Online Privacy and Marketing: Current Issues for Consumers and Marketers

Online Privacy and Marketing: Current Issues for Consumers and Marketers

Betty J. Parker (Western Michigan University, USA)
Copyright: © 2009 |Pages: 13
DOI: 10.4018/978-1-60566-012-7.ch012
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Marketing practices have always presented challenges for consumers seeking to protect their privacy. This chapter discusses the ways in which the Internet as a marketing medium introduces additional privacy concerns. Current privacy issues include the use of spyware and cookies, word-of-mouth marketing, online marketing to children, and the use of social networks. Related privacy practices, concerns, and recommendations are presented from the perspectives of Internet users, marketers, and government agencies. The chapter concludes with a discussion of the ways in which consumers’ privacy concerns, as they apply to Internet marketing, would benefit from additional research.
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Privacy has once again become the price computer users pay for their use of the information technology infrastructure — Mathias Klang, 2004

The Internet is a marketer’s dream come true. No other medium comes close to providing the two-way communication, vast global reach, cost effectiveness, and tracking capabilities of the Internet. The Internet may well be on its way to becoming the medium of choice for advertising and promotion of both consumer and B2B (business to business) products and services. But all media have advantages and disadvantages and despite the efficiencies and effectiveness of Internet marketing, privacy and security concerns continue to dominate use of the Internet for marketing purposes (Hoffman, Novak, & Peralta, 1999).

The marketing industry has long raised many issues for privacy advocates, even before the emergence of the Internet as a marketing medium (Ashworth & Free, 2006; Culnan, 1995; Jones, 1991). Today, the ease with which marketers can track users’ preferences and behaviors to serve them personalized advertisements represents a brave new world of privacy issues. The magnitude of data collection on the Internet is enormous and the FTC has estimated that up to 92% of Web sites collect personal information (FTC, 1998). Privacy issues as they apply to the marketing arena are especially challenging: What could be more personal and potentially damaging to consumers than the unauthorized sharing of credit or debit card numbers or public knowledge about one’s medical information or purchases, for example?

The focus of this chapter is Internet privacy in the context of consumer marketing. The chapter will provide insights into the ways that online privacy has become a balancing act in which the needs of businesses are oftentimes balanced against the needs of consumers. A number of privacy issues that affect the marketing of products and services will be presented, along with recommended best practices. The marketing/privacy issues to be discussed in this chapter are: (1) consumer, marketer, and government perspectives on data collection, ownership, and dissemination; (2) online advertising and the use of cookies and spyware; (3) word-of-mouth marketing and the use of blogs, sponsored chat, and bulletin boards; (4) marketing online to children; and (5) privacy issues in social networks and online communities.

There is currently a gap in the literature regarding specific online marketing techniques and privacy issues that impact marketers and consumers alike. Much of the marketing literature to date has focused on regulations, public policy, and consumer attitudes toward privacy. This chapter represents one of the first analyses of online marketing practices and their associated privacy issues. Managerial issues and suggested marketing best practices are also provided.


Three Perspectives On Online Privacy, Data Collection, And Data Ownership

There is consensus about the importance of online privacy among Internet users, marketers, and government agencies. Online privacy was a concern of 81% of Internet users and 79% of consumers who buy products on the Internet, according to a tracking study by the U.S. Department of Commerce (Oberndorf, 1998). Marketers’ privacy concerns are reflected in the fact that approximately 77% of Fortune 500 companies posted a privacy statement on their Web site (Schwaig, Kane, & Storey, 2005). In addition, government agencies play an important role in the regulation of the medium, and lawmakers continue to pass laws to increase online protection. Background information about key U.S. laws regulating privacy in marketing can be found in Table 1.

Table 1.
Online privacy legislation affecting marketing on the internet
Privacy Act1974Forbids government from gathering or maintaining secret information about people without a lawful purpose.
Communications Decency Act1996Regulates indecency and obscenity on the Internet.
Children’s Online Privacy Protection Act1998Provides rules and guidelines for online information collected from children.
CAN-SPAM Act2003Establishes standards for commercial email use.

