The history of consumer marketing during the past two decades reflects a growing realization that information about customers is a key competitive asset. Airlines have spearheaded the development of loyalty programs, which offer valuable incentives to airline passengers in return for the ability to capture much more detailed profiles of frequent flyers. Banks have invested heavily to integrate information systems that facilitate access to broad activity profiles of customers across the major product categories offered by a bank. Credit information bureaus have compiled detailed credit histories of individual consumers. And retailers have developed point-of-sale information to track product movements and improve merchandising and promotion programs.

Yet much of the information marketers want most about consumers has nearly always been out of reach. When is a consumer going to make a purchase? What is the precise impact of advertising on that decision? What (and how much) are consumers buying from competitors and across categories?

What marketers really want is "demonstrated preference" information to show when a consumer is about to purchase

Online markets (e.g., the World Wide Web or proprietary online services such as America Online or CompuServe) hold the potential to allow consumer marketers to answer these questions for the first time. They can provide better visibility of what consumers are buying, when they’re buying it, and from whom they’re buying it. They can give transparency to consumers’ intent to purchase, and to their "demonstrated preference" for certain categories and brands over others. Best of all, they can bring information to marketers in real time, while it is still of use.

Companies best able to capture this information and use it strategically will see market power shift their way as improved information flows allow them to select the most desirable customers and to better target them when they’ve signaled an intent to purchase. Already a new breed of network-based intermediaries is positioning to accomplish this information capture by aggregating people and resources on networks. Once these aggregations reach critical mass, the new intermediaries will be well positioned to create and capture value by leveraging rich profiles of consumer and vendor activities. Customers may also play an important role—to the extent they begin to reclaim ownership of their own information—thereby transforming what is today a "free" asset into an increasingly expensive asset to acquire. The implication for companies of all stripes is that they must begin to pursue explicit information-capture strategies addressing issues of targeting, capturing, leveraging, and competing for information about consumers. These strategies must in turn reflect a thorough understanding of the range of potential scenarios by which a still immature online marketplace is developing.

Information constraints in physical marketplaces

The competitive value of information has long been limited by the types and amount of information actually available in physical marketplaces. Vendors in physical markets, for example, often find that their "window" on transaction histories tends to be limited to their own customers. For example, United Airlines can identify a business traveler who flies extensively on United and selectively upgrade service to that traveler to increase loyalty to United. It has much less ability to identify an American Airlines frequent flyer who happened to book a flight on United. From United’s perspective, this passenger appears as a relatively uninteresting passenger because she doesn’t appear to travel much; therefore she would not receive special attention or service. If United had access to integrated travel profiles of all its passengers (even people who have never flown United before), it could be much more effective in targeting and serving highly profitable business travelers.

Retailers are in a better position than vendors to see a broader range of customer activity, but even they are hampered by two obstacles. First, many retailing businesses are highly fragmented, so they only see a small fraction of the total market. More importantly, they lack an established tool for tying specific transactions back to identifiable consumers who can then be targeted by marketing programs. A number of retailers are introducing "frequent buyer" programs in an effort to overcome this barrier, but these programs are still relatively new and so far consumer acceptance has been mixed.

In addition to integrated transaction histories, marketers also strive to obtain better visibility on intent to purchase, especially for higher ticket items such as homes, cars, and airline travel. Unfortunately, access to this information is also very limited in traditional market environments. Market research techniques have been developed to measure preferences and likelihood of purchase but these techniques tend to be segment-based and less useful in identifying specific individuals who are about to buy. Even direct survey questions on intent to purchase have limited ability to pinpoint those who actually will purchase.

What marketers would really like to see is demonstrated preference information where a consumer’s actions give a clear, early indication that a consumer is about to make a purchase decision in a specific product cate-gory. If a consumer begins contacting real estate agents to see homes on the market, this is likely to be an early indicator of interest in obtaining a mortgage. Access to this kind of information in physical markets has unfortunately been fragmented at best. Such information is also highly time sensitive and the ability to obtain this information quickly tends to be limited.

