greater level of interest. Consumers benefit because they are served with advertising that is more relevant to their interests and needs, ad networks and brands argue.

However, despite the compelling arguments put forward by the industry, there remains the spectre of concern that companies are operating in the shadows for nefarious purposes.

The willingness of the industry to demonstrate openness and transparency should be commended. The regulation of OBA, and subsequent confidence it is hoped this will instil in consumers, has been pushed by the industry, which also runs an online information service, Your Online Choices, to educate, inform and allay fears.

The education drive, particularly to raise awareness of the ASA’s pending oversight, should be stepped up. The cross-industry campaign planned for the first quarter of 2013 to raise awareness of behavioural advertising should be just the start.

Consumers need to be left in no doubt collected data on them is being done for their benefit.

It will not happen overnight, but if data use to serve better targeted ads is to prosper, consumers’ concerns need addressing.

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