Complete Chapter List

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Table of Contents
Kuanchin Chen, Adam Fadlalla
Chapter 1
Andrew Pauxtis
What began as simple homepages that listed favorite Web sites in the early 1990’s have grown into some of the most sophisticated, enormous... Sample PDF
Google: Technological Convenience vs. Technological Intrusion
Chapter 2
Angelena M. Secor
In this chapter, consumer online privacy legal issues are identified and discussed. Followed by the literature review in consumer online privacy... Sample PDF
A Taxonomic View of Consumer Online Privacy Legal Issues, Legislation, and Litigation
Chapter 3
Hy Sockel, Louis K. Falk
There are many potential threats that come with conducting business in an online environment. Management must find a way to neutralize or at least... Sample PDF
Online Privacy, Vulnerabilities, and Threats: A Manager's Perspective
Chapter 4
Thejs Willem Jansen
Governments and large companies are increasingly relying on information technology to provide enhanced services to the citizens and customers and... Sample PDF
Practical Privacy Assessments
Chapter 5
Leszek Lilien, Bharat Bhargava
Any interaction—from a simple transaction to a complex collaboration—requires an adequate level of trust between interacting parties. Trust includes... Sample PDF
Privacy and Trust in Online Interactions
Chapter 6
Huong Ha, Ken Coghill
The current measures to protect e-consumers’ privacy in Australia include (i) regulation/legislation; (ii) guidelines; (iii) codes of practice; and... Sample PDF
Current Measures to Protect E-Consumers' Privacy in Australia
Chapter 7
Anil Gurung, Anurag Jain
Individuals are generally concerned about their privacy and may withhold from disclosing their personal information while interacting with online... Sample PDF
Antecedents of Online Privacy Protection Behavior: Towards an Integrative Model
Chapter 8
Alan Rea, Kuanchin Chen
Protecting personal information while Web surfing has become a struggle. This is especially the case when transactions require a modicum of trust to... Sample PDF
Privacy Control and Assurance: Does Gender Influence Online Information Exchange?
Chapter 9
Bernadette H. Schell, Thomas J. Holt
This chapter looks at the literature—myths and realities—surrounding the demographics, psychological predispositions, and social/behavioral patterns... Sample PDF
A Profile of the Demographics, Psychological Predispositions, and Social/Behavioral Patterns of Computer Hacker Insiders and Outsiders
Chapter 10
Chiung-wen ("Julia") Hsu
This chapter introduces a situational paradigm as a means of studying online privacy. It argues that data subjects are not always opponent to data... Sample PDF
Privacy or Performance Matters on the Internet: Revisiting Privacy Toward a Situational Paradigm
Chapter 11
Tom S. Chan
While delivering content via the Internet can be efficient and economical, content owners risk losing control of their intellectual property. Any... Sample PDF
Online Consumer Privacy and Digital Rights Management Systems
Chapter 12
Betty J. Parker
Marketing practices have always presented challenges for consumers seeking to protect their privacy. This chapter discusses the ways in which the... Sample PDF
Online Privacy and Marketing: Current Issues for Consumers and Marketers
Chapter 13
Suhong Li
The purpose of this chapter is to investigate the current status of online privacy policies of Fortune 100 Companies. It was found that 94% of the... Sample PDF
An Analysis of Online Privacy Policies of Fortune 100 Companies
Chapter 14
Andy Chiou
In this chapter, the authors will briefly discuss some cross cultural concerns regarding Internet privacy. The authors believe that due to the cross... Sample PDF
Cross Cultural Perceptions on Privacy in the United States, Vietnam, Indonesia, and Taiwan
Chapter 15
Sean Lancaster
Biometrics is an application of technology to authenticate users’ identities through the measurement of physiological or behavioral patterns. The... Sample PDF
Biometric Controls and Privacy
Chapter 16
G. Scott Erickson
This chapter focuses on the specific issue of the federal Freedom of Information Act and associated state and local freedom of information laws.... Sample PDF
Government Stewardship of Online Information: FOIA Requirements and Other Considerations
Chapter 17
Charles O’Mahony
This chapter will discuss the legal framework for consumer and data protection in Europe. Central to this discussion will be the law of the European... Sample PDF
The Legal Framework for Data and Consumer Protection in Europe
Chapter 18
Karin Mika
This chapter provides an overview of law relating to online and Internet medical practice, data protection, and consumer information privacy. It... Sample PDF
Cybermedicine, Telemedicine, and Data Protection in the United States
Chapter 19
J. Michael Tarn
This chapter explores the current status and practices of online privacy protection in Japan. Since the concept of privacy in Japan is different... Sample PDF
Online Privacy Protection in Japan: The Current Status and Practices
About the Contributors