Another category of customer information with enormous value involves the correlation between exposure to advertising and purchase behavior. Today, even the most sophisticated advertisers remain highly frustrated by lack of information on this key issue. The old joke that "I know half of my advertising budget is wasted, I just can’t tell which half" effectively captures the sense of helplessness that advertisers feel in an environment of limited information.

Finally, another category of information that is very valuable and yet typically requires considerable expense to compile in traditional market environments involves consumer satisfaction with specific products or services. This information is essential to drive customer retention and customer capture programs, as well as for the valuable feedback it provides for product or service enhancement programs. Customer surveys and user group forums can provide this kind of information, but they are expensive to mount on a sustained basis and, because they require effort by customers, often tend to be fragmentary and biased in their results.

Why online markets help to eliminate information constraints

The emergence of online marketing environments offers the potential to enable marketers to overcome the constraints on information capture that exist in the physical world. Broadly speaking, this is taking in place two directions.

Capturing information

First, online environments enhance the ability to capture valuable categories of information conveniently and cost-effectively. Since advertising and transactions are delivered electronically, it is easier to maintain an electronic record of this activity over time without requiring any additional data entry. This electronic "trail" can prove particularly helpful in more effectively coupling across information categories. For example, a consumer who books airline tickets and reservations online in a travel forum provides both the potential for generating a rich and integrated travel transaction history and for coupling that with demonstrated preference information. Thus, when that consumer begins to ask for information in a travel forum or in a community of interest on the Internet about places to go in Italy, a strong early indicator is provided that this person may soon be in the market for a trip to Italy. That information can be cross-matched with the travel transaction history to determine the relative attractiveness of that consumer not just for the next travel occasion but over a longer time frame.

Similarly, online information capture allows marketers to discover which advertisements have impact on purchase behavior. Since advertisements can be targeted down to the level of an individual consumer, and a purchase can be made simply by clicking an icon on the advertisement, advertisers can now potentially track much more precisely who has seen an advertisement and whether they were moved to purchase. Advertisers can not only determine the effectiveness of specific advertising in the aggregate, they can now analyze effectiveness at the level of specific customer segments and even individual consumers. This invaluable information allows them to more effectively target future advertisements, and to refine their message for greater impact.

Better yet, this information is potentially available to marketers in real time. Marketers will soon be able to zero in on consumers whose online behavior has signaled a potential intent to purchase in a particular product or service category. They’ll then be able to target this buyer with a product offering before the decision phase of her purchase is complete. By definition, this information has a relatively short shelf life. Once the transaction has occurred, the signaling value disappears. In most cases, the value of this information can be measured in days, if not hours, so the ability to access this information quickly is critical.

Finally, the information captured online can provide a complete picture of consumers’ online activities, including transaction history and demonstrated preferences, across categories of goods and interests. More complete consumer profiles would allow marketers to better understand and anticipate consumers’ purchasing behavior. For example, an airline or travel vendor’s understanding of a customer who frequently purchases tickets to California would be significantly enhanced by the knowledge of his/her purchasing camping equipment on a regular basis and participating in online hunting forums. The integration of online information across categories is feasible as network access providers, large gateways, and information files resident on consumer’s computers all have the potential to collect comprehensive online histories.

Information intermediaries

The second broad change to information capture brought about by online marketspaces is to make it possible for an entirely new set of companies to capture information. Unlike in physical markets, where vendors or retailers are usually the best positioned to learn about customer preferences and transactions, in online markets a new category of network-based intermediaries is strongly positioned to create value by aggregating people and resources on networks and thereby developing rich profiles of consumer and vendor activities.

