Volume One Issue Eleven / December 2009

In this Issue… Mobile Marketing in Japan....3 Cross-Border Marketing... 6

Insights into this dynamic tool and its
place in crowded Japan. A case study
on how to sell fashions to young
women - THE market in Japan, by
Atsuko Morimoto
Richard Miller , dean of the cross-border
marketing community reflects on the de-
velopments in direct mail, addressing/
postal problems and prospects.

Privacy Update..... 9 Flash Cookies ....13

Behavioral targeting in the sights of
regulators on both sides of the Atlantic.
New DNC list in the Netherlands. UK
privacy commissioner gets power to
fine .... more
Privacy flash flood warning - What is an
LSO? Can it be used to hurt you? How do
they find you and how do you control
them?

Departments...
Editor’s Note.....1
Marketing, Privacy, Postal
Issues. What‘s Inside This
Issue
Reader’s Trivia..... 15 Contact Us ..... 18
Globalization - good or bad? E-mails and phone contact
Does the recession make you information
want to close the borders?

Editor’s Note: What’s Inside This Month

Marketing, Privacy, Postal Issues
In this issue, we spend more time on marketing and
privacy issues than we have recently. We touch on
postal issues only as part of the legendary Richard
Miller‘s in-depth discussion of changes in global
direct marketing.
Don‘t miss the excellent case study on a mo-
bile and on-line marketing phenomenon in Japan
from Atsuko Morimoto, a dm pro from that market.
Teen-age girls use their mobile phones to buy out the
supply of fashions on the runway of the most popular
fashion show in Japan during the show!
We also open the discussion on behavioral
marketing and American consumers‘ attitudes to the
surreptitious gathering of data about our browsing
habits. It is now imperative for us to study and un-
derstand the public‘s reaction to targeting/selection of
offers, news, and content based on that information.
We bring a short review of a recent very important
survey of American attitudes to what the interactive is
community is tracking and what they do with it. We
note also the increased activity in this subject area in
Europe. Pay attention, since regulation will be on the
Continued on next page
Volume One
way unless business responds to consumer and law-
makers‘ concerns. (In Privacy Update.)
The emerging technologies and techniques of
data capture, such as ―Flash cookies‖, also raise the
public‘s blood pressure, and we unpack that discov-
ery and how it seems to work and why it was devel-
oped. We note Europe (again, sigh) wants cookies to
be ―opt-in‖.
It has been a while since we brought devel-
opments from Europe to our readers, but we see in-
creasing action on marketing and privacy law en-
forcement and cover these developments in Privacy
Update. Our Lucerna Juris resources have called in
with news. Alexander Singewald brings us up to date
on the new Netherlands mandatory do-not-call list
law and its implementation. From the UK, Rosemary
2
Issue Eleven / December 2009
Jay tells us the nervous-making news that the Infor-
mation Commissioner is getting the legal authority to
levy fines, big fines, for certain violations of the pri-
vacy legislation in that country.
We are not forgetting trade and development.
Test your knowledge of globabalization‘s impact and
its inhibitors around the world in Reader‘s Trivia.
Which countries are most positive about globaliza-
tion? Brazil? Argentina? The USA?
At the close of 2009, a year filled with eco-
nomic and personal despair and pain for many, we
sense subtle signs of recovery and hope. At this sea-
son of hope and promise, The Prescott Report wishes
you and your loved ones health and success, however
you choose to measure success, in 2010. And, we
pray for peace for all of us.
Volume One Issue Eleven / December 2009

A Case Study: Mobile Marketing in Japan

The following article is taken from a case study on mobile marketing in Japan from a presentation prepared
by Atsuko Morimoto of AM Associates, Japan. The presentation is downloadable from The Prescott Report
document library "Morimoto mobile study". See below for contact details for Ms. Morimoto.

A Bit of Background they will find you. Mobile spend was up 59% year on
year in 2008.
Mobile services in Japan are controlled by three
Mobiles are part of everyday life. Consumers use
major telecommunications carriers: Docomo, Au, and
their mobile phones in ways that have not yet become
Softbank. Content and applications require the ap-
entirely common in other countries and in this respect
proval of each carrier. The
Japan has been quite a pioneer. The phones have, of
markets for mobile handsets
course, the usual standard features, including
and for mobile services are
the ability to make calls and send text mes-
quite substantial. There are
sages. Of course, you can
slightly over 108 million sub-
send e-mail. Somewhat
scribers in this land of 127
more unusually, they have
million people. It is esti-
better cameras
mated that the online mo-
than one ex-
bile shopping market
pects, generally
(being mobile contents
between 3.2 and
and mobile commerce
10 megapixels,
combined) in
with a 12-
2009 will reach
megapixel cam-
$13.5 billion
era having just
and all this is
been intro-
occurring in a
duced. You can
country the size of
also watch tele-
California with a
vision, use your
population of 127
GPS navigation,
million people. Group
which is becom-
M reported last year that
ing more com-
about 10% of ad spend in
mon elsewhere,
Japan is mobile market-
use your electronic debit card,
ing, or more than is spent on
make railroad pass payments,
direct mail. Japanese consumers
transfer data with infrared, and download pic-
have been accessing the Internet
tograms and ring tones from hit songs. [I was
via mobile for years. 76% of Japanese
surprised last week in Budapest when my dinner host
use the Internet.
paid for his parking spot by sending an SMS of his
If you want to reach busy adults in Japan, mobile is
license plate number to a mobile number on a placard
an effective tool, although it is opt-in. Still, you build
near where he parked. When we left he texted again
your mobile-friendly website and engage in effective
and “the clock stopped”. Editor]
SEM practice, think a little bit about WOMMA, and

