Thursday, October 25, 2012

Data and politics

While other bloggers have made predictions of how the outcome of the Presidential elections will have an impact on the Supreme Court or the economy, those weighty issues fall beyond this blog’s purview.  However, we should ask “what will happen to interactive marketing if President Obama wins re-election or if Governor Romney unseats him?”

Here’s why: the Senate recently opened an inquiry into data brokers.  While a representative of the Direct Marketing Association dismissed the inquiry as “a baseless fishing expedition” (translation: oh, shit), the inquiry could have an impact on what marketers now consider standard marketing practices.

Moreover, the man who will sit in the Oval Office will have the choice to broaden or narrow that impact.  In turn, marketers will have to adjust to these two possible worlds.

The short answer: hedge against potential legislation by making the most of your own data.

The inquiry, headed by West Virginia Democrat John D. “Jay” Rockefeller IV focuses on what data brokers, such as Epsilon and my former employer Acxiom can do with data that they collect.  It comes on the heels of a bipartisan House inquiry from earlier in the year.  In short, the Senate committee will take up the question of what data brokers do and, essentially, what they should be able to do.

Reading between the lines, I suspect that the Senators have concerns about what constitutes privacy in the digital age.  The data compilers brush up against privacy concerns by the very nature of their being--they accumulate data about disparate aspects of an individual’s life and then assemble them.  While U.S. law specifically protects some kinds of data--medical and financial especially--marketers or other entities could possibly suss out some sensitive information using currently available data.

For instance, laws and regulations protect information about an individual’s diabetes treatment.  However, let’s say that same individual buys over-the-counter products for diabetics, such as Glucerna Hunger Smart Shake for People with Diabetes Rich Chocolate (yes, that’s the real name).  If the individual uses a store loyalty card or a credit card, then a data compiler might be able to buy that information and conclude that the individual suffers from diabetes.  And, in turn, another marketer might use that information to target that individual for a diabetes-related offer.

Of course, what drives the Congressional inquires is fear.  While diabetes offers for assumed diabetics doesn’t seem all that threatening, other scenarios might.  In a nightmare scenario, a criminal could use the diabetes shake information plus key bits of identity to file fraudulent medical claims.  Or burgle the diabetic’s house while she went for dialysis.  I couldn’t say what a criminal might do, because I’m a rather law-abiding type.

Back to politics.

In all probability, a Romney victory will effectively quash any inquiry or subsequent attempts at regulation or legislation.  As the pro-business party, the GOP has traditionally focused on removing perceived restraints on commerce.  Democrats trying to make a stand against a GOP agenda would probably not take up the privacy banner, which doesn’t seem as exciting as fixing the economy or (not) invading Iran.

On the other hand, an Obama victory might embolden privacy advocates who see current law as too weak on data privacy.  In fact, a few scenarios could evolve:

  • More informed consent on use of data.  Current laws such as CAN-SPAM have explicit clauses that require marketers to get approval from consumers in order to send email.  The current inquiries might lead to laws requiring companies to get permission for selling or trading customer information (as some companies do currently).

  • More specific firewalls.  I’d imagine that the law might expand to include new classes of information that marketers and others simply cannot use.  For instance, anything classified as a medical product, such as an over-the-counter remedy, a nutritionally-enhanced food or a simple device such as a cane, might become off-limits.  I’m not sure how the law would enforce this kind of information, but let’s say that legislators have not always worried about enforcement.

  • Data embargo.  In a doomsday scenario, legislators or regulators could simply ban data trafficking completely.  While highly unlikely, and while marketers would surely challenge such a ban, the possibility nevertheless exists.

In any of the above cases, the possibility of legislation casts a shadow over marketers.  Common tools such as data appends, re-targeting and list rental may become difficult or in some cases even impossible.

Accordingly, marketers should really focus on the data they have.  I can’t imagine a scenario where, for instance, laws would prevent Amazon from using recommendations based on browsing history or collaborative filtering, assuming the data points did not fall into an already protected class such as health care.  Nevertheless, marketers should plan on updating privacy policies and data collection procedures to ensure that they have consumers’ explicit permission to keep and use those data for their own purposes.

Even in a doomsday scenario, marketers will have plenty of their own data from which they can make effective projections, segments and offers.  Marketers with resources should start evaluating their in-house data resources now as a contingency for a potentially more limiting environment.

Anyone have any other legal insight?  Kindly share below!

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