Already one can make out new "species" emerging in this online "ecology": virtual communities that aggregate content and communication environments to serve specific user segments (e.g., ESPNET SportsZone), electronic market-makers that aggregate a critical mass of buyers and sellers in specific transaction categories (e.g., Firefly around recorded music), gateways like America Online that organize a broad range of resources to serve most of the online needs of their subscribers, network access providers such as NetCom, PSI, and AT&T that provide physical access to networks (but who also are moving rapidly to add a range of value-added services for subscribers), and various kinds of billing and payment service providers (e.g., Visa or Mastercard) who want to make it easier for network users to engage in commercial transactions.

Suddenly previous assumptions about who best captures what kind of information are now no longer so certain

Any of these players could be in a position to capture rich profiles of network users and their transactions on the network—in many cases, much broader profiles than individual vendors might hope to capture and much more linked to specific consumers than traditional retailers have been able to capture. Suddenly previous assumptions about who best captures what kind of information are now no longer so certain. Related assumptions about who extracts the value from this information now also need to be reassessed.

Uncertainties

The full potential and implications of information capture in online environments won’t be realized until a number of challenges are addressed. We believe all of these challenges will eventually be surmounted, mostly sooner rather than later. But the online marketer will do well to monitor progress against them carefully. These challenges and uncertainties fall broadly into four categories: reach, technology deployment, scope of capture, and privacy.

Expanding the reach of online environments

Product categories targeted to young, affluent families would already find the reach of online environments quite reasonable

Online environments are still relatively new platforms for consumers in general and for commercial transactions in particular. In the United States, only about 12 percent of households are online today, although a much larger percentage of households—roughly 30 to 40 percent—are at least equipped with one or more computers that can serve as an access device. While these percentages suggest that the online environment lacks sufficient reach to be interesting yet for mass consumer goods producers, the demographics of existing online penetration indicate that this environment is already very relevant for certain consumer product categories. Specifically, product categories targeted to young, affluent families (e.g., certain kinds of personal financial services, high-end audio and video equipment, luxury cars, gourmet food products, software) would already find the reach of online environments quite reasonable for their target customer segments.

Thus, many attractive segments of consumers can already be found online. But there is another dimension of reach that is also relevant—what percentage of consumer transactions in relevant product categories are actually conducted online? Obviously, the ability to capture information about transactions assumes that these transactions are actually performed online. Today, very few consumer transactions are conducted online, although the frequency and value of these transactions are growing and many providers are building out consumer transaction capabilities on networks. In part, the rate of growth of consumer transactions is likely to be a function of the growth of targeted consumer advertising that is coupled with transaction capability. In this respect, advertising is likely to lead transactions. Since reach for advertising in certain consumer product categories is already available, transaction growth is likely to follow once appropriate technologies (e.g., those addressing security concerns) are deployed and consumers have become more comfortable with online purchasing.

Technology deployment

Information capture in online environments also depends on the deployment of an array of technologies focused on measuring, tracking, collecting, and analyzing user activities on the network. Some environments—most notably, America Online—have already developed rich information capture technology platforms. Others, such as the Internet, are still lacking some of the basic technology capabilities needed to realize the information capture potential. Specifically, Internet-based players are wrestling with two related challenges: how to capture detailed profiles of the activities of users who come to their Web site, and how to tie this information to the identity of specific users so that they can be proactively identified and targeted with marketing programs.

With regard to the first challenge, many companies, including NetCount and Intersé, are investing aggressively in the technologies necessary to differentiate "hits" to a Web site from actual visits. In some sense, these companies aspire, in part, to become the Nielsens of the Internet, and to assist advertising firms and consumer marketers in improving the effectiveness and efficiency of advertising in this emerging media. As advertisers have become aware, hits are an almost meaningless measure of user activity since they are distorted in a number of ways. For example, accessing a single web page with four graphics icons stored as separate graphics files on the Web site will register as five hits on that page even though it was just one person accessing that page one time. On the other side, if one Web site downloads a web page on another Web site to "cache" that page (a growing practice to speed access to frequently requested pages on other Web sites), the download will appear as a single hit on the primary site even though the cached page will be accessed by thou-sands of users visiting the secondary site. From an advertiser viewpoint, the advertiser wants at a minimum to know how many separate "visits" to the ad occurred.

