Smart Marketing or Invasion of Privacy?
An occasional report on experiments in marketing.* * *
You've probably heard at least something about target marketing. The idea is to segment your customers by, say, their past purchases, location, or age. The more you know about these groups, the better you can fine-tune your messages to them. Seems like a smart way to make the most of limited advertising dollars.
But can you get too close? Do you risk overstepping boundaries of propriety if your marketing database includes information you didn't get directly from your own customers? For example, private data obtained from purchased mailing lists or from Dun & Bradstreet reports?
Consider the two examples of target marketing that follow. You make the call -- smart business or invasion of privacy? Leave your opinion on our toll-free line, 800-238-1756, or send E-mail to firstname.lastname@example.org over the Internet.
Exhibit 1: Cover Concepts. Two smart young guys, one fresh idea: Sell advertising space on book covers and distribute them free to public-school students. Since starting Cover Concepts, in 1989, Michael Yanoff and Steven Shulman have doubled sales nearly every year. In 1994 the Braintree, Mass., duo distributed 40 million colorful book covers to 20 million students across the United States. Advertisers such as Nike and Gatorade are apparently delighted. They know they're reaching the hard to reach, including 10 million elementary-school kids and their parents.
Cover Concepts has attracted some 90 advertisers with its extensive database, built with demographic data from the Department of Education and median-family-income data from the Census Bureau. "Our database is pretty much the clincher," says Shulman. "We know what percentage of each school is black, Hispanic, white, Indian, Asian. We have all the racial breakdowns."
If an advertiser requests "fourth-grade classes with 25% or more Hispanic students, we can do that," Shulman continues. "And we can target suburban schools with a median family income over $30,000." He adds, "We go to a client with our database loaded. We say, 'Here's how many inner-city kids you can reach."
Exhibit 2: FreeFone Information Network. It's the Zen of target marketing: marketing to an audience of one. FreeFone, in Seattle, has grown a business that embodies one-to-one marketing. Consumers who sign up for FreeFone's service are paid to listen to advertisers' five-second pitches. Every time "subscribers" pick up their phones, they automatically activate a short plug for pizza, greeting cards, or whatever. They're reimbursed 15¢ for every call they make using the service. They receive coupons by mail if they release their names. But advertisers can mail to those names only once.
"It's less like junk mail and more like help," says Martha Rogers, a fan of the service and an expert on one-to-one marketing at Bowling Green State University, in Ohio. But some would say it's more like Big Brother: should subscribers dial an advertiser's competitor, they prompt a reminder message. FreeFone founder Harry Hart also knows a lot about subscribers -- they answer a 192-question survey. But he vows never to sell anyone the consumer information at his disposal. "I'm the gatekeeper, if you will."