3 Continued on next page

Volume One
Special phones.
Manufacturers have recently begun producing
phones for special purposes. Two recent develop-
ments are handsets for children with very limited
access to websites and limits on the amount that can
be spent with a mobile carrier. In addition, it is pos-
sible to provide security and to track a child with GPS
linked to a security firm.
Another population that has special needs is the
elderly. In this case, phones have been developed
that are simpler to operate and have larger buttons
and letters and which will respond to voice instruc-
tions. It is also possible to pre-register three phone
numbers such as
close friends or
family members, Background: Handsets Are Becoming Fashionable
which will ring as a Tool of Self-expression
through with a
touch of one button.
Handsets are
also becoming
fashion items in
their own right and
permit individuals
to express them-
selves with their
phones. Some of
these reflect tradi-
tional Japanese arts,
as shown in the
nearby slide.
Study: Tokyo
Girls Collection
Tokyo Girls Collection is a fashion event that
takes place every two years to a sellout audience.
Unlike the usual fashion show, which is directed to
the industry and very often is by invitation only, the
show is open to consumers, and it embraces a very
populist ideology of "Real Clothes". In short, it fea-
tures accessible and affordable fashion brands.
Naturally, it is directed at young girls and, unsurpris-
ingly, the fashions which are shown during the show
sell out almost immediately. In fact, the September
2009 show attracted 22,000 young women in person,
and it was broadcast nation-wide.
During the fashion show customers could order
the clothing they saw on stage. In fact, interactive
4 Continued on next page
Issue Eleven / December 2009
sales in the 24 hours from the start of the show reached
nearly $600,000. All the items featured in the fashion
show were available for purchase via mobile phone
immediately after being introduced on the runway.
As noted in the slide on the next page, three web-
sites are affiliated with the real event and keep the
business buzzing between shows. Girlswalker.com
provides information and shopping opportunities
through the mobile phone. This site, launched in
2000, is now the biggest mobile site in Japan, with 7.2
million young female subscribers. It is extremely
popular, with nearly one and a half billion page views
per month. Its free content includes information on
fashion trends, shopping, show business, horoscopes
and comics. It is, in
fact, a portal that at
its peak (pre-
recession) had
somewhere around
800 participating
stores. The largest
one still sells
around $600,000
worth of merchan-
dise per month.
Fashion-
walker.com is the
PC-accessible in-
formation and
shopping site. This
site is intentionally
laid out along the
lines of the most
popular multi-story
fashion complex in Tokyo, called "Shibuya 109". In
addition, there are fashion magazines affiliated with
this entire project, and new fashion items introduced
in those magazines are likewise available for purchase
through Girlswalker.com and Fashionwalker.com.
Finally, Stylewalker.com is a community site
where members can blog, post photos, and create an
avatar which they can dress and change hairstyle. The
site also serves as a powerful market survey location
to detect trends in this rapidly changing market.
Japan may be a country whose population is
shrinking and aging, but you would not detect that
from the state of e-commerce, mobile commerce, and
the buying power of young girls.
Volume One
Recall that Japan has had its problems, with an
economy often described by economists as
―stagnant‖, but it is still the second richest country on
earth, and obviously endowed with young women
with money to spend, and phones to spend it with!
5
Issue Eleven / December 2009
Ms. Morimoto is a highly respected advertising and market-
ing professional with experience at Dentsu Wunderman, Ogilvy
& Mather and Grey Advertising. Her consulting company spe-
cializes in marketing and communications. She can be reached
at amassociates@amajp.com Website: www.amajp.com.
Volume One
CROSS-BORDER MARKETING:
The Changing Dynamics by Richard N. Miller
Richard N. Miller is Managing Partner of Market Response
International (www.rmillerinternational.com) in Chatham,
MA. He is Executive-Director Emeritus of the International
Mailers’ Advisory Group, and the author
of Multinational Direct Marketing: the
Methods & The Markets (McGraw-Hill).
He can be reached at
rmiller@capecod.net.
F
ew industries have changed as much as a
result of the electronic revolution as interna-
tional direct marketing . We create campaigns, pre-
pare production materials, order lists, monitor the
letter-shop, take orders, confirm and track shipments,
receive payment, settle claims, handle customer ser-
vice, upsell and upgrade - all without leaving our
computer screen! When I first came into this busi-
ness in 1979, every one of those operations was han-
dled by a separate channel, often at disparate geo-
graphical locations, and much of the operation was
manual. And, it took forever. But how things have
changed!
Let‘s look at three of the most important ele-
ments in cross-border direct market-
ing: List, Addressing and Delivery
and see where things stand today.
The List Industry: Tra-
ditional vs. ―e‖ sources
As usual, the health
of the list industry needs to
lead off any discussion of
direct marketing, interna-
tional or domestic. Publish-
ing is the oldest and one of
the richest sources of lists in
the international direct marketing
field. However, with dramatic changes in
reading habits, the number of periodical titles
has declined significantly, impacting the total uni-
verse of subscriber names available.
6 Continued on next page
Issue Eleven / December 2009
For instance, where McGraw-Hill once pro-
duced over 40 international titles, they now publish
closer to 20. I see no solution to replacing this loss,
other than opting for more email lists. Though email
campaigns can be produced with considerably less
expense than traditional direct mail campaigns, they
generally require a larger target universe to attain ac-
ceptable results.
Nevertheless, the judicious use of interna-
tional email lists is an important part of any mar-
keter‘s arsenal. In the developing regions of the
world, email currently extends much further than
does any other Internet-based technology. Conse-
quently, email lists have evolved as a powerful tool
for collaboration in Africa, Asia, and Latin America,
especially in the areas of social services and fund
raising.
Is e-mail Worth It?
However, the email list industry has not really
matured, and costs are all over the lot. Many email
lists are more expensive than traditional mail lists,
particularly in B2B. If a typical international publi-
cation‘s direct mail list costs
you $250 per thousand, an
email list could run almost
twice that, especially if it is
certified as ―permission‖-
based. There is really no jus-
tification for that, especially