Technology and approaches are also being developed to address the second information capture need: how to tie profiles of user activity to identifiable consumers who can then be proactively identified and targeted with marketing programs. The nature of this challenge and the aspirations of players such as I/PRO and Agents, Inc. are different from those of players focused on tracking site traffic—that being to strengthen and develop relationships with individual consumers. The technologies typically involve creating a unique identifier embedded in the user’s browser software or establishing some type of third-party registration service. The least attractive option, but the one most widely used today in the absence of some of the new user identification technologies or services, involves requiring users to register at individual Web sites.

The technology innovation to address these needs is well underway today and many of the technologies are already in an early stage of commercialization. There will, however, be inevitable lead times in the deployment of this technology and potential issues regarding standardization. For example, if one technology for measuring visits defines a "visit" in a certain way, will other technologies employ similar definitions of visits so that visits can be meaningfully compared across Web sites? Similarly, will the network converge around one technology standard for identifying users or will there be multiple technologies requiring multiple identification "readers" to be installed at each Web site?

There’s a third technology issue which also bears mentioning, although it applies to only one category of players in the online environment: those companies who also have significant business presence in traditional marketing environments. These companies must wrestle with the non-trivial issue of integrating the information captured in online environments with the information captured on legacy systems in traditional marketing environments. A new set of technology start-ups are beginning to target this issue and develop a set of "translation" tools that can help this integration process. Nevertheless, the diversity of legacy systems in place—many of them "home grown"—will make this integration process very difficult to implement in a timely and cost-effective manner.

Scope of information capture

If the technological hurdles to information capture on the Internet are likely to be resolved soon, another obstacle may prove more difficult. This involves the scope of information capture by any individual company, especially in fragmented network environments like the Internet. In one extreme view of the Internet, individual product and service vendors will use the network to disintermediate traditional intermediaries and deal directly with consumers from their own Web sites. The implications of this scenario for information capture are profound. In the absence of any aggregating intermediaries, each Web site will capture a rich profile of the activities on that Web site but, in most cases, that profile is likely to be a very narrow slice of the total profile of any consumer’s activity on the Internet. Unless there is an active market to trade this information across Web sites, the value of this information will be significantly diminished for all but the largest vendors.

The value of information could be greatly enhanced by the ability to aggregate across a consumer’s full set of activities

This issue may well lead to the emergence of a broad range of new, network-based intermediaries who add value by aggregating people and resources on the network. To the extent that these intermediaries appear, the scope of information capture by individual companies could become quite broad. For example, if a virtual community emerged around personal financial investment, the organizer of that community (and potentially providers to that community) could accumulate a very broad profile of the financial activities and investments of its members. Even more broadly, billing/payment service aggregators might be able to develop comprehensive profiles covering the full range of activities of individual consumers across the entire online environment. In this scenario, the value of the information would be greatly enhanced by the ability to aggregate either across an individual consumer’s full set of activities or at least across a broad range of related transactions. Unlike traditional retailers, these new, network-based aggregators would be able to link these activity profiles with identifiable consumers who could then be targeted and served with tailored marketing programs.

The potential impact of privacy concerns

The broader the scope of information capture, the more privacy is likely to rise as a significant issue

The final hurdle that must be overcome in realizing the full economic value of the information captured in online environments has to do with privacy. Ironically, this obstacle grows in size as the three prior challenges are overcome. The greater the reach of online environments, the more robust the information capture technology platform, and the broader the scope of information capture by individual companies, the more privacy is likely to rise as a significant policy issue.

