Expert answer:Chapter 9: DoubleClick Privacy Policy case study h
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regulatory issues that need to be addressed by the organization.
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400
Chapter 9
Social and Legal Issues
DoubleClick Inc.: Gathering Customer
Intelligence’
By Professor Scott Schneberger and Ken Mark
Introduction
This Monday, we revealed that the Federal Trade Commission (FTC)
began a voluntary inquiry into our ad serving and data collection prac
tices explained Kevin Ryan, president of DoubleClick Inc. It was
Thursday, February 17. 2000, in New York City and Ryan was prepar
ing to answer media and investor questions.
“We are confident that our business policies are consistent with our
privacy policy and beneficial to consumers and advertisers,” he contin
ued. “The FTC has begun a series of inquiries into some o1 the most
well-known web companies, including DoubleClick. and we support
their efforts to keep the Internet safe for consumers.”
Several Internet privacy activists had filed a tbrmal complaint with
the FTC after being informed by media sources that DoubleC’lick had
the ability to determine a persons identity through the use of ‘cookies”
and other databases. Here was an excerpt of an article in an early Jan
uary 2000 edition of USA Today:
Activists charge DoubleCtick double-cross
Web
users have
lost privacy
iv it/i the drop
of a cookie, they sa~’.
By Will Rodger, USATODAY.com
Say goodbye to anonymity on the Web.
This case has been written on the basis of published sources only. CorisequentI~ the
interpretation and perspectives presented in this case are not necessarily those of
Doubleclick Inc. or any of its employees.
lYE
Ken
Markdiscussion.
and Profissor
Scott Schneborger
prepared
th~s case
solely to provide niateSal
for class
The authors
do not intend
to illustrate
either effective it ir,t’nbrtive
handling of a managerial situation, The author., may have disguised cvrtuin names and other identi
fying information to protect confidentiality.
lvoy Management Seiwices prohibits say form of reproduction, storage or lransn,itt,il without its
written pcrlnission. This material is not covered under authorization froni CanCopy or any repro.
ductio,, rights organization. To ,,rder topics or request permission to reproduce niuterials, contact
Ivey Pubtishing. hey Management Services, rio Richard Ivey School of Business. The University of
Weston, Ontario. London, Ontario, Canada. N6A 31(7: phone t5191 661-3208; fax 519) 661-3882;,.moil cases~’ivey.uwa.va.
copyright 02001. Ivey Man.igernent Service’
Version; A’ 20t’l-02-t4
DoithieClick Inc.: Oat/icing Customer Intelligence
401
DoubleClick Inc., the Internet’s largest advertising company, has begun
tracking web users by name and address as they move from one web site to
the next, USATODAY.com has learned.
The practice, known as profiling, gives marketers the ability to know the
household, and in many cases the precise identity, of the person visiting any
one of the 11,500 sites that use DoubleClick’s ad-tracking ~cookies” What
made such profiling possible was IjoubleCliclc’s purchase in June of Abacus
Direct Corp., a direct-marketing services company that maintains a database
of names, addresses and retail purchasing habits of 90 per cent of American
households. With the help of its online partners, DoubleClicic can now conelate the Abacus database of names with people’s Internet activities.
DoubleClick Inc.
With global headquarters in New York City and over 30 offices around
the world, DoubleClick was a leading provider of comprehensive Inter
net advertising solutions for marketers and web publishers. It com
bined technology, media and data expertise to centralize planning, exe
cution, control, tracking and reporting for online media companies.
Along with its proprietary DART targeting technolog3ç DoubleClick
managed Abacus Direct, a database of consumer buying behavior used
for marketing purposes over the Internet and through direct mail.
The privacy controversy over DoubleClick began in the summer of
1999, when DoubleClick announced it was merging with Abacus Direct
in a deal valued at more than US$1 billion. Privacy experts had feared
that DoubleClick would begin merging the two databases at some
point. But they said they were unaware that DoubleClick had begun its
profiling practice in late 1999. Before its Abacus purchase, DoubleClick
had made its money by targeting banner advertisements in less direct
ways. DoubleClick ad-serving computers, for instance, checked the In
ternet addresses of people who visited participating sites. Thus, people
in their homes may see ads different from those seen by workers at
General Motors, or a machine-tool company in Ohio.
