Live from the Donnelley Privacy Conference: How DMers Are Coping with Legislation

Cheer up. That wave of privacy legislation that hit last year may not be as bad as you thought.

Many companies were ready for it, and others have used it as a spur to redefine their businesses, according to panelists at Donnelley Marketing’s Information Privacy Forum in Aspen, CO.

Take Publishers Clearing House, which faced its own regulatory problems during the 1990’s.

“We’ve been forced to reevaluate our business and become more sensitive to privacy issues and issues in general relating to consumers,” said Rory Cumming, general manager of pch.com.

That has meant turning to permission-based marketinf–in the PCH online survey, for example.

“We disclose the value proposition to the consumer, and receive a surprisingly high participation rate,” Cummings said. “We’re much more customer-focused in the past.”

Then there’s Trilegiant Corp., a third-party marketer that lost access to some much-needed data following passage of Gramm-Leach-Bliley.

“When the data went away, we were forced into some innovative thinking,” said Frank Smith, vice president-modeling and analysis.

That’s a serious matter for a company that mails 250 million pieces and makes 10 million phone calls every year. “On a tactical level, our business lives and dies by direct mail and outbound telemarketing,” Smith said.

Where did it lead? Improved modeling and the use of third-party compiled files “increased our ability to replace lost data,” he said. “Modeling techniques became more important to us.”

Even a business-to-business DMer like Kodak Professional Photography Group has changed the way it does things.

The recent bills “reminded us to focus on what the customer wants relative to our brand portfolio,” said Brian Keery, director of e-Business for the group.

Kodak, which has many businesses and data sources, has reorganized itself so that its product marketers “organize their messages so that they’re not competing for the same customer,” Keery added.

Does that mean that legislation is a good thing?

Keery admitted that it has “spurred a climate of innovation.” But he noted that regulation usually lags behind demand.

“If you’re waiting for legislation, you’ve missed the boat,” he said.

That was seconded by Smith and Cumming, who said that their companies try to stay ahead of legislation.

Meanwhile, many firms have refocused attention on their customer lists, according to Dr. Charles Stryker, CEO of Venture Development Center Inc.

“The reception is warm,” he said. “You can e-mail, you can mail, you can communicate with them in a variety of integrated ways.”

Firms are also seeking marketing partners–especially those with strong lists. Insurance providers, for example, are approaching magazines like Fortune and Forbes and asking to market under their brands.

“AIG can’t promote via e-mail, Forbes can,” Stryker said. “It puts people with big customer lists in the cat-bird seat.”

Of course, some firms may have overreacted to the legislative threat. Marketers have gotten more conservative not only about data use but also about “the copy and affinities that show up,” said Smith. They want to stay at arm’s length from the offer itself, as if to say: “We’re giving you this message, but it’s not really coming from us unless you’re asking us to participate,” he said.

Worse yet, new legislation in the pipeline. An example is California’s SB-1.

“Where GLB said an institution couldn’t share personally identifiable information with a market, SB-1 says you can’t share the name and address,” said Smith.

In an understatement, he added: “Without name and address, it becomes very difficult.”

Moreover, the risks and solutions vary from company to company.

“The cost of bad marketing is very real,” Stryker said. “It’s not just that there’s no response, but you’ve lost the right to market.”

He added that permission marketing doesn’t work for everyone. With cell phones and credit cards, for example, “people don’t always know they need the product until they get the message,” Stryker said.

Ray Butkus, president of The Donnelley Group, noted that many dire predictions were made at last year’s Privacy Forum. “Sadly, many of those dire predictions are coming true,” he said. “Barely a week goes by without news of a call center closing.”

His conclusion?

All parties need to “balance the consumer’s right to be left alone and free from fear that his or her private information is going to be abused and the marketers’ legitimate right to freely communicate and transact trade,” he said.