as response rates for email
lists are generally much
lower than traditional lists.
Thom Hansen, VP
International at Direct Me-
dia, Inc. calls it ―greed‖.
(www.directmedia.com. They can
charge more, so they do. So-called ―opt-
in‖ names are compiled from lists where
names have been generated with only im-
plied or passive permission. With a true per-
Volume One
mission-based list, the person has specifically agreed
to the solicitation. For the prudent marketer, permis-
sion lists are essential.
What Pulls? What Doesn’t?
Hansen‘s experience has been that the high
tech or IT lists are the ones that pull best. Responses
to general merchandise lists are mostly disappoint-
ing. Brand recognition helps get mail opened, but
without good branding, it‘s an uphill battle. More-
over, Hansen says most results from B2C email
campaigns are ―terrible.‖
Tower of Babel?
There is another factor that impacts both the
availability and effectiveness of cross-border list de-
velopment - language. Though hard facts are diffi-
cult to come by, one can observe a steady increase in
the use of English as the operative language in many
international transactions.
Though Chinese is spoken by more people
than any other language, it is obviously confined to
specific geographical locations. English has been
for decades the second most widely spoken language
(followed by Spanish), and has the advantage of be-
ing more widespread geographically.
In an interesting observation, Charles Pres-
cott (editor of this newsletter) noticed that upper-
level executives in Chinese companies do not list
themselves on the local LinkedIn but on the real thing
- which is English dominant. They apparently feel
comfortable enough with the language. The point
being that as a language continues to gain currency, it
markedly increases the growth potential for email
(and traditional) list sources.
International Addressing: Bringing Standards
to bear
When it came to addressing, for decades
what you saw, was what you got – which was gener-
ally a cumbersome package of labels dumped on
your desk after having been lost for a week some-
where between Kuala Lumpur and New York! And
in many cases, even though a tape might be avail-
able, the list owner wouldn‘t let you have it for fear
of theft. You were lucky if you could get them to
ship you labels.
When you finally got the labels, you had no
opportunity to verify or correct what was given to
you. If your supplier was really modern, and you
7 Continued on next page
Issue Eleven / December 2009
actually received a tape, there was very little you
could do to edit the information. So, your printing
fields had to accommodate a wide range of formats,
from as few as 4 lines to as many as 10! If you
couldn‘t accommodate that, important data would
simply be dropped off the label. Stories are legion of
mailings that came in and went out with no country
name on them.
Postal developments save the day!
What helped bring order out of chaos, of
course, was the introduction of postcodes (ZIPs) in
the 60s. Now, 117 of the 190 member-countries of
the Universal Postal Union (UPU) have some kind of
postcode system in place. That still leaves 73 with-
out postcodes, and among those with a system, the
level of sophistication varies widely, from primitive
to advanced.
The UPU is aware of this problem and is ad-
dressing this on two fronts. A percentage of Termi-
nal Dues (the reimbursement for delivery paid by one
country to another) paid by developed and emerging
countries is reserved for technical improvement pro-
jects in the developing countries, including post code
development.
The UPU is also a major player in the interna-
tional standards body working on uniform methods
of international address management. The goal is not
to arrive at a standard postcode – that will never hap-
pen. Rather, the goal is to arrive at a standardized
system of managing and correcting the data within
the fields no matter what the postcode format.
Thanks to industry volunteers from the US and
Volume One Issue Eleven / December 2009
Europe, great strides have been made in this regard. among the most reliable options for international pro-
For more information on this issue, I refer motions and communications. The mistake the USPS
you to previous issues of The Prescott Report which continues to make is in believing it can ―grow‖ that
have addressed this subject in considerable depth. market. Highly unlikely. What they should be fo-
cusing on is building share of market with more com-
Postal and Express Delivery: Fighting for petitive pricing and aggressive one-on-one sales ser-
share of market on one hand, and sharing it on the vice. Moreover, they must negotiate with the Postal
other. Regulatory Commission to approve the tools with
Obviously, two main elements in interna- which to do this.
tional direct marketing are promotional and delivery
Lots of competition
logistics. Though the USPS gave up dominance of
Meanwhile, foreign posts such as Germany,
parcel delivery long ago, it still fights for its share of
the Netherlands, France, and Sweden continue to cut
cross-border mail delivery. However, they some-
into the USPS with various deals and delivery op-
times get hold of the wrong end of the stick. The
tions. Of course, opportunists from several parts of
USPS Global Business unit does not understand that
the world continue to try to leverage the disparities in
the international direct mail market is modest in size
UPU terminal dues by offering tempting ―deals,‖
and essentially static.
usually at the expense of quality of service.
When I was producing international mailings
As for package delivery, FedEx and UPS of
in the 80s, the USPS was the only name in the game.
course dominate the international package delivery
Then in the early 90s, foreign posts woke up to the
market. It has not been a postal game for years, but
fact that the USPS had no monopoly on cross-border
recently the post and express companies have started
mail and they began salivating. Several of the for-
integrating their services, at least domestically.
eign posts came to the table and very successfully
As the USPS still has a lock on the ―last
began to eat a lot of the USPS‘s lunch, and they still
mile,‖ the USPS, FedEx and UPS have found it
are!
makes a great deal more sense to use each other‘s
But they are all sharing a lunch market with
strengths to integrate delivery, rather than to fight for
little growth potential, particularly in light of the re-
each individual package.
cession. Even so, the offshore posts pose serious
Unfortunately, international logistics do not
competitive problems for the USPS. Fortunately,
lend themselves to this profile. The USPS actually
the USPS still retains two extremely competitive
flirted with the idea of setting up operations in other
workhorses: ISAL (International Surface Airlift) and
countries to compete more directly with its foreign
IPA (International Priority Airlift).
competition, but this has not been given serious at-
Frankly this dynamic mailing duo remains
tention.

