Caught in the Middle

Web sites must balance customer privacy concerns with the need for personalized information.

Web sites that are racing to deliver personalized content, take heed: Privacy tools that give users much more control over their personal data will force a change to more permission-based Web personalization in the future.

But a lot will depend on the kind of response the (mostly small) vendors of these privacy technologies receive from consumers in the near term, users and analysts say.

The tools - which range from anonymous e-mail and browsing software to sophisticated cookie blockers and IP-address scramblers - will increasingly let users decide how much of their personal information is made available and to whom.

If the technologies catch on, sites that want to deliver targeted content will have to be more up front about the manner in which they collect personal data and how they plan to use it, says George Nassef Jr., CIO at Ltd. in New York.

"Web sites that still rely on cookies for information will need to retool and find other means of identifying their customers," he says.

Privacy technologies are gaining more attention at a time when growing online privacy concerns are casting a pall over Web personalization efforts, says Jay Ramadorai, chief technology officer at Atlanta-based Inc.

His company recently completed a proprietary survey of its customers and found that a majority of them ranked personalization a much lower priority than privacy, Ramadorai says.

As a result, he says, will focus its personalization "more on the really motivated customer and be more careful about who we send unsolicited e-mails to."

Web personalization refers to the ability of e-commerce sites to modify their content to match an individual's profile. Much of that profile today is built by quietly tracking a consumer's buying and surfing habits using so-called browser cookies.

Cookies - which are tiny text files that contain a user's identification - are frequently used by Web sites to recognize repeat visitors and to customize site content or services accordingly.

For instance, cookies can be used to create a personalized home page or remember shopping cart information on an e-commerce site. Cookie information, when combined with other site analysis tools, profiling systems and filtering products, lets an e-commerce site create profiles that can be used for effectively targeting content.

"It really is no different from the information-gathering that has been going on for years in the off-line world," says Mike Budowski, CEO of Inc., an online specialty stationery retailer in Orlando.

"If I don't know the demographics of the people visiting my site, I miss my entire target audience," says Budowski.

Even so, the surreptitious nature of cookies and people's fears that the information may be easily misused are fueling widespread privacy concerns.

One example is the recent public outcry that prompted Internet advertiser DoubleClick Inc. to back off from its plans to link its vast anonymous Internet user database with identifiable information contained in the Abacus Direct off-line database. DoubleClick uses cookies to track users as they travel across multiple sites, gathering shopping information and personal preferences in the process.

Privacy-enhancing technologies are aimed at stymieing this kind of snooping while giving users the freedom to choose what information they share, says Craig McLaughlin, CEO of Privada Inc., a San Jose-based vendor of privacy software.

The firm's Privada Proxy software, for instance, gives users the ability to block or delete certain cookies or to block all cookies from sites they don't trust, McLaughlin claims.

The software allows users to privately surf the Web using fictitious identities and to send and receive e-mail that can never be traced back to them. Before the end of this year, the company hopes to have an e-commerce feature on its Web site that lets users buy goods over the Net using scrambled credit-card numbers and mailing addresses that can't be directly traced back to the buyer.

The goal of such software isn't to make users anonymous but to afford them more control over how their personal data is harvested and used, McLaughlin insists.

"Privacy need not be the very antithesis of personalization. . . . [T]he goal really is consumer choice," says McLaughlin, who plans to sell the technology to Internet service providers. Privada is just one among a horde of companies trying to tap into a market fueled by growing privacy concerns.

Consider the following examples:

• Saratoga, Calif.-based IDcide Inc.'s Privacy Companion is a free application that works with a Web browser to help users determine when and by whom they are watched on the Net. Users can then choose whether to permit such snooping. They also can set controls on the kind of personal data that can be extracted by Web sites.

• New York-based Youpowered Inc.'s Orby Privacy Plus client software allows users to create their own profiles listing information ranging from credit-card numbers to personal interests and hobbies. The profile is updated continuously as users traverse the Web, but it's up to the user to decide which information to make available to Web sites. The company also has Platform for Privacy Preferences-compliant server-side software that allows content providers to express their privacy practices in a standard format that can be retrieved automatically and interpreted by the Orby client software.

• AG, a subsidiary of Siemens AG in Germany, has software that lets users filter out unwanted advertising banners, pop-up windows, animated images or Java applets. Bidirectional automatic cookie filters let users block cookies from sites they dislike.

• Zero-Knowledge Inc. in Montreal allows users to create multiple personalities (called Nyms) that can be used to browse the Web in total anonymity. The company's Freedom software ensures that any profiles and browsing history linked to a Nym can never be traced back to the real user - even by the company.

If properly used, such software can actually help foster better personalization rather than deter it, says Bonnie Lowell, CEO and president of Youpowered.

That's because privacy-enhancing technologies put users much more in charge of their personal data, says Ron Perry, co-founder of IDcide.

"Most people confuse anonymity with privacy," he says. "We see privacy as being able to share information with a party you can trust to keep the information confidential."

Consider Inc. in Needham, Mass. Its site recommends products based on a child's individual learning style and educational goals. As a result, it depends heavily on information supplied by customers (and gathered by cookies) to target its content.

Even so, Smarterkids - which denies access to those who disable cookies - leaves it up to the user to decide just how much information to part with and when. For instance, it's up to customers to decide whether they want to save the results of learning surveys done during the course of a session.

"The approach we have taken is to show [users] why we need the information and how we can be better if you give us data," says co-founder Richard Viard. "I think people are fed up with sites that keep asking for information, with no apparent use to the customer."

"The only way personalization will succeed is if Web sites have trusting relationships with their customers," says Lowell, who is also co-chairwoman of the Personalization Consortium, a Wakefield, Mass.-based advocacy group.

For the most part, though, the vendors who are delivering such technologies are still very small and don't have the user base to be able to dramatically influence personalization trends just yet, says Chris Christiansen, an analyst at International Data Corp. in Framingham, Mass.

"Most of them are just starting to roll out their products and services," he says, so it'll take some time yet to figure out how much of an impact they'll have.

Also, many Web sites have already started doing the kind of permission-based profiling that such technologies hope to help foster, says Jamie O'Neil, chief operations officer at Inc., an Austin, Texas-based retailer.

Much of the customer data that's used to deliver personalized content on's site, for instance, is voluntarily supplied by customers, he says.

"To me, the real challenge appears to be getting the critical mass of consumers" to support personalization technologies, O'Neil says. "When that happens, we'll start using it."

Copyright © 2000 IDG Communications, Inc.

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