Many regulators and consumers aren't comfortable with the way marketers track people online. But offline companies have been culling personal information from consumers for years. And the two worlds are getting more comfortable working together. That could spell trouble for everyone.

Today The New York Times documents some of the tactics that marketers are using to get a better picture of consumer habits both online and off. Congress is currently investigating behavioral targeting practices online, but the privacy implications from melding the two spheres could be much worse.

Integrating offline and online marketing tactics is the holy grail for many companies trying to better understand their consumers. But pairing the two methods is fraught with problems.

For starters, marketers online protect themselves by only collecting anonyomous data. But offline companies have been collecting personal info for years. From the Times:

"For decades, data companies like Experian and Acxiom have compiled reams of information on every American: Acxiom estimates it has 1,500 pieces of data on every American, based on information from warranty cards, bridal and birth registries, magazine subscriptions, public records and even dog registrations with the American Kennel Club."

Pairing that data with the information that is automatically collected when people surf online starts making the whole anonymous data collection process look a lot less innocuous.

Even businesses that use tktk are nervous about what it means. Patrick Williams, who publishes the personal finance magazine Worth, recently got the names and addresses of 10,000 Americans from 11 cities who had houses worth more than $1 million, net worth of over $2 million, lived within a few miles of other rich people and subscribed to business publications from Acxiom. He was very pleased with the data, but he tells the Times of Acxiom: "They are the scariest data research company around — they know far too much."

Advertisers online argue that tracking people's surfing habits online helps serve them better and more relevant advertising, which is true. But increased access to information isn't always used in beneficial ways for consumers:

"Some marketers are using offline data more subtly — for example, showing a budget shopper a discount offer and a regular shopper a full-price section."

While offline coupons and deals often differ by region and demographic, closing the loop by putting the information online can also make it seem more discriminating. Do your shopping habits dictate what kind of person you are and what sort of deal you deserve?

Removing the barrier between the online and offline worlds will help companies get a better picture of individuals, but it also has the potential to break down the protections that consumers have from privacy violations. Regulation friendly Congressmen aren't likely to be fans.

Everyone needs to tred carefully to make sure that consumers are protected and brands continue to get useful data. And simply putting a disclaimer in the fine print isn't going to be enough in all cases. Marc Rotenberg, executive director of the Electronic Privacy Information Center, tells the Times: “Real transparency means that the user gets access to the information, not to a policy about the information."

Meghan Keane

Published 31 July, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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