8
Volume One
Privacy Update
Behavioral Targeting.
This subject is beginning to reoccupy
the privacy debate on both sides of the
Atlantic. In the US, it will be one of
the items on the agenda in a series of
roundtables on privacy being con-
ducted by The US Federal Trade Commission, which
began on December 7 in Washington, DC. http://
www.ftc.gov/bcp/workshops/privacyroundtables/
PrivacyRoundtable_DraftAgenda.pdf.
As early as March 31 of this year, the Euro-
pean Commissioner for Consumer Affairs Meglena
Kuneva expressed in a public policy address her
concerns regarding online behavioral advertising,
urging business to protect consumers and give them
more power. In October, Commissioner Viviane
Reding (Information, Society, and Media) raised the
temperature by referring to an action by the Com-
mission against the UK for not being aggressive
enough in enforcing the Data Protection Directive in
regards to the practice. She indicated that the Com-
mission was receiving many expressions of concern
about the practice and was ―closely monitoring‖ the
situation.
Meanwhile, the UK‘s Office of Fair Trading
has announced an investigation/consultation into the
practice, a sometimes lengthy proedure that normally
kick-starts self-regulation exercises in the business
world and frequently can lead to rule-making or, less
frequently, legislation. The OFT‘s investigation,
however, appears to center around whether online
retailers use their tracking of a visitor‘s browsing
pattern in order to raise the price of an item unfairly.
They are less concerned about privacy than fair com-
petition, not surprising, given their title.
In the meantime, the European Commission
has commenced an action against the UK for failing
to take stronger action against BT and Phorm, a tar-
geted marketing firm, with respect to its use of ―deep
packet inspection‖ of BT customers‘ traffic. The EC
9 Continued on next page
Issue Eleven / December 2009
alleges that this is done without the appropriate level
of knowledge and consent by BT‘s customers. Deep
packet inspection is used by broadband and mobile
operators to provide various levels of service to cus-
tomers. This, also raises the issue of net neutrality, as
the practice enables the carrier to discriminate among
messages or downloads, perhaps enabling it to ration
bandwidth to someone down loading videos fre-
quently.
Very Important Survey Results on Behav-
ioral Targeting.
A recently released survey of American atti-
tudes toward the practice has significantly elevated the
subject. Americans Reject Targeted Advertising and
the three activities that enable it; Turow, Hoofnagle,
King, Bleakely, and Hennessy. The work interprets
the result of a nationwide telephone survey of Ameri-
can attitudes to targeted advertising and the data col-
lection practices that support it.
Americans overwhelmingly reject the practice
Here is a handful of the findings of the survey, which
was conducted with substantial scientific rigor:
• 66% do not want ads tailored to their interests. The
figure goes to a range between 73% and 86% when
people are told the three ways data are gathered:
tracking, tailoring of ads, and targeting of ads.
• Younger people are only slightly less concerned than
older people, with 55% of 18-24 year olds rejecting
tailored advertising. This flies in the face of ―common
knowledge‖ that the young are not privacy sensitive.
• 92% agree there should be a law requiring websites
to delete records of an individual‘s browsing.
• Young and old both reject tailored ads, tailored dis-
counts, and tailored news.
Americans are also less knowledgeable about
the protections currently afforded them by the law
with respect to data collection and the use companies
can make of their browsing habits. Surprisingly, re-
spondents felt they had more legal protection than
they do, and replied incorrectly in well over a major-
Volume One
ity of the time when asked to say if the following
were true or false.
- If a website has a privacy policy, it cannot share
its information about you with other companies.
(False, 62% were incorrect.)
-If a website has a privacy policy, it must delete
your personal information if you request it. (False,
54%) And,
-92% of respondents felt there should be a law re-
quiring websites to delete personal information if
requested to do so.
The authors conclude that one thing that
seems to be bothering people very deeply is the
sense of being tracked and possibly manipulated.
That last datum on deletion of data, together
with another suggestion of a law forbidding data
sharing among companies without affirmative con-
sent, will likely be critical centers in the debate that
is launching now. The paper may be downloaded
here: http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=1478214
UK ICO Gets Prosecutorial Power.
In May 2009, the UK Information
Commissioner was given the ability
(as of April 2010) to serve a
"monetary penalty notice" on a data
controller. (A ‗data controller‘ is the
technical legal term for the company or person who is
responsible for the personal information of individu-
als.)
The Commissioner must be satisfied that a
data controller has committed a ―serious contraven-
tion‖ of the data protection principles. The UK statute
contains eight fundamental data protection principles
derived from the EC‘s Directive of 1995 and include
obligations of maintaining security, not transferring
data to third parties unless authorized, and of course
having legal authority to be in possession of data in
the first place. The principles can be reviewed here:
http://www.opsi.gov.uk/Acts/Acts1998/
ukpga_19980029_en_9#sch1-pt1
The Commissioner may issue a notice if he is
