March 31, 1999 8:30 AM PST

IBM to pull Web ads over privacy concerns

Companies that want advertising dollars from Big Blue will need to post a privacy policy on their Web sites.

In a letter sent to online advertising customers today, IBM, the second largest advertiser on the Web behind Microsoft, is leading a charge for more privacy on the Internet, vowing to pull its advertising from sites in the United States or Canada that do not cite clear privacy policies.

The company said more stringent policies are necessary to overcome consumers' fear of doing business online and to fuel the growth of e-commerce.

"Our objective is not to cancel advertising but to get people to comply," said IBM spokesman John Bukovinsky. "We felt this was an opportunity for us to use the economic or financial leverage of advertising to encourage sites without a privacy policy to adopt and clearly post policies for people to see."

IBM is giving advertising clients until June 1 to post a policy, he said.

A clear privacy policy lets Web surfers know what information will be collected when they visit a site and how it will be used or sold to marketers. Many Web sites collect personal information through online registrations, mailing lists, surveys, user profiles, and order fulfillment requirements.

The company estimates that just 30 percent of the 800 sites where it advertises worldwide now tell visitors how personal information is collected about them on the site and how it is used. Of the 800 sites where IBM advertises, about 350 sites are located in the United States and Canada. About 10 percent of IBM's overall $600 million advertising budget for 1999 will go toward online advertising.

In the letters sent out today, IBM does not specify privacy guidelines for companies to post, but does recommend that companies visit the Online Privacy Alliance for recommendations, which includes letting surfers know what your company sells to marketers and whether a company is using cookies to track where a surfer visits.

"It's critical that private industry take whatever initiatives it can to ensure fundamental privacy practices are followed," Bukovinsky said.

A spokeswoman for the Online Privacy Alliance, whose 86 members include industry groups and Fortune 500 companies, said while many companies and organizations have moved to educate users about privacy, IBM--to her knowledge--is the first to bank advertising dollars on it.

"We think that anything companies can do to encourage other companies to post privacy policies that respect consumer privacy is a very good thing," she said.


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