Commentary: New tracking technology could prove taxing

Web marketing company Quova envisions retailers using its Internet Protocol (IP) address-tracing technology to identify a geographic location of each Web surfer to then target that person with e-commerce offerings geared specifically to their interests.

But just because someone lives in Southern California doesn't

	See news story: Geographic tracking raises opportunities, fears

mean they wouldn't want to buy a winter parka--the shopper may be planning a ski trip or shopping for presents for a relative in Minnesota, for instance.

Companies need to distinguish between plain data and information they can really use. At best, the Quova data could help retailers target direct-mail campaigns slightly more accurately. It is not nearly as valuable as profile information, which most people will happily give up in return for very little.

Relying on this technology to obtain location information that people do not volunteer also has its dangers. People are likely to see this as an invasion of their privacy, and it could drive many shoppers away from a retailer's site.

This type of technology might be of more value to government tax departments and other regulators. For instance, the French government wants Yahoo to prevent anyone from France from participating in auctions of Nazi items. Yahoo has argued that it has no way to know where a bidder is located--but with this new technology, it might be able to pinpoint the location of auction participants.

The fly in the ointment, however, is that Quova admits it cannot trace the location of Web surfers who come in through America Online, the single largest consumer service on the Internet in number of subscribers. The reason is that AOL does not use Internet standard IP technology, which isolates its subscribers from the rest of the public Internet. Instead, the company provides a gateway to the Internet from its own, proprietary technology.

Retailers that want to gain invaluable marketing information on their customers should ask those customers to provide information voluntarily, not try to gain it through involuntary means that many customers will see as an invasion of privacy.

Most Web surfers will happily provide the demographic data that retailers want in return for very little--perhaps nothing more than the promise that the retailer will use the data to give the shopper information that interests that individual, which is what focused marketing is supposed to do. Not only does this avoid shopper concerns about privacy, but it will also gather much more valuable information that Quova can provide.

Meta Group analysts Peter Burris, Dale Kutnick, Val Sribar, and William Zachmann contributed to this article.

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