satisfied that the contravention was either deliberate
or that the data controller knew, or ought to have
known, of the contravention risk, and that the contra-
vention would be likely to cause substantial damage
or substantial distress, but he failed to take reason-
10
Issue Eleven / December 2009
able steps to prevent that contravention.
The government has begun a procedure known
as a ―consultation‖ with the public surrounding the
implementation of these powers, including the maxi-
mum penalty amount. It has proposed that the Com-
missioner will be able to determine the amount of the
monetary penalty in accordance with guidelines that
he will make, with a maximum penalty proposed to be
£500,000 for serious breaches. In the words of the
consultation notice: ―whether new fines of up to
£500,000 will provide the Information Commis-
sioner's Office (ICO) with a proportionate sanction to
impose on those seriously contravening the data pro-
tection principles‖. The authority responsible for set-
ting the limit is the Secretary of State, but the decision
of how much to penalize up to that maximum will be
exercised by the Commissioner.
“New powers of ICO: ₤500,000 fines
and prison!
Our Lucerna Juris colleague Rosemary Jay of
Pinsent Masons reports as follows:
―There are two current consultations on
stronger powers for the UK Information Commis-
sioner: Introducing custodial sentences for the know-
ing or reckless misuse of personal data, and setting the
maximum penalties for civil monetary penalties.
Both are available from the website of the Ministry of
Justice http://www.justice.gov.uk/consultations/
consultations.htm.
Both new powers are intended to come into
effect in spring 2010 and reflect the increasing profile
of data breaches and the determination of the authori-
ties in the UK to deal with serious breaches.
The power more likely to affect business is the
power to impose financial penalties. The proposed
maximum is £500,000.00, a figure that will make
most businesses sit up and take notice.
There are a small number of cases where a
notice will not be served. These are:
• where the contravention of the law was discovered as
a result of a data controller voluntarily agreeing to
have its processing assessed for compliance under
Continued on next page
Volume One
section 51(7) of the DPA;
• where the contravention of the law was discovered
as a result of a public sector data controller being
made subject to an assessment of compliance as a
result of an order served by the ICO under the Coro-
ners and Justice Act 2009 (which has introduced this
power for the ICO as far as the public sector are con-
cerned).
• where the controller is the Crown Estate Commis-
sioners, the Keeper of the Privy Purse of the Royal
Household, the Duchy of Lancaster or the Duchy of
Cornwall (i.e. the Royal Households).
The power is subject to a formal process set
out in the legal rules under which the Commissioner
must serve on the organization a "notice of intent" to
impose a penalty and then take account of any repre-
sentations which the business makes to him about the
imposition or the size of the penalty proposed.
The Commissioner must take these into ac-
count and may then determine to serve a notice. The
organization has the right to appeal to the Information
Tribunal against the penalty or the amount of the
penalty, otherwise it must be paid within 28 days.
The money does not go to the ICO but to the
Consolidated Fund. If it is not paid it can be pursued
by the ICO as a debt in the High Court.
The interesting thing, apart from the general
move to a more punitive regime, is that those bodies
that submit to an assessment can potentially avoid
such a penalty. Moreover those public bodies that the
ICO decides to assess will escape the punishment
even if serious contraventions are found.‖
This now brings the UK into closer alignment
with some of the other Data Protection Authorities on
the mainland. The Spanish authority has substantial
powers of penalty and has been known to shoot to
kill. The Netherlands is not at all afraid to levy sub-
stantial fines, and the Italian garante also has strong
powers.
Previously, the ICO in the UK was considered
to be a bit toothless, with powers of embarrassment,
but not much else. Embarrassment is something most
businesses have shown themselves able to tolerate.
However, since the most glaring data breaches and
misuses seem to occur in the government sector, the
embarrassment tool is really still the ICO‘s only
power there. Editor.
11
Issue Eleven / December 2009
Europe and Cookies. Here we go again.
Early in November, the Council of
Ministers of the European Union ap-
proved legislation in the telecommu-
nications area which removes barri-
ers to the ePrivacy Directive coming
into force. The formalities required for formal adop-
tion will be undertaken in the coming weeks. The
revised ePrivacy Directive, as amended by the Euro-
pean Parliament and adopted by the Council, must be
implemented by the Member States within 18 months.
It appears to include a requirement for affirmative
consent before a cookie may be put on a user‘s com-
puter.
The new provisions are alleged to bring vital
improvements in the protection of the privacy and
personal data of people active in the online environ-
ment. Some of the changes introduced include:
• A framework for mandatory notification of personal
data breaches. Communications providers and ISPs
involved in individuals' personal data being compro-
mised must inform them if the breach is likely to ad-
versely affect them. Examples of such circumstances
would include those where the loss could result in
