Copyright 1999 Boston Herald Inc.
The Boston Herald
November 15, 1999 Monday ALL EDITIONS
SECTION: FINANCE; Pg. 027
LENGTH: 1168 words
HEADLINE:
On-line tracking raises ire
BYLINE: By Tim McLaughlin
BODY:
How the cookie crumbles has given new meaning
to Internet privacy.
Electronic "cookie" files let on-line marketing
firms track the browsing patterns of Internet users to create massive databases
on consumer behavior. On-line profiling is a key component of the $ 3 billion
on-line advertising industry, launching companies such as Engage Technologies
Inc. of Andover and its New York rival, DoubleClick Inc.
While the
advertising industry says many times on-line profiles don't contain names or
other personal information, privacy advocates say the practice
has a great deal of potential for abuse. Internet privacy advocates say most Web
surfers have no idea their clicking patterns are being tracked and shared with
advertisers.
On-line profiling has the potential to shed light on
personal interests, hobbies or goals. The profiles also may reveal medical
conditions, sexual preferences and political or religious beliefs, said Andrew
Shen, an executive at the Electronic Privacy Information Center in Washington.
Shen recently told Federal Trade Commission officials that on-line
profiling is like having someone spy on you at a shopping mall, taking notes on
what you bought and what caught your interest.
"The on-line version of
this monitoring is taking place, but just without us noticing," Shen said in
written testimony.
Advertisers covet the services of profilers because
they can provide layers of detail about Internet consumers unprecedented in a
traditional retail environment. Engage, which raised $ 95 million in a July
public offering, touts a database with 35 million anonymous profiles compiled
from Internet behavior.
The database is considered valuable because it
helps advertisers target consumers most likely to buy their products. It also
lets them deploy thousands of customized ads in an instant.
Cookies are files placed on your computer's hard disk drive by Web site
servers. Each cookie gets a unique number, so that Web sites know when your
computer pays a visit. Many times users are not aware of so-called
opt-out provisions that let them turn cookies off.
While cookies don't
contain personal information, they can enable the association of Web
surfing data with a real individual. Besides knowing where you go, Internet
profilers also can record how long you stay at a site and how deep you go into
its pages. A computer maker, for example, can learn you were only one click away
from a purchase.
Using complex mathematical formulas, on-line marketers
also can instantly deploy ads to match a Web surfer's interests. That's why you
may start noticing ads for brokerages, rather than random ones for toys, if you
regularly go on-line to check stock quotes.
Privacy advocates
most frequently cite Doubleclick as the company with the greatest potential for
invading Internet privacy. The world's largest on-line ad agency in June struck
a deal to merge with Abacus Direct Corp., which compiles consumer purchasing
habits through a database that tracks catalog subscriptions and purhcases.
It is hardly an anonymous database. Abacus' research contains 88 million
5-year buying profiles, including credit card numbers, personal addresses,
telephone numbers and information about household incomes.
"The merging
of these two databases of information creates the ability to not only obtain
(personal information), but a way in which to know the on-line behavior of real
individuals," according to Shen at EPIC.
While Internet consumers
frequently hand over personal information to on-line retailers, they don't have
a direct relationship with profiling companies, EPIC said. There are no legal
guarantees these companies will police themselves.
Sensing a potential
public outcry about their practices, on-line profilers already have launched a
publicity campaign to mollify privacy concerns. A number of profilers, including
Engage, DoubleClick and MatchLogic, have hired former FTC commissioner Christine
Varney to deal with privacy issues.
In an FTC hearing on the subject
last week, privacy advocates, profilers and advertising trade groups warned of
the invasive potential of new technologies.
Daniel Jaye, a founder of
Engage Technologies Inc., said privacy concerns raised by EPIC don't apply to
his company's profiling model. He said Engage and its customers only know
profile subjects as consumers. Engage's dual-blinded identification system also
prevents Web sites from collaborating on information about consumers.
Engage also doesn't gather profile material from medical sites or ones
with political content, such as abortion issues, Jaye said.
During an
on-line profiling workshop in Washington last week, Engage executives
spent considerable time telling regulators how they were different
from their competitors.
Richard M. Smith, a Brookline security expert
who has busted Internet companies spying on their customers, said competitive
and financial pressures could force a profiling company to change its practices
to keep clients.
Jaye said he isn't worried about Engage giving in to
competitive pressure.
"We think having a strong privacy position, one
that tries to go beyond reproach, is a competitive advantage," he said.
"Customers want to work with us because we are sensitive to the needs of
consumers."
Jaye said profiling technology helps Internet advertisers
justify their investment.
"Our technology helps sustain the Internet as
a long-term medium," he said.
Dan MacKeigan, an Internet analyst at
Friedman, Billings and Ramsey, said off-line advertising doesn't allow for a lot
consumer privacy, either.
"Catalog companies and financial institutions
have been collecting (personal data) for decades," MacKeigan said.as
He
said the on-line profiling industry would be well served to police itself and
avoid collecting social security numbers and information from sensitive sites
carrying health information.
Smith said the long-term prospects for
on-line profiling are not good.
"People don't know what's going on," he
said. "I suspect this kind of profiling will disappear once they do."
Graphic: Surf watchers - On-line advertising agencies collect personal
information about Internet users, using electronic files called cookies which
are placed on your computer at the same times as the on-line ads.
Cookies
What they collect
Internet profilers know what
sites you visit, how long you stay and if you buy anything. This is correlated
with personal information you give Internet sites such as your name, e-mail
address, age, income and more.
Advantages
Helps advertisers
target marketing to people interested in their products.
Disadvantages
Invades personal privacy by sharing information with third parties
without your consent.
Major profilers
Engage Technologies Inc.
Andover
Boasts 35 million anonymous consumer profiles
DoubleClick Inc.
New York
The biggest on-line
advertising agency, saturates the Internet with its electronic cookies
Staff graphic by Jeff Walsh
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November 15, 1999 
