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DoubleClick Merger Good News For Privacy Advocates?

Written By: D. Geller
Published On: October 13 2000

DoubleClick Merger Good News For Privacy Advocates?
D. Geller - October 13, 2000

Event Summary

NetCreations, Inc. was founded in 1995 by current CEO Rosalind Resnick and CTO Ryan Scott Druckenmiller. Ms Resnick was one of the early celebrities of the Internet revolution. A business journalist who began covering the Internet from its inception as a commercial concept, she founded the NetGirl Forum on America Online, which during her tenure in 1995 and 1996 was one of the most successful areas on AOL. Ms Resnick and Mr. Scott built one area of their original NetCreations business - the Postmaster website, an opt-in mailing list for webmasters - into the core of a profitable marketing business with 1999 revenues of $20 million (up 508% over 1998) and net income of $4.5 million.

The NetCreations business, PostMasterDirect.com, is a double opt-in e-mail marketing service. Visitors to the site select categories in which they are interested in receiving marketing e-mail. However they are not entered into the database until they have replied to an automatically generated e-mail from the site. The two actions required by the user are the reason the service is called "double opt-in." NetCreations brings more than 15 million double opt-in addresses to the merger. There are also approximately 7 million single opt-in messages in DoubleClick's databases.

An important aspect of NetCreations' privacy policies is that they never rent out their lists of names. They perform all mailings for their customers, who therefore only become aware of individuals when those individuals choose to respond to a mailing. Furthermore, NetCreations keeps no information about individuals that can reasonably be used to identify them; the only information is the e-mail address and the list of categories about which the user wishes to receive e-mail.

Given that DoubleClick has received quite a bit of flak for its privacy policies (see DoubleClick Takes Bath, Throws in Towel) one of the first questions asked about the merger involved its privacy implications. Here the early indications are that the news is good for consumers. NetCreations assured TEC that a fundamental piece of the agreement is that the two companies' e-mail databases will be kept separate. The DoubleClick policy will be that publishers will choose between using single and double opt-in lists, and that it will always be made clear to consumers which kind of list they are signing up for. NetCreations states that while they were leading the development of industry best practices for e-mail marketing they came to recognize that not all legitimate marketing applications are consistent with the double opt-in approach. For this reason they support the continuance of the single opt-in list so long as it remains separate from the double opt-in list and both publishers and consumers understand which list they will be involved with.

Ms Resnick will become Vice President for Corporate Development of DoubleClick and will be responsible for all corporate development involving e-mail marketing. She will also become a member of DoubleClick's Privacy Advisory Board where she can be expected to add credibility to both the company's public image and the implementation of consumer-friendly privacy policies.

Market Impact

This merger adds a missing component to DoubleClick's offerings. Its chief competitor, Engage Technologies owns the competing double opt-in service YesMail.com. DoubleClick also benefits, in our opinion, from the reputation and abilities of Rosalind Resnick, especially with respect to the privacy community.

NetCreations gains the backing of the largest and most successful marketing firm on the Web. In particular, it will gain immediate access to the international market. Already about 10% of the e-mail addresses it controls are from outside North America, but up to now it has had no international sales presence. DoubleClick maintains more than thirty offices around the world and will provide a tremendous boost to NetCreations' global presence.

User Recommendations

The question for the IT executive is whether working with DoubleClick or NetCreations makes technical sense for the company. With respect to this news you're likely to be asked about whether your company could get into trouble with bad publicity as a result of working with DoubleClick or NetCreations. If anything, TEC believes that this merger will improve DoubleClick's privacy policies and track record.

Of course, DoubleClick is a whale and NetCreations a minnow, so that if the corporation doesn't take its representations to Ms Resnick or her advice seriously, there would be plenty of ways for it to get into trouble with privacy advocates. For example, it must be tempting to consider using the category information that NetCreations has as a way to target advertising. However, that would be nearly impossible under the spirit of the agreement, as we understand it. It will be DoubleClick's willingness to avoid this kind of merging of information assets that will demonstrate how serious the company is about privacy. But so long as Ms Resnick and her team are there to stand up for the spirit of NetCreations, we expect that the whale will end up moving aside for the minnow.

 
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