identity theft, fraud, humiliation or damage to reputa-
tion. The notification will include recommended
measures to avoid or reduce the risks.
The data breach notification framework builds
on the enhanced provisions on security measures to be
implemented by operators, and should stem the in-
creasing flood of data breaches.
• Reinforced protection against interception of users'
communications through the use of - for example -
spyware and cookies stored on a user's computer or
other device. Under the new Directive, users should be
offered better information and easier ways to control
whether they want cookies stored in their terminal
equipment.
• The possibility for any person negatively affected by
spam, including ISPs, to bring effective legal pro-
ceedings against spammers
• Substantially strengthened enforcement powers for
national data protection authorities. They will for
example be able to order breaches of the law to stop
immediately and will have improved means of cross-
border cooperation.
The importance of this subject is such that The
Prescott Report will be preparing a special report on
Continued on next page
Volume One
this legislation.
New Do-Not-Call List and Law in Netherlands.
Because of the prevalence of English
and German in the Netherlands, it is
not unknown for marketers from out-
side the country to launch telemar-
keting campaigns into the country
from abroad. This being the case, we want to assure
that companies comply with the new law in the
Netherlands regarding telemarketing:
Effective October 1 of this year, a new man-
dated Do Not Call list law took effect and the list
opened for registration. Some 2,700,000 numbers
were carried forward from the previ-
ous self-regulatory list and within a
very short time some 600,000 new
Telemarketers in Holland must
numbers were added.
It is absolutely mandatory to recruit consumers/small
clean your calling list against the businesses for do-not-call list
DNC list, which now also contains
business numbers, small companies,
home offices and self-employed people, as well as
individual consumers. In short, there is less distinc-
tion between B2B and B2C names. The population
of SoHoSe numbers is large.
There are exceptions. You can call numbers
on your list, even though they are on the DNC list, if
one of the following exceptions applies:
• “Soft opt-in” clients where a “similar” product is
being offered to that purchased or given as a gift.
• This is definitely a market research call.
• This is a call to complete a transaction or at the re-
quest of the individual, as when you return a call to
customer service or to confirm a transaction, such as a
hotel reservation.
Another requirement is that in any commer-
cial call to a number not on the list, the caller must
inform the called party that they have a right to be on
the in-house Robinson (suppress) list of the caller,
and that the called party has a right to ask the caller to
12
Issue Eleven / December 2009
put their number on the DNC list! In short, commer-
cial callers have to recruit sign-ups and do the work
themselves for those who ask! We are advised by
Alexander Singewald, a Dutch lawyer and a colleague
from the Lucerna Juris legal network that the ―best
practice‖ on giving this notice is generally done by
advertisers at the end of the call. Clever lads.
Call centers and advertisers should register to
upload names of people who ask them to register
them. This upload registration is free. It is also nec-
essary to register to download the list, which may be
used for 4 weeks only. The fee varies with the number
of names you are deduping.
Enforcement of the law is within the province
of the OPTA, which can issue admin-
istrative warnings and levy fines of up
to €450,000. OPTA has indicated that
it will seek enforcement against tele-
marketers from outside the country.
So far, it has already issued warnings
to three call centers and one advertiser
(all domestic) for various offences.
The latter was warned for not having registered to
obtain the list and for not having informed called par-
ties of their rights to opt-out. Moreover, the authority
receives a list every week of companies who have
registered to download the opt-outs.
The Dutch authorities are generally perceived
in Europe as meaning what they say and not making
empty threats. If they say they will enforce against
foreign advertisers and call centers who don‘t com-
ply, rest assured that they will endeavor to do so. To
access the list (in Dutch): www.bel-me-niet.nl.
There is a downloadable instruction sheet in English
that will walk you through registering at https://
www.bel-me-niet.nl/sites/www.bel-me-niet.nl/files/
Information%20for%20International%
20Companies.pdf. We have also copied this sheet to
the Document Library of The Prescott Report at
www.prescottreport.com/document-library and to
our blog www.prescottreport.com/blog.
Volume One
Flash Cookies - Privacy Flash Flood Warning!
So you periodically go to Tools| Options| Pri-
vacy in Firefox, or to Tools| Internet Options
in Explorer and either clean out the cookies, or con-
firm you are happy with your privacy settings. Maybe
you even look at them and delete those you‘d rather
not have your loved ones, or your employer, find.
And now you think you are safe from websites cap-
turing your browsing history.
That‘s what I thought, and we‘re both wrong!
The technology is way ahead of us. There are types
of cookies that aren‘t deleted by the normal browser
cookie-clean-up utilities. They are called ―Flash
cookies‖, they are part of Adobe Flash Player, and
they don‘t reside in your browser.
They reside on your computer where the sites
that planted them will find them on your return. This