Every time viewers saw or clicked on those banners DoubleClick
added that fact to individual dossiers it built on them with the help of
the cookies it stored on users’ hard drives. Those dossiers, in turn,
helped DoubleClick target ads more precisely still, increasing their reF.
evance to consumers and reducing unnecessary repetition.
The “owner” of those cookies remained anonymous Lo DoubleClick
until it bought Abacus.2
~Those cookies were anonymous because although Doubleclick tracked the cookie
(and subsequently, the userl, it did not possess any means to identify the owner of the
cookie. In effect, DoubleClick was cognizant of the user’s surfing habits hot not of the
surfer’s identity With the additional database containing personally identifiable infor.
,nal.ion. there existed a possibility that the information in the cookie could be matched
with a suffer’s profile, thus identifying the user.
402
Chapter 9
Social and Legal Issues
Being tracked as they move around the Web “doesn’t measure up to
people’s expectation on the Net,” says Robert Smith, publisher of the
newsletter Pet uccy Journal. “They don’t think that their physical loca
tions, their names will be combined with what they do on the Internet.
If they (DoubleClick) want to do that they have to expose that plan to
the public and have it discussed.”3
A publicly listed company, DoubleClick traded under the symbol
DCLX on the NASDAQ exchange.4
DoubleClick’s DART
Developed by DoubleClick and awarded U.S. Patent 5,948,061, DART
was a web-based, enterprise-class advertising management software
package. It performed targeting, reporting and inventory management,
allowing sites (or networks of sites) to manage all or some of their ad
serving and reporting functions through DoubleClick’s central servers.
The benefit to advertising clients was the opportunity to build lifelong
relationships with their customers (users) through personalization of
advertising messages (see Figure 1). A client would begin by placing an
advertising campaign with DoubleClick. With the use of DoubleClick’s
DART technology, advertising messages would be placed on sites most
visited by the client’s customers, and advertising results tracked. Dou
bleClick would then compile data gathered and present the results of
the campaign to the client (see Figure 1).
Websites intending to sell banner advertisement could outsource the
delivery of the site’s online advertisement to Doubleclick. While serv
ing the ads, DoubleClick would then utilize DART to collect, analyse
and optimize online ads and their delivery.
Benefits of DART5
Streaml ned campaign management, pinpoint targeting and real-time. tic
tionable reports all add up to One important metric—increased return on in
vestment (ROT.) DART For Advertisers gives you the process and tracking re
finement that empowers you to continuously optimize your campaigns and
tie your marketing programs tn real dollars generateth l’lere are a Few of the
benefits of using DART tbr Advertisers:
A Web-based Service Offering—DART (hr Advertisers is available from
anywhere based on permissions you control. And because it’s a sefl’ice. yOU
get instant upgrades without application deployment or maintenance costs.
“AS reported in USA 7hduv. Jan, 15, 2000.
DoubleClick information and press releases were accessed rron,
www.douhleclick.com.
“From www.duubteelick,com, February 29, 2000.
DaubteCtick ma: Gathering Customer Intelligence
FIGURE 1
403
Central Campaign Management
CENTRAL CAMPAIGN MANAGEMENT
U
4
till I
II’
campaign
U
one set or reports
• An Integrated Solution—DART provides the industrys strongest ad man
agement technology, built-in targeting and sophisticated reporting that, to
gether, form the cornerstone of closed-loop marketing and enhanced ROl. Its
constantly evolving feature set is based on the aggressive demands of lead
ing-edge installed base.
• Centralized Planning and Control—Na matter how extensive your me
dia plan, DART forAdvertisers provides a sophisticated media planning tool
and enables you to buy and traffic ads across as many sites as you wish. So
you can track requests for proposals (RFPs) and insertion orders, control cre
ative changes and view standardized reports within and across campaigns
like never before.
• High-Level Targeting—With built-in targeting capabilities, DART offers
an unlimited array of targeting criteria to ensure you get the right message
to the right person at the right time. DART’s targeting capabilities are the
best in the industry.
• Consistent Reporting—DART provides you a single set of real-time re
ports that span your entire campaign. Armed with detailed post-click, trans
action and reach and frequency information, you can test different execu
tions of selling messages, rich media and ad sizes—and then swap
instantaneously to maximize campaign effectiveness.
• Private Labeling—With DART, agencies gain a competitive advantage by
offering the leading online campaign management capabilities within their
own suite of products anti services.
