PRIVACY Gamble

PROCTER & GAMBLE FEELS SO STRONGLY ABOUT PRIVACY THAT IT’S PUTTING THE CONSUMER IN THE DRIVER’S SEAT

aBOUT A YEAR AGO, when it started revamping itself from a U.S.-centric to a truly worldwide company, Procter & Gamble established a council to identify issues that should be managed globally because of the significant effect they would have on its business.

One of those issues was privacy.

“It has the attention of the company’s top management,” says Zeke Swift, P&G’s privacy director and marketing director for Global iVentures, which P&G created about a year ago to oversee its Internet and intranet activities, including 100 Web sites.

Swift – who’s been a P&G marketer for 21 years – says that, for the packaged goods giant, privacy starts with the customer. “We want to create an environment of confidence and trust so consumers will share information with us in a way that will allow us to understand and meet their needs. Technology allows us to do [in terms of targeting] what would have only been a dream when I started.”

But the company views privacy concerns as an impediment to this goal. We see [the privacy issue] as a speed bump…it’s a consumer concern and we want to address it,” Swift says.

To do that, P&G has taken a step that would give many marketers pause: Its official policy is that the data it has on each consumer is the consumer’s, not P&G’s.

Swift says that having this attitude about customer ownership has actually simplified decision-making. “So many follow-up decisions almost [make] themselves. For example, if it’s someone’s data, of course we’re going to tell them how we use it.”

It also answers another sticky question from the privacy drama: Should consumers be given the ability to access – and correct, if necessary – the information companies have about them?

Yes, says P&G. For the past year, consumers have been able to do that only by calling or writing in, but the firm plans to eventually have an online system. Many companies fear being forced to do that, through regulation, because of the technical and financial burden.

“Allowing access is a technological challenge [especially letting consumers delete or suppress their records from a Web site] and we’re going to make a significant investment,” Swift comments. “We want to take existing databases and link that data to better understand each consumer’s needs, but the same system would give us the ability to provide access pretty efficiently. I really believe that 80 or 90 percent won’t ask for [their records] to be deleted.”

Swift says that, for practical reasons, the company – whose 300 brands range from Tide to Oil of Olay to Vicks Formula 44, and whose net earnings last year were $3.76 billion – is initially addressing its online privacy issues, rather than those affecting its traditional business. For example, P&G is currently conducting an internal random audit of its Web sites to make sure they’re complying with its principles.

“We’re starting with online because that’s where most of the consumer concern is,” Swift says. “Also, it’s embryonic so it’s much easier to start on the right foot than to have to come back to it and get it right. Ultimately we’ll do it online and offline on the same terms.”

As for the opt-in/opt-out debate, Swift is clearly impatient with it. “The issue is `opt,’ not opt-in or opt-out,” he says. “The real issue here is choice. When it comes down to online execution, you really have three places the little dot can go: `We’ll send you information unless you say no,’ `We won’t send you information unless you say yes,’ or you say, `Don’t send anything to me.’ The real debate over opt-out is where the default goes. To the best of my knowledge, no one has done a study to say what the consumer really wants in regard to that.”

P&G now has a global privacy statement that appears on all its Web sites. The document explains, among other things, that P&G keeps personal data supplied by the consumer; that it may enhance that data with outside files; and that the data will be used to promote products to the consumer unless he or she says not to. The statement includes extensive information on how to contact the company about these issues.

Swift says that sites around the world can translate the document and adapt it to the region’s privacy requirements. For that purpose, the firm has privacy guidelines to help its employees address the privacy regulations in their respective countries.

As an example, he says that for marketing purposes children are defined as under 13 in the United States (under the Children’s Online Privacy Protection Act) and under 17 in Europe. “Our principle says, `We treat children’s data differently.’ The execution is, `What’s the local standard?'”

Partly to comply with the Better Business Bureau Web subsidiary BBBOnLine’s requirement that a privacy statement take only one click to get to, P&G is developing an executive summary. From there, Swift says, visitors will be able to click to more detailed sites. All brands eventually will link to a single P&G statement, he adds.

Interestingly, not all the company’s sites have the BBBOnLine seal yet because of this complex procedure. “We applied about as soon as you could for all our sites, which [totaled] about 48 at the time,” Swift comments. “With that number it was a pretty arduous process and we worked with BBB on how to improve and simplify [it].”

The company takes privacy seriously, starting from the top. Chairman John Pepper, for example, is taking an active role in the firm’s Privacy Leadership Initiative, a group formed to push the adoption of privacy technologies and practices. P&G has a global privacy officer (Mark Schar, also vice president of Global iVentures and consumer market knowledge), director (Swift), manager (Mel Peterson) and council.

P&G has chosen to be active in three of the many online privacy groups: the Online Privacy Alliance, BBBOnLine and the Privacy Leadership Initiative. “We picked the ones that would make significant contributions in key areas,” Swift says.

Swift adds that P&G will start focusing on applying these principles to offline privacy in months to come, but the process has already started. For example, when customers call consumer relations, they first hear a message explaining that they should let the service representative know if they don’t want to receive additional marketing offers.

How does the privacy lobby view P&G? The firm’s Web sites “go beyond what is minimally required by the current self-regulatory environment,” says Robert Ellis Smith, publisher of the Privacy Journal, Providence, RI. “Even access is not always an element of a company’s privacy activities. It’s especially unusual if they’re allowing access over the phone.”

Direct Marketing Association president and CEO H. Robert Wientzen, who came to the DMA from P&G, says that the company was obviously not nearly as concerned with privacy 25 years ago when he started doing database marketing there.

Says Wientzen: “It’s encouraging to see P&G – the quintessential mass marketer – much more focused on it now, because it [shows that] they’re beginning to see the advantage of information now. The fact that they’re concerned with privacy says they’re more focused on using information in a marketing way. It bodes well for direct marketing in general.”