arguably permits the sites to continue to expand their
knowledge of where you go and when. In short, you
haven‘t escaped being tracked by those companies.
Adobe is a highly respected company and
Adobe Reader is one of the world‘s most commonly
used freeware programs on the planet. It is propa-
gated by thousands, perhaps millions, of well-
meaning public authorities and companies to enable
clients and citizens to download and read documents
of all sorts. Adobe has an enormous fund of good
will to draw on. Along with another program, the
Flash Player, there apparently comes a Flash
‗cookie‘.
The recent survey of Americans‘ attitudes to
targeted marketing notes the following: ―Also known
as local shared objects (LSO‘s), Flash cookies are
stored in connection with the Adobe Flash player and
cannot be erased through the cookie privacy controls
in a browser. In order to delete Flash cookies on a
user‘s computer, a user must visit Adobe‘s website
13
Issue Eleven / December 2009
and use an online settings manager tool. Moreover,
sites have even begun to use the Flash cookies as
backups to reinstate traditional cookies that a user
deleted, a process that is known as ‗re-spawning‘. In
fact, they even have a typically-techie descriptive
name: spawn-ware, because they can recreate them-
selves.‖ (The survey is discussed in this issue‘s Pri-
vacy Update.)
The next part of this puzzle, which begins to
make me paranoid, is that you have to go to the Adobe
website to access these LSO‘s, even though they re-
side on your machine. Why? Well, according to
Adobe, the LSO is not really a ―cookie‖ but a settings
memory tool. When you leave YouTube or a gaming
site or any application running in Flash Player, it
stores your settings in the LSO so you don‘t have to re
-enter them when you return. Nice touch, when you
think about it.
As Adobe‘s site says: ―Local shared ob-
jects ...allow websites and applications to remember
things about a user between...visits. A local shared
object, by itself, is just information tied to a particular
website — it can't do anything to or with the data on
your computer. A local shared object is exactly like a
browser cookie, except that it can also store data that
is more complex than simple text.‖ Also, only the site
that planted it can access it. Nice touch.
But why don‘t the cookie cutters work on it?
Let me be extremely clear on this. I am not inclined to
be shocked by this stuff. I grew up with techies and I
have 20 years‘ experience with marketers. I under-
stand the reason the motivations driving their devel-
opment.
The first reason is because the techies can do it
and besides ―cool things help us make the product
better‖. So I am inclined to believe that these ideas are
Continued on next page
Volume One
developed and implemented with good intentions, as
was the Flash LSO. And if you‘ll proceed to the
bottom of this piece you‘ll find that Adobe gives you
total control over them.
Also, I understand that marketers love data. It
helps enhance the files and target offers. I gather that
marketers have only recently discovered this tool and
begun to employ it for this other purpose–
identification and replanting of a cookie which per-
mits tracking. This is sinister. I found a bunch on my
machine.
Were I paranoid, I would think Adobe was
surreptitiously planting this device in computers
worldwide, conspiring with browser developers to be
sure it remained undetected.
They are not. Adobe‘s CPO Mimi Rasmussen
has informed me this use of the LSO is news to them
and they are discussing it with the browser compa-
nies, re-examining the Flash cookie plant process and
rethinking the consumer interface. Good on them.
And Adobe is not alone in using LSO‘s. So does
Google Gears, Microsoft Silverlight and Sun‘s Java
Unfortunately, this sort of discovery makes
things worse for the data industry. It makes the gen-
eral public more cynical about and suspicious of
technology, business, and marketing. It invites the
attention of regulators. And, it feeds movements like
that among European regulators to make positive
consent a prerequisite to every cookie plant.
To check your very own Flash Player persis-
14
Issue Eleven / December 2009
tent cookie file (or LSO) go here:www.adobe.com/go/
player_settings_en
You will find the following notice: The
Adobe Flash Player Settings panels let you make
decisions about privacy, data storage on your
computer, security, notifications of updates, and
the use of the camera and microphone installed on
your computer. Use the links in the table of con-
tents to learn how to make these decisions.
At least one of these purposes is perfectly be-
nign. Remote use of your computer‘s camera and
microphone, with your consent, makes things like
collaborative working and meeting tools function ef-
ficiently. The privacy and security dashboard does
indeed give you total control over the ability of web-
sites to do that and is carefully and intelligently laid
out. But it‘s not just about camera and mike, it‘s also
speakers.
What is this ―data storage‖ business? That‘s
not explained in words I understand. And ―privacy‖? I
thought I made those choices in my browser. I just
checked my LSO‘s –Vizu, Clearspring, Scanscout,
VisibleMeasures. These are ad networks sites and I‘ve
never been to them, although I have seen two of the
videos featured on two of them. Only two sites relate
to meetings sites I‘ve visited– MarketingProfs and a
FEDMA provider. Here comes that paranoia again.
And game site Bigpoint.de? Guess I should talk to my
teen-age son about using my computer. Hmmm. So
maybe I need a kid-watch LSO?
Volume One Issue Eleven / December 2009

