Data Crunchers: Marketing Boon or Threat to Privacy?

WASHINGTON —  The map on the TV monitor zooms in quickly, first on a street, then on a house. What’s the average age, education and income of the neighborhood? Are the occupants more likely to buy Perrier or Budweiser? Simple. Just push a few buttons, and the answer is there.

This is modern-day marketing, based on computerized grids compiled by the U.S. Census Bureau. The maps, one for every street in America, were made up from data gathered by census takers who last year went door to door asking for information on every household.

Now, private market researchers are adding data from their own research to create a stunning new tool that promises to revolutionize marketing and mail-order sales in America.

Using a mix of color-coded graphics and demographic data, marketing specialists can spot neighborhoods with large concentrations of potential customers of certain products or services. They can, for instance, pinpoint communities that have grown affluent enough to support a gourmet grocery store.

The advent of these Topologically Integrated Geographic Encoding and Referencing Systems--or TIGER maps, as census officials call them--thrills business, which is eager to reduce the waste that traditionally accompanies mass marketing.

But it also is prompting increased concern among civil libertarians who fear that such an advance makes it easier for unscrupulous persons to invade individual privacy or engage in discriminatory business practices.

Michael J. Weiss, a writer who specializes in demographic analysis, worries that the anonymous information in the census could be used as “a sophisticated form of redlining” to deny bank loans or consumer goods to neighborhoods based on the profile of their residents.

“You can’t blame the Census Bureau for that,” Weiss says. “They’re only producing the data, and they don’t release any names.”

Still others say the problem goes far beyond the Census Bureau--and deeper than government intrusion into private matters.

Indeed, an expanding volume of information about Americans--with and without specific names--has become openly available as part of huge databases maintained by consumer goods manufacturers, banks, credit bureaus, retailers and countless other businesses.

Two decades ago, such bits and pieces of personal information were part of broad profiles of large areas such as regions and states. As technology improved, users were able to target smaller units. Eventually, counties, census tracts and ZIP codes were targeted.

Mary Culnan, a Georgetown University professor who has become an expert on technology and consumer privacy issues, recalls her outrage 20 years ago when her purchase of a baby gift from a magazine catalogue put her on the mailing list for other makers of baby products.

“Overnight, it seemed my mailbox was full of baby stuff,” she says.

But that was primitive by today’s standards, she concedes. The marketing firms then didn’t even check the demographics of her neighborhood for clues on whether she was likely to be a potential buyer of baby rattles and carriages. If they had, she says, they would have discovered that “I don’t live in a neighborhood with families with small children.”

Culnan says such lapses are rare nowadays because most companies target far more closely before sending out expensive mass mailings. Now, armed with the TIGER maps, their aim will be even more precise, enabling them to concentrate on specific neighborhoods or street blocks.

Mark Capaldini, vice president of Claritas Corp., an Arlington, Va.-based firm that collects, repackages and sells demographic data to companies seeking new insights into American buying habits, says the new technology will open up tremendous opportunities for business.

“The ultimate and most obvious end product has been the explosion in direct mail,” Capaldini says, “but we can envision direct marketing fragmenting down to individual members of a household.”

Practically speaking, lists of magazine subscribers, credit cardholders, patrons of cultural institutions and users of countless other consumer goods provide marketers with an open window into the nation’s work and leisure activities, through which the sellers can collect samples of the lifestyles of their best customers.

Now, they can electronically lay that information over the TIGER maps and “see” the data displayed on maps of the country, a region or even a specific city block--pointing marketers to the best places to offer sales promotions. Meanwhile, consumers rarely know why or how they were chosen.

Experts say the next wave in the technological advance will come when the U.S. Postal Service completes its move to widespread use of four additional digits on ZIP codes.

The extra four numbers will enable marketers to zoom down to a particular side of the street or to selected floors within a high-rise office building. “No one has yet put the census data with ZIP-plus-four,” says David Sherman, a product manager at Claritas. “We’re ready to use it as soon as it happens.”

But some observers, such as Janlori Goldman in the Washington office of the American Civil Liberties Union, are less enthusiastic.

“We are getting dangerously close to having census information (being used to) zero in on small groups and possibly individuals,” says Goldman, who directs the ACLU’s Project on Privacy and Technology.

“We recognize the Census Bureau goes to great length to ensure the confidentiality of its information,” she says. “However, information technology has become so sophisticated that marketers can use census data and zero in on small groups--and possibly individuals.”

And Weiss, who wrote “The Clustering of America,” a 1988 book that describes how marketers and politicians use demographic data to target their messages more effectively, warns that it is industry, not Uncle Sam, that poses the biggest threat to privacy.

“It’s the big companies which should be of concern, not the government,” he says.

But Census Bureau officials aren’t as troubled as the private critics. Robert W. Marx, chief of the agency’s geography division, says protecting the privacy of its data is the biggest concern of the bureau.

Indeed, Marx insists that the creation of TIGER maps poses “no more of a problem than existed before.” Companies “were always targeting customers with census data,” he says. “They just do it faster now.”

Doug Anderson, vice president of Spectra Marketing System Inc., a Chicago firm that specializes in mass marketing of consumer package goods, believes that the TIGER maps will only improve the access to existing data, not create new data.

But he cautions that there’s far more information to be collected than most Americans realize--and it’s more likely to be generally available to anyone who wants it.

“What’s different from before is that everything is becoming computerized,” he says. “The kind of consumer data out there is more accessible to anyone with a personal computer. We are entering the point where we’re putting all that data together and people are just beginning to learn that this data is out there.”

Of particular worry to some marketers and civil libertarians is the fact that the information that is available increasingly includes specific names, addresses and other identifying labels.

Anderson says a common adage among marketers is, “Never underestimate the willingness of the American public to tell you about itself.”

Whenever people enter contests, apply for a loan, subscribe to a magazine, answer a telephone or mail survey, they are passing along information that may find its way onto a computer data file.

“Credit bureaus know as much about us as anybody” in the government, says Culnan, the Georgetown professor. “They get information about us monthly, and many of those firms have direct-marketing operations, and they sell mailing lists that are based in part on our credit reports.”

Anderson adds: “The data isn’t out there because we stole it from them. Someone gave it away, and it’s out there for us to use.”

But Capaldini defends the new technology as a natural outgrowth of the Information Age. “Data is a lot like water,” he says. “There’s plenty of it out there in the Potomac, but that’s not going to do you any good if you want a drink now. It’s got to be processed and filtered and cleaned up. Then, it’s got to be put in a form that you can use.

“That’s what we do,” he says.