404
Chapkr9
Social and Legal Issues
Delivering DART
With an expansive team of engineers supporting DART’s complex sys
tem, IjoubleClick served up to 53 billion ads6 to DART-enabled sites per
month to companies in over 13 countries around the world. It accom
plished this through the use of 23 global data centers, world-class host
ing facilities like Frontier Global Center and Exodus Communications.
It also possessed a network of nearly 800 media and ad servers (Mi
crosoft NT Quad Processors) positioned around the world to assure re
liability. The architecture it used was 100 per cent scalable, running Or
acle databases hosted on Sun Solaris equipment. DART’s front-end
(user interface) was hypertext markup language (HTML) compliant
and could be accessed from any browser and any platform.
DoubleClick had the ability to segregate ad serving from the site’s
back-end transaction processing, matching ads in under 15 inillisec
onds and serving ads at an average rate of one every 24 milliseconds.
DART in Operation
DART’s user profile database recognized unique users by their cookies
and delivered a precisely targeted ad every time the user accessed Web
pages that. were using DART. First, by accessing the web page, the user
would trigger an ad “request” from DoubleClick. Next, if that user had
previously visited DoubleClick sites, DoubleClick would recognize the
user’s cookie file and unique number, retrieving the IP address, coun
try domain, company, browser and operating system. (If not, a cookie
would be placed on the new user’s computer at this timei DART would
match up a targeted ad to the user-profile, then deliver a targeted ad to
the user (see Figure 2).
Using Cookies at DoubleCliek
Cookies were small text files stored on a user’s hard drive and were em
ployed by thousands of sites. Cookies enabled sites to “remember” users
across site pages and across multiple visits to a site. Using cookies did
not damage user files nor could they read information from a user’s
hard drive,
This feature enhanced c-commerce and internet advertising in nu
merous ways, including allowing personalization features such as stock
portfolio tracking and targeted news stories, and enabling shopping
sessions and quick navigation across multiple zones of e-commerce
sites, Cookies could remember user names and passwords for future
visits, control ad frequency or the number of times a user saw a given
ad, and could allow advertisers to target ads to a user’s interest.
6DnubleCliek expected to sen’e over 53 billion ads per month by June 2000.
Doubkclkk hut: Gathering Customer Intelligence
405
FIGURE 2 DoubleClick DART in Action
Ryan explained that DoubleClick did not employ cookies to exploit
sensitive data.
DoubleClick has never and ~viIl never use sensitive online data in our profit
hag. It is DoubleClick’s policy to only merge personally identiuiaMe informa
tion with personally identifiable information for profiling, after providing
clear notice of a choice.
Selling Research on Collected Data
One of DoubleClick’s business units collected traffic and usage data,
and analysed the effectiveness of campaigns. From this research, the
document produced for advertising clients was called Spotlight.
Spotlight allowed an advertiser to determine which media placement
generated a specific type of post-click activity important to its media
plan. Spotlight provided customizable metrics such as the number of
registrations, number of sales, number of units purchased, types of
services purchased, and actual sales revenue generated as a result of
an advertiser’s campaign.
Reports offered three levels of reporting including banner level, cam
paign level, and aggregate activity data at the advertiser level. Another
feature offered conversion-to-activity rates by clicks, impressions and
media costs. A third offered a counting methodology that credited ac
tivities to the last ad the user clicked on prior to performing the activ
ity, for up to 90 days after the ad had stopped running (see Figure 3).
406
Chapter 9 Social and Legal Issues
FIGURE 3
rH
A user visits
advertiser’s site.
1,1~
C_wH
~-
r~r1
Advertiser runs
real-time reports
sorted as desired by
site or across your
entire campaign.
DcubieClitk captures visitors
behavior
Abacus, the previously mentioned division of DoubleClick, would, on
behalf of Internet retailers and advertisers, use additional statistical
modeling techniques to identify those online consumers in the Abacus
OnILne database who would most likely be interested in a particular
product or service.
A Complaint Filed with the FTC
Jason Catlett of Junkbusters Inc. (an Internet privacy consultancy,
David Banisar, deputy director of Privacy International, and the U.S.
Electronic Privacy Information Center filed a complaint with the Fed
eral Trade Commission charging that DoubleClick had deceived con
sumers by suggesting the company’s technology Let them remain
anonymous. They expected to enlist a wide array of consumer groups to
back their position.