Reader’s Trivia - Globalization, Good or bad ?

T he future of the world depends on decisions

we, you and I, make today and tomorrow.
Right? ….Well, in fact, they depend on how
well our children are educated and how hard they
study. If you live in North America or Western
Europe and you think you own tomorrow, just look
at the following: YOU..TH ink NOT.
Pardon me, but if you believe you
own tomorrow, then I congratulate you on
having rich parents. You, or your children,
CAN own tomorrow, but it will take very,
very hard work. As Thomas Friedman and
the labels at Walmart should certainly have
told you by now, we now have a global
meritocratic competition system.
Our exclusive Thrifty Traveler re-
ported to us several months ago of being at
the Hong Kong and Singapore public librar-
ies in the morning when they opened for business.
He had to make way for all the students rushing in to
claim a place at one of the tables where they would
spend all day studying.
There are sea-changes going on out there.
Like tsunamis or avalanches, we should be terrified
and run for our lives, but they are hypnotic. While
running won‘t help, there is salvation available be-
cause the schools, the secret to survival, are still
there. Nothing will stop us if we keep learning, and
nothing will prevent our children from succeeding, if
we provide them with good foundations for learning.
Read on as we test ourselves on what
globalization really means and whether it is
good or bad. If this interests you, we urge
you to download this wonderful paper from
the International Chamber of Commerce
from which we have created this little exam –
Standing up for the Global Economy – Key
Facts and Figures in support of globaliza-
tion. Find it at www.iccwbor.org, under
―globalization‖, or:
http://www.iccwbo.org/home/
statements_rules/statements/2004/Globalization%
20paper%2004.pdf. If that fails, contact Edi-
tor@PrescottReport.com and we will send it to you.

Order the following countries from shortest to longest in terms of turning possessions in to ti-

Q: tled property (and by extension, richest to poorest): Indonesia, Australia, Congo. Bonus ques-
tion : does it matter, for heaven’s sake? All bureaucracies make us wait, so what?

The influential economist and advisor Hernando de Soto, author of The Mystery of Capital: Why

A: Capitalism Triumphs in the West and Fails Everywhere Else, first articulated what should have been
obvious: the formalities required to turn assets into capital directly impacts the turning of assets into
capital. That is to say, if it takes a lot of bureaucracy and agony and time and money to get a trans-
ferable title to property, so it can be exchanged or mortgaged, or to incorporate a business to make it
transferable, this will directly impact, in a negative way, capital formation and wealth creation.
For example, the faster the incorporation formalities, the better the wealth creation. In order to form a
corporation: Australia -2 days; Indonesia -168 days; Congo -215 days. (By the way, in New York State, it takes
about 45 minutes to form a corporation. Editor).
The poor are poor only in terms of the ―bell-jar‖ that the traditional legal system puts around wealth ti-
tles, such as complex and tedious incorporation and land registration requirements. In fact, home builders in the

15 Continued on next page

Volume One Issue Eleven / December 2009
slums of Cairo or Rio (―squatters‖ admittedly - but on otherwise unusable land, probably given to the owner‘s
great-great-grandfather for ―services‖ to the crown) would be quite wealthy IF they could register the land they
have occupied. In short, much ―black market‖ wealth is ―black‖ only because outdated laws label it as such.
One of de Soto‘s projects was undertaken to open a small garment workshop on the outskirts of Lima,
all according to the law. To finally register the business (which would enable it to borrow money, or be sold, or
if fortune smiled be listed on the stock exchange) took one person working 6 hours a day for 298 days.

The developing countries maintain very high tariff barriers against imports from other devel-

Q: oping countries. If these barriers were reduced to equivalency with developed countries, this
would result in increased exports from developing countries of about (a) US$ 50 billion (b)
US$ 100 billion (c) US$ 350 billion in value.
(C) US$ 350 billion. South vs. South barriers to trade basically continue to prevent trade. Brazil

A: sells and buys more with China than with any country in South America. If these countries in-
creased their export trade by only US$ 350 billion, this would be 7 times as much as they receive in
aid. Countries in Latin America and Africa have very high barriers to trade with each other, and they
are among the most under-developed countries.

True or false – Farmers in Japan, Europe and the US are the biggest obstacles to final trade

Q: liberalization.

True, very true. Subsidies for production, tariff and quota barriers for imports are major barriers.

A: The US, Japan, and Europe continue to use them; all to keep agricultural products out of their mar-
kets, and to spread their products in world markets at a price unsupported farmers can not sustain.
This is painful and