We’re still looking at Chapter 9 on e-commerce. My plan this week is to publish at least one post per day that extends the material that I posted last Thursday.
In my Thursday class, I mentioned web analytics as one popular method that e-commerce managers use to gather data about customers. There are a few legal ways of gathering this data, including web server log analysis, cookies, and programmatic methods. Web browse toolbars are another popular method of collecting this data. See slides 11 and 12 in this PPT that I originally posted last Thursday.
However, it’s much easier to get this data from a trusted source: an Internet Service Provider (ISP). Most residential customers use an ISP to access the internet. It’s trivial for an ISP to collect information about the web sites and pages that each customer visits.
Most customers don’t have a clue that, when they signed up for internet service, they also authorized their ISP to sell information about their internet activities. The legal notice is usually buried deep in the contract or a privacy notice, and US regulations require little if any disclosure to residential customers.
Wired magazine has been following this trend, and has two interesting reports from Ryan Singel. Friday’s report discusses a presentation by David Cancel about clickstream selling, as the practice is called. Jeremy Rainer posted a follow up interview with Cancel here. Cancel is also the CTO of Compete Inc., a major US web analytics firm that works with a wide range of major US ISPs and US advertisers.
When ISPs sell this clickstream data, they can add $5 of margin per subscriber to their value chain. Of course, ISPs love this found money. This additional revenue is a convenient way to accelerate the ROI for new lines, equipment and services. Selling clickstream data has quickly become a key success factor that major ISPs ignore at their peril.
Some ISPs might pass clickstream revenue along to customers as discounts, if these firms face pricing pressure in their market. On Oahu, Clearwire has gained several points of market share in the last 6 months, mostly from former customers of Oceanic Time Warner or Hawaiian Telcom.
Today’s report has a long list of questions that Singel sent to major US ISPs about their clickstream selling activities, focusing on privacy and legal issues. Outside the ISP and web analytics industries, few people know much about this data. Is it anonymized so that user names are not associated with details about their web site visits?
Tags: e-commerce, Hawaii, Honolulu, ISP, key-success-factors, ksf, Oahu, ROI, security, USA, value-chain