We have already seen early indications of this concern. When it was revealed that Microsoft was automatically downloading information about user system configurations as part of the process of registering for Microsoft Network, a major controversy unfolded and Microsoft was forced to back off. A similar controversy broke out when users discovered that Netscape had implemented the so-called "cookie" technology in its browser software. This cookie technology automatically captured information about user activities on the Internet and downloaded information about prior visits to a Web site when the user returned to the Web site. In this case, Netscape was forced to agree to make the cookie technology an optional feature that could be turned on or off by the user in subsequent releases of the browser.

In dealing with concerns over privacy, it is important to remember a key distinction. When consumers are asked about concerns over privacy, they invariably express a high degree of concern. However, when the question is reframed to test willingness to accept something of value in return for access to detailed information about the consumer, respondents seem to become much more favorable to providing the information. What seems to upset consumers most is when the information is captured without their knowledge and when they appear to receive nothing in return for the information.

Privacy policies could evolve in a number of directions. At the two extremes, there may be no restrictions on information capture or, alternatively, all forms of information capture may be prohibited. What is much more likely is that privacy policies may require treating information capture as an option to be chosen by the user. For example, vendors or intermediaries might be required to seek explicit permission from users before being able to capture or use information. A more modest resolution would be to allow information capture except in situations where the user actively takes steps to block information capture. Minor details in policies could have significant impact on outcomes. For example, if the default position for the Netscape cookie technology is "on," much more information capture is likely to occur than if the default position is "off," which would require an active decision by the user to turn the feature on.

Privacy policies may differ depending on the category of information involved. For example, ability to capture information about transaction histories may be more tightly controlled than information about basic demographics such as age, sex, and size of family.

Similarly, privacy policies may differ depending on whether the issue is information capture or information liquidity. For example, one set of privacy concerns deals with the ability of vendors or intermediaries to capture information about consumers and use this information in their own busi-ness. A very different set of privacy concerns may be triggered on issues of information liquidity—whether or not the vendor or intermediary capturing the information can then "sell" this information to third parties. The terms and conditions of the sale may also be relevant—a list rental for one-time use by a third party may be treated quite differently than an outright sale with no restrictions on use of the information by the third party (including even the sale of this information to yet another business). One quite plausible outcome would be tighter restrictions on information liquidity than on information capture itself.

Four value-creation scenarios

The major challenges outlined regarding information capture in online environments define a range of potential scenarios which in turn have profound implications for value creation. These scenarios can be described by focusing on two key dimensions of uncertainty: the scope of information capture by individual companies in online environments and the degree of information liquidity (i.e., how readily this information can be bought and sold). This approach to scenario development assumes that reach issues will be resolved over time and that the technologies required for information capture will be deployed and standardized in ways that make it economically feasible to capture detailed information about consumer activities on networks. If one is sanguine about the growth of online environments in the consumer marketplace, these appear to be relatively safe assumptions and the major uncertainties tend to concentrate on business and privacy policy issues. For example, will business activity in online environments be highly fragmented or will aggregating intermediaries become significant players? Privacy policy issues are especially acute in the area of information liquidity. The relative freedom to buy and sell information about consumer activity on networks will likely profoundly shape the potential for value creation from this information asset.

We’ll now explore the four scenarios that seem most likely to occur.

1. The information toll road scenario

In this scenario, new, network-based intermediaries emerge who focus on aggregating people and resources in online environments and, as a result, are well positioned to capture very broad profiles of consumer activities on the network. The scope of information capture by individual companies—i.e., these new intermediaries—is therefore quite high. In contrast, information liquidity—the ability to buy and sell this information to others—is assumed to be very low as a result of privacy concerns over potential abuses of information.

Intermediaries who own customer profiles could end up capturing the bulk of the value-creation potential

As a result, the intermediaries are well positioned to become organizers of customer webs, leveraging the unique asset that they accumulate over time: the rich activity profiles of the customers they aggregate. Unable to "sell" their profiles to third parties, the intermediaries become natural channels for interactive advertising and shopping, providing opportunities for third parties to leverage the customer profiles without actually "acquiring" them and, in the process, further enriching these profiles based on the next wave of consumer activity. These customer profiles have substantial commercial value and it is likely that the intermediaries who own them would end up capturing the bulk of the value-creation potential.