More troubling to privacy advocates was DoubleClick’s refusal to
state which Internet sites were furnishing then, the registration rolls
that DoubleClick needed to link ohce-anonymous cookies to names, ad
dresses, phone numbers and catalogue purchases. Catlett stated,
The fact that DoubleClick is not disclosing the names of the companies who
are feeding them consumers names is a shameful hypocrisy. They are trying
to protect the confidentiality of the violators of privacy.
Don bk-Click Inc.: Gatlieri;ig Customer Intelligence
407
Jonathan Shapiro, senior vice-president and Abacus unit chief bris
tled at Catlett’s characterization, saying, “Any company that uses data
from the Abacus database to target Internet ads must disclose it on
line.” Moreover, he added, DoubleClick itself would hand over to privacy
advocates the list of participating companies if it could. But as in many
lines of business, partners frown when their relationships were dis
closed without their permission. Shapiro concluded, “If they all bought
a billboard and said they work with us. that would be great.”
The New Privacy Policy
Ryan announced,
Earlier in February, DoubleClick announced what we believe is the most ag
gressive Internet privacy policy ever and committed ourselves to a national
campaign to educate consumers about online privacy We also announced
that we will only do business with online U.S. publishers that have privacy
policies. We have engaged PriceWaterhouseCoopers to perform periodic pri
vacy audits so that consumers remain confident that we are living up to our
commitment to protect users’ privacy. In addition, we have announced the
creation of the DoubleClick Privacy Ad Board, and we are adding a new ex
ecutive level position of Chief Privacy Officer.
DoubleClick explained in its privacy policy (see Exhibit 1) that it did
not collect any personally identifiable information about its users such
as name, address, phone number or e-mail address. It did, however, col
lect non-personally identifiable information such as the server the
user’s computer was logged on to, his or her browser type, and whether
the user responded to the ad delivered.
Non-personally identifiable information collected by DoubleClick
was used for the purpose of targeting ads and measuring ad effective
ness on behalf of DoubleClick’s advertisers and web publishers who
specifically requested it. However, non-personally identifiable informa
tion collected by DoubleClick could be associated with a user’s person
ally identifiable information if that user had agreed to receive person
ally tailored ads.
In addition, with the delivery of ads via DART technology to one
particuiar web publisher’s website. DoubleClick combined the nonpersonally identifiable data collected by DoubleClick from a user’s
computer with the log-in name and demographic data about users col
lected by the web publisher and furnished to DoubleClick for the pur
pose of ad targeting on the web publisher’s website. DoubleClick had
requested that this information be disclosed on the website’s privacy
statement.
There were also other cases when a user voluntarily provided personal
information in response to an ad (a survey or purchase form, for exam
ple). “That person will receive notice that their personal information is
408
Chapter 9 Social and Legal Issues
EXHIBIT 1
Bauble Clics
IJoubleClick Privacy Policy
I
I
PR1VACY POLICY
DoubleCliek Privacy Statement
Internet user privacy is of paramount importance to DoubleClick, our adver
tisers and oux web publishers. The success of our business depends upon our
ability to maintain the trust of our users. Below is information regarding Dou
bleClick’s commitment to protect the privacy of users and to ensure the in
tegrity of the Internet.
Information Collected in Act Delivery
In the course of delivering an ad to you, DoubleClick does not collect any per
sonally identifiable information about you, such as your name, address, phone
number or e-mail address. DoubleClick does, however, collect non-personally
identifiable information about you, such as the server youi’ computer is logged
onto, your browser type (for example, Netscape or Internet Explore,i, and
whether you responded to the ad delivered.
The non-personally identifiable information collected by Doubleclick is used
for the purpose of targeting ads and measuring ad effectiveness on behalf of
DoubleClick’s advertisers and web publishers who specifically request it. For
additional information on the information that is collected by DoubleClick in
the process of delivering an ad to you, please click here.
However, as described in “Abacus Alliance” and “Information Collected by
DoubleClick’s websites” below, non-personally identifiable information col
lected by DoubleClick in the course of ad delivery can be associated cciii, a uscrs
personally identifiable infor,nation if that user has agrced to receive personally
tailored ads.
In addition, in connection solely with the delivery of ads via DoubleClick’s
DART technologr to one particular web publisher’s website, Doubleclick toni
hines the non-personally identifiable data collected by DoubleClick fr …
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