Publishers Clearing House rushes the Net, grapples with privacy

The famous sweepstakes is marketing its Web site through direct mail and with $10 million of TV advertising promoting its $21 million millennium sweepstakes.

Almost everyone has pulled that familiar envelope out of their mailbox exclaiming that they "may already have won $1 million!"

Now the famous Publishers Clearing House sweepstakes is targeting consumers online.

Like other major offline marketers that are looking to the Net for future business, Publishers Clearing House has formed a new company, PCH.com, to give online users a crack at exclusive contests and sweepstakes and to pitch magazine subscriptions and other merchandise.

The company is marketing the Web site through direct mail and with $10 million of TV advertising promoting its $21 million millennium sweepstakes. The contest winner will be announced on Super Bowl Sunday, Jan. 30.

"Publishers Clearing House started our sweepstakes in 1967, and we will always continue to be a direct-mail company, but moving forward we think the Net will become increasingly important to us," said Christopher Irving, the company's director of consumer affairs.

If the popularity of online auctions is any indication, online users don't mind competing for goods--especially free money--or giving up personal information in exchange for services or products.

But privacy advocates have long warned that consumers should realize that they don't get something for nothing when it comes to online contests or incentives sites. These sites range from DoubleClick's NetDeals.com to Webstakes.com, which offers customers the chance to win gifts and prizes; there's also Cybergold, which gives customers cash for browsing.

Other companies--such as MyPoints.com, which went public last month, and Netcentives, which filed for its IPO in July--offer frequent flier miles to users who browse partners' sites.

Whether these companies can spin thier models into profitable online businesses is still an open question, analysts say.

All this is in addition to the plethora of e-commerce and entertainment sites that frequently run promotions and collect personal data in the process.

Net users should read a site's privacy policy before handing over their name, address, telephone number, email address and other sensitive data, privacy experts say. Online it is especially easy for a Web site to assign visitors so-called cookies, which can be used to associate online registration information with users' browsing habits and offline consumer activity.

"The name marketers give to people who enter sweepstakes is 'opportunity seekers,' a group that they treat with even more cynical contempt than the average consumer," said Jason Catlett, founder of Junkbusters, a clearinghouse for privacy-protection measures. "The odds of you winning something in a sweepstakes [could be] about 1 million to 1, but the odds of losing some of your privacy are about 1 to 1."

The sweepstakes industry also has come under fire for its lack of disclosure. Publishers Clearing House has testified in congressional hearings that probed the sweepstakes industry's practices and investigated whether contests make false and deceptive statements. The company also settled a nationwide class-action lawsuit in August by agreeing to disclose that no purchase is necessary to enter a contest, for example.

The company's new Web venture has a posted privacy policy that states it will not "rent or exchange" a person's email address or phone number with other companies. If a person buys a subscription through the sweepstakes, however, Publishers Clearing House obviously will pass personal information on to the magazine; the company simply will not share that data with a third party, according to Irving.

Still, as the company points out in its privacy statement, magazine "publishers often exchange or rent their subscriber names."

PCH.com currently does not assign cookies to visitors, but if it does add that feature, it will be up-front with users and disclose that information, Irving said.

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