Distinct sub-scenarios can be defined by focusing on the potential roles of specific categories of intermediaries (e.g., virtual communities, electronic market makers, gateways, network access providers, billing/payment service providers). Each sub-scenario would be distinguished by its assumption regarding the specific category of intermediary that might end up having the richest and broadest profiles of specific customer segments.

2. The information fragmentation scenario

A second scenario imagines that information capture is quite fragmented on networks—no entity is able to capture more than a very narrow slice of a user’s activity profile online—and that information liquidity is also low. Under these conditions, the potential for value creation through information capture in online environments is likely to be low and fragmented among many players. This scenario favors the very large vendors of products and services who are better able to capture information about their customers online. These vendors can then treat this information as a distinctive asset that reinforces their competitive advantage.

3. The information integrator scenario

A third scenario also assumes that information capture is fragmented on networks, but that information liquidity is high. Under these conditions, one might expect to see the emergence of specialized information integrators that would collect the information captured in many different locations and aggregate this information into integrated customer activity profiles. In this scenario, the value creation potential of the integrated profiles would be high and the ability to capture this value creation potential would depend upon the concentration of information integrators relative to information capturers and information customers. Hence, a value-maximizing extreme might see few large integrators—with many collection points and sophisticated integration tools—compiling and brokering highly comprehensive consumer profiles.

This scenario would tend to favor smaller vendors of products and services on the network who would have increased access to a broader range of information about potential customers. More generally, this scenario would favor companies who are very skilled in the application of customer information to improve marketing programs. Since they would be able to extract more economic value from the customer information, they would presumably be able either to pay higher prices for this information in order to gain privileged access to it or to pay prevailing market prices and capture more of the economic surplus for themselves.

4. The customer control scenario

A fourth scenario is a variant of the first in that it assumes that information capture is concentrated and that information liquidity is low. However, it differs significantly regarding the location and focus of information capture, since all the other scenarios focus on information capture by various forms of providers.

In this scenario, privacy concerns dictate that the customers themselves become the primary location of information capture and therefore "owners" of the information captured. Information capture could occur through software installed as a plug-in to the browser residing on the customer’s PC. As the customer navigates through the network, the activity profile is automatically and transparently captured by the customer’s software.

This information could then be managed by a new form of information intermediary who acts as an agent for the customer, providing a variety of filtering, vendor seeking, and information "rental" services that optimize the value of the customer profile to the customer, consistent with the customer’s privacy preferences. Under this scenario, the value creation is quite high because the profiles are rich and comprehensive for individual customers and the customer is in the best position to capture the value creation potential inherent in these profiles.

This scenario would represent a fundamental shift from traditional information capture roles in physical space. Traditionally, consumers’ roles have been limited to providing data about themselves through surveys, transactions, etc. In the customer control scenario, consumers would become key collectors and controllers of primary information, potentially obviating the need for information capturers and, in the process, staking an important piece of the value chain. As a result, the value-added roles of other players would shift toward data integration and analysis and away from information capture.

Explicit information capture strategies are essential

Senior management must develop explicit information capture strategies as part of their broader online strategies

To maximize the potential for value creation, senior management must develop explicit information capture strategies as part of their broader online strategies. These strategies should address a broad range of issues regarding targeting, capturing, leveraging, and competing for information about consumers.

Targeting high-value information

The key issue here is: what kind of information about customers (and potential customers) is most valuable to your business? Broad generalizations can be misleading and may lead companies to overlook key categories of information that are important for specific types of business.

