Marketers already are salivating about how the companies could combine their data and use it to send targeted advertisements and promotions that will entice people to spend more on AOL (NYSE: AOL) Time Warner offerings as well as products from other advertisers.
But the prospect of a massive database also has some privacy experts worried about its appeal to Internet hackers as well as potential for misuse by marketers.
"It is a nightmare," says Jason Catlett, president of Junkbusters Inc., a consumer-privacy group.
AOL already has the names, addresses and credit-card numbers of its 22 million members. It also has tons of tidbits on ages, interests and musical tastes of the people who fill out member-profile pages or register with AOL's ICQ chat or its Spinner online radio divisions.
Meanwhile, Time Warner (NYSE: TWX) has the names, addresses and information on the reading and listening habits of the 65 million households who receive its magazines, CDs and books.
'Incredible opportunity'
"It's an incredible opportunity for both companies," says Gerard Broussard, director of media metrics and analytics at the interactive division of advertising agency Ogilvy & Mather, a unit of WPP Group. "This could potentially provide marketers with tremendous opportunity to speak to consumers in ways they never had before."
Broussard envisions a day when AOL Time Warner will be able to track which television show a person is watching on Time Warner's cable system, as well as the Web sites they surf on AOL. A person watching a health program on a Time Warner cable channel who then visits a site, such as the drkoop.com Inc. page on AOL, could be tagged as someone concerned about health issues -- a prime target for ads from pharmaceuticals companies.
The two companies have said they do have plans to distribute AOL software disks in Warner Bros. Stores and promote more Time Warner magazines to AOL members.
AOL insists the company doesn't track where its members go within its service -- or on the Web -- and that it has no plans to start now. Nor are there plans for a combined AOL-Time Warner database, at least for now. "We haven't really gotten into the whole database question," says Kathy Bushkin, an AOL spokeswoman. "That wasn't really part of what the deal envisioned in the first place."
Privacy advocates worry
Still, privacy advocates, never enamored of AOL's marketing moves, are nervous about the prospect of a bigger database. "They'll have one big honey pot of information about a person," said Catlett of Junkbusters Inc. "It will be a magnet for government investigators, for hackers and for misuse by marketers."
But even if AOL Time Warner eventually decided to toss all their information into one big data soup, some Internet executives say it will be difficult to create a powerful joint-marketing monster. Time Warner's central database is updated quarterly, so some data would likely be too old to be of much use to Internet marketers, who prefer more frequent updates.
Combining big databases is inherently difficult. "It is extraordinarily complex to put these databases together," says Kevin Ryan, president of the online-advertising shop DoubleClick Inc. Ryan has been trying to use reams of customer-purchasing data from DoubleClick's Abacus Direct division to target banner advertisements to those most likely to be interested. He speculates that combining AOL and Time Warner databases might take as many as five years.
The bulk of Time Warner's database consists of names pulled from its Time Inc. book and magazine division, which publishes magazines such as Time, People and Sports Illustrated, as well as books by such authors as David Foster Wallace. It also produces the 73-year-old Book of the Month Club. The media company knows the musical tastes of the 41 million current and former members of its direct music marketer, Columbia House, which it owns jointly with Sony Corp.
Time Warner already does a lot of marketing between its own divisions. For example, if the music department's marketing gurus think Beethoven sonatas will go down well with the same kinds of people who subscribe to Fortune magazine, the company's music club can send promotions of its classical CDs to those readers.
AOL sells lists of its members' names and addresses to marketers such as catalog companies, though users can choose to opt out of having their information used.
AOL targets advertising using information from third-party data companies that tell which of its members own cars or homes, have kids or live in a certain part of the country. AOL says it doesn't use the information people put in their member profiles -- such as gender, age, occupation and hobbies -- to market to them.
A spotty record
But AOL has a spotty record when it comes to maintaining users' privacy. In July 1997 the company decided to hand over the home phone numbers of its subscribers to telemarketers. AOL reversed the policy after a public outcry. Later in 1997, AOL disclosed the identity of a Navy officer, who was using a different screen name and who described his marital status as gay on his AOL member-profile page.
The Navy began an investigation based on the information from AOL. AOL and the Navy settled a lawsuit brought by the officer in the summer of 1998. Just last month, AOL said it would force members who already had told AOL not to send them online promotions to make the request again, or face new promotions. The proposed $140.9 billion merger between America Online Inc. and Time Warner Inc. could create one of the largest databases ever, teeming with juicy information about individual tastes in books, music, magazines, as well as hobbies.
