Editorial: Selling Privacy Makes Sense

You're probably as angry about this issue as your customers: marketers are obtaining personal data by fair means and foul, and regular people are fed up with the advertising barrage. So use this frustration—in your ads.

by Alex Goldman ISP-Planet Managing Editor [August 6, 2004]

As the barrage of spam and popups increases, ISP customers are becoming more and more resentful of advertising in all its forms. But the local ISP has an advantage here. The local ISP spends money on local businesses, and so its ads are less intrusive. Furthermore, the local ISP does not take subscribers' personal data and sell it to marketers.

A few months ago, we found one ISP using exactly this sales pitch for its accelerated dialup. While writing the article Proxyconn Pitches Pure Speed we examined the dialup acceleration sales page of Great Falls, Mont.-based Sofast Communications. The page advertising the Sofast Nitro dialup acceleration product includes a direct excerpt from the privacy policy of the company's main competitor in the dialup acceleration market: NetZero (which is a part of Westlake Village, Calif.-based United Online):

NetZero will collect, store, compile and utilize information about you, your computer, your phone number and your use of the NetZero Services including, without limitation, information regarding the Web sites you visit and information that you provide in response to NetZero questionnaires, surveys and registration forms. NetZero may provide this information to third parties including advertisers, clients, marketing organizations and others.

There's no doubt this is a real issue. One anti-spam site has an article called Why Your ISP Takes Bribes From Spammers. Of course, they're not talking about the regular ISP. They're talking about large ISPs that have marketing agreements and about webhosts that offer "bulletproof" hosting.

Another anti-spam activist website, Advertisers Using WhenU, tracks which companies are using adware. The list includes Sprint, Verizon, T-Mobile, and a webhost called POWWEB. The activist hopes that people will stop using these companies' products when they realize the companies engage in grey market advertising.

A recent story in BusinessWeek Online called Guess What—You Asked For Those Pop-Up Ads notes, "Adware's enemies are mobilizing. Both houses of Congress are considering anti-spyware legislation." But the article also notes that many large companies support adware from WhenU and also from Claria (which renamed itself to escape previous negative publicity as Gator).

As far as we know, most ISPs do consider privacy an advantage, but they don't advertise it. We asked why.

Carol Miller, president of Berlin, N.H.-based North Country Internet Access (a.k.a. Networks, Computers, & Internet Access) told us that although NCIA is protective of their customer base, they never thought of it as a marketing angle. "Of course there's no way we're going to read people's mail. And when law enforcement asks for customer information, we require a subpoena. We don't just hand over information."

She added a wonderfully libertarian New Hampshire anti-tax perspective on the issue of privacy. "The tax issue is also a personal privacy issue, we think. Taxing people on IM or webmail use in an intrusion into privacy, we think." ISP-Planet agrees that ISPs should not have to keep records of what people do online.

On the other coast of the US, Dane Jasper, president of Santa Rosa, Calif.-based Sonic.net agreed that this is an important issue. "End user customers have become more and more aware of this issue due to the one-two punch of marketing and identity theft. Spam and junk mail and telemarketing and junk faxes are flooding in and they want to know they won't have their information sold—and then there are people who go through the multiyear nightmare of financial identity theft."

But, Jasper argued, some people are willing to trade privacy for goods. "The Web evolved from where everything was free to where everything has a cost. Some people don't mind being marketed to and want the rock bottom price. For some consumers, it's a fair choice. They choose to exchange some privacy for a deal. Some websites allow you the choice of seeing an ad or paying money for content or filling out a survey. People are getting used to giving attention to ads to get something. In any case, where there's a cost, there has to be revenue. Some websites go to a subscription model, and some display ads."

Jasper said his company chooses not to mention the issue in its sales pitch for two reasons. "We prefer to talk about our strengths and not others' weaknesses. But I think 99 percent of ISPs do not sell personal information."

In the end, what ads work for you depend, as always, on your market. Jasper is probably right that no ISP should embrace negative advertising. But we suspect that any ISP that can make this a positive service will gain a brand advantage, even if it's a local advantage augmented by other local advantages, such as participation in fairs and parades, the chamber of commerce, and even simply having genuinely local employees.

—End