For example, many consumer businesses aspire to establish long-term relationships with customers and therefore value profiles of transaction histories to provide a measure of the economic potential of that customer. This focus is especially important when the consumer makes repeated purchases of specific products or services over a long period of time. However, such a focus may not be as relevant for a residential real estate broker who is more concerned about information that would suggest a particular person or family is about to enter the housing market.

Similarly, leading vendors in specific markets are more likely to place higher value on an increased amount of information about their own customers to strengthen customer retention programs or to better identify cross-selling opportunities. In contrast, new entrants focused on customer acquisition will be more focused on information about the broader market rather than their own customers.

Being explicit about what kind of information has the greatest value can be very helpful in developing more targeted and cost-effective information capture and acquisition strategies.

Capturing high-value information

Once you have a clear focus on the information that is most valuable to the business, the key challenge is to assess the relative importance of online environments in facilitating capture of this information and the specific approaches best suited to exploiting the potential of online environments as a capture medium.

• What is the relative ability of online environments to capture this information more quickly and cost effectively compared with traditional marketing environments? Being explicit about assumptions can be very helpful here to avoid either over-estimating the power of online environments or being blind-sided by constraints that exist today but may be readily overcome in the near future.
• What kinds of online business models and technology platforms are most useful to exploit the potential of online environments in capturing this information? The temptation here is to focus too much on technology platforms without adequately considering business models and their impact on the scope of information capture. Traditional business models may be much too constrained in terms of exploiting information capture potential. For example, does it make sense to become a virtual community organizer rather than simply a vendor of products or services within a virtual community in order to capture a broader range of information about community members?

Leveraging the value of information capture

A large and growing gap has emerged between the amount of information captured and the use of it to create economic value

This is perhaps the biggest challenge to senior management. Even in traditional market environments, a large and growing gap has emerged between the amount of information actually captured or readily available for capture and the actual use of this information to create economic value. Technology barriers (i.e., the limitations of legacy systems), skill barriers (i.e., the data mining, analytical and marketing skills required to apply the information in the marketplace) and organizational barriers (i.e., "smokestack" functional or product organizations that limit the ability to share information across organizational boundaries) are all responsible for this gap. The availability of even more information about consumers in online environments offers the potential to widen this gap even further. Senior management must avoid the temptation to focus on information capture issues while under-managing the major challenges involved in leveraging the value of this information. Addressing the following questions may help:

• What will be required to integrate the information captured online with other customer information captured in traditional marketing environments?
• What skills will be required to leverage the economic value inherent in the information captured?
• What changes to organizational structures and incentive systems may be required to more effectively leverage the value of information across organizational boundaries?
• What information capture and information sharing policies will be required to maximize the economic value to your company while at the same time protecting the privacy concerns of your customers (and potential customers)?
• What kinds of new partnerships/relationships and contractual terms and conditions might be required to maximize the value capture potential for you while reducing the risk that broader access to this information might undermine the value of your core business?

Competing for high-value information

One key question senior management needs to address is who else might be in a position to capture this information in an online environment (including the customers themselves) and what are the implications for your business? Here, the risk is that senior management takes too narrow a view of potential competitors for high-value information. While focusing on existing competitors in traditional market environments is important, it is essential to remain alert to the implications of new, network-based intermediaries who may be in a position to capture a much broader scope of information. At the extreme, customers themselves may become competitors for information about themselves. If they succeed in establishing ownership rights to this information, the implications for existing businesses could be dramatic.

Information is power. Companies will do well to keep this truism in mind as they venture from physical space to virtual space. Virtual space offers the potential to fundamentally alter who captures what kinds of information about customers. Properly understood, online marketspaces offer significant opportunity to create new value based on a deeper insight into customers and their activities and preferences. Larger companies in particular must carefully think through the implications of broader and deeper access to information about customers. Many companies today enjoy a significant advantage resulting from unique access to limited information about their own customers. These advantages may be under attack by new entrants who leverage the powerful information capture potential of online environments to level the playing field or, even worse, to shift the balance of information power to create new kinds of advantaged players on that playing field.