Marketers already are salivating about how the companies could combine their data and use it to send targeted advertisements and promotions that will entice people to spend more on AOL (NYSE: AOL) Time Warner offerings as well as products from other advertisers.
But the prospect of a massive database also has some privacy experts worried about its appeal to Internet hackers as well as potential for misuse by marketers.
"It is a nightmare," says Jason Catlett, president of Junkbusters Inc., a consumer-privacy group.
AOL already has the names, addresses and credit-card numbers of its 22 million members. It also has tons of tidbits on ages, interests and musical tastes of the people who fill out member-profile pages or register with AOL's ICQ chat or its Spinner online radio divisions.
Meanwhile, Time Warner (NYSE: TWX) has the names, addresses and information on the reading and listening habits of the 65 million households who receive its magazines, CDs and books.
'Incredible opportunity'
"It's an incredible opportunity for both companies," says Gerard Broussard, director of media metrics and analytics at the interactive division of advertising agency Ogilvy & Mather, a unit of WPP Group. "This could potentially provide marketers with tremendous opportunity to speak to consumers in ways they never had before."
Broussard envisions a day when AOL Time Warner will be able to track which television show a person is watching on Time Warner's cable system, as well as the Web sites they surf on AOL. A person watching a health program on a Time Warner cable channel who then visits a site, such as the drkoop.com Inc. page on AOL, could be tagged as someone concerned about health issues -- a prime target for ads from pharmaceuticals companies.
The two companies have said they do have plans to distribute AOL software disks in Warner Bros. Stores and promote more Time Warner magazines to AOL members.
AOL insists the company doesn't track where its members go within its service -- or on the Web -- and that it has no plans to start now. Nor are there plans for a combined AOL-Time Warner database, at least for now. "We haven't really gotten into the whole database question," says Kathy Bushkin, an AOL spokeswoman. "That wasn't really part of what the deal envisioned in the first place."
Privacy advocates worry
Still, privacy advocates, never enamored of AOL's marketing moves, are nervous about the prospect of a bigger database. "They'll have one big honey pot of information about a person," said Catlett of Junkbusters Inc. "It will be a magnet for government investigators, for hackers and for misuse by marketers."
But even if AOL Time Warner eventually decided to toss all their information into one big data soup, some Internet executives say it will be difficult to create a powerful joint-marketing monster. Time Warner's central database is updated quarterly, so some data would likely be too old to be of much use to Internet marketers, who prefer more frequent updates.
Combining big databases is inherently difficult. "It is extraordinarily complex to put these databases together," says Kevin Ryan, president of the online-advertising shop DoubleClick Inc. Ryan has been trying to use reams of customer-purchasing data from DoubleClick's Abacus Direct division to target banner advertisements to those most likely to be interested. He speculates that combining AOL and Time Warner databases might take as many as five years.
The bulk of Time Warner's database consists of names pulled from its Time Inc. book and magazine division, which publishes magazines such as Time, People and Sports Illustrated, as well as books by such authors as David Foster Wallace. It also produces the 73-year-old Book of the Month Club. The media company knows the musical tastes of the 41 million current and former members of its direct music marketer, Columbia House, which it owns jointly with Sony Corp.
Time Warner already does a lot of marketing between its own divisions. For example, if the music department's marketing gurus think Beethoven sonatas will go down well with the same kinds of people who subscribe to Fortune magazine, the company's music club can send promotions of its classical CDs to those readers.
AOL sells lists of its members' names and addresses to marketers such as catalog companies, though users can choose to opt out of having their information used.
AOL targets advertising using information from third-party data companies that tell which of its members own cars or homes, have kids or live in a certain part of the country. AOL says it doesn't use the information people put in their member profiles -- such as gender, age, occupation and hobbies -- to market to them.
A spotty record
But AOL has a spotty record when it comes to maintaining users' privacy. In July 1997 the company decided to hand over the home phone numbers of its subscribers to telemarketers. AOL reversed the policy after a public outcry. Later in 1997, AOL disclosed the identity of a Navy officer, who was using a different screen name and who described his marital status as gay on his AOL member-profile page.
The Navy began an investigation based on the information from AOL. AOL and the Navy settled a lawsuit brought by the officer in the summer of 1998. Just last month, AOL said it would force members who already had told AOL not to send them online promotions to make the request again, or face new promotions.
