Confessions of a Data Broker

Acxiom’s CEO Scott Howe explains how self-regulation can work

Not long ago, data brokers—companies that compile databases of consumer information and then sell them to marketers—toiled in the shadows of media and advertising, seen as largely responsible for those piles of junk mail. Then along came the Internet and the ability to track consumer browsing behavior, enabling data brokers to synch online and offline data. Brokers became the new villain in the privacy debate, subject to investigations by policy makers.

Privacy hawks swooped in mostly on Acxiom, one of the largest brokers, with 8,000 clients like Macy’s, Hearst and Starcom. It’s been busy striking deals with Facebook, BlueKai, Yahoo and other Internet and consumer research companies to provide a more robust set of variables. Expected to generate $1.1 billion in 2013 revenue, Acxiom gathers information on some 700 million consumers, with up to 1,500 data points per person.

For a CEO under attack, Acxiom’s Scott Howe seems calm. Admitting the industry isn’t used to being “consumer-facing,” Howe is taking the lead on making the industry more transparent and accountable to consumers. He says he has a vision of what the new proposition between consumer and data collection should be. Can Acxiom shift the debate and convince Washington and consumers that self-regulation can work?

Adweek: What’s it like to be the poster child for data broker critics in Washington?

Howe: It’s always a great story to have a villain with a black hat. One of the reasons we’re the poster child is we’ve taken a stance. Great companies realize they are going to be a lightning rod, no matter what. A lot of good things have been written about us, a lot of bad things have been written … The conversation we should be having around data brokers should not be about the companies, it should be around the collection, analysis and use of the data. There is hardly a company out there that isn’t doing some collection, analysis and use of data. That’s the better conversation.

About every branch of the government is investigating the business. Do you feel it’s justified?

Our industry shares some of the blame because some companies have been secretive. The bad apples can really ruin an industry’s reputation. The companies you have heard of like Epsilon and Experian are some of the most ethical in the world. Things are less established in the online space.

Sen. Jay Rockefeller (D-W.Va.) calls your business a “shadow business” and says it’s the “dark side of American life.” What is the biggest misconception about the data broker business?

One of the misperceptions is the way marketers work. It’s not about a single individual and their data, it’s about big data and appealing to a segment of audience. The data used for marketing is different from the data the data people might be anxious about.

You recently launched a portal where consumers can correct their data or opt out of collection. What have you learned since its launch last September?

It’s still in beta, but we learned a ton. We’ve never been a consumer-facing company before. Over half a million have visited the site. We thought there would be double-digit opt-out rates, but the actual is less than 2 percent. Eleven percent took time to change some element of their data. The most common data elements they changed were (in descending order): political party, income and education. We also have a lot of space for write-in comments. Most asked about how they can fix their information and how they can share even more about themselves. People want to share their favorite brands.

What’s next for the portal?

I have a vision of what this can be—not just a mechanism for people to say no, but also a mechanism for them to say yes. In turn, they should have better experiences and get some sort of tangible benefit back. Right now, the benefit is control, but there has to be a value exchange. In our next version, we will have a consumer value exchange. The next release will be sometime this summer.

How would this value exchange work? Other than control, what else can you offer?

What’s valuable to some is worthless to others, so it has to be something that appeals to everyone and it can’t be complicated. We think we have a pretty good solution, but I’m not ready to share it.

You obviously have a vision of what consumer data collection should be in the future …

Instead of data being a good thing, it should be a great thing. In five years, people will manage their data as effortlessly as they manage maintenance to their house.

What about FTC commissioner Julie Brill’s suggestion that all brokers should do what Acxiom is doing on a centralized platform?

That sounds challenging. I’m in favor of heightened regulation but not the law of unintended consequences. It’s hard for a government agency to step in to build a massive tech project that’s never been done. Creating a national permission site would make the Affordable Care Act website look like DOS code. We should all be a little trepidatious about going down that path.

So what’s the solution to giving consumers more control over their data?

Ultimately what wins is great value propositions for people, not straight regulation. If your objective as a company has been to be secretive and hide behind a curtain, you’re going to lose. There may need to be guardrails around collection, analysis and use of data. It should be about transparency and choice.

Do you agree with lawmakers like Rockefeller, who recently introduced the Data Broker Transparency and Accountability Act?

I applaud the intent because the intent is great. We do agree on most things. The entire industry can agree on limiting data use for marketing [but] not for things like employment screening, credit underwriting. I think we can agree on heightened limitations on use of certain personal data. Those are protections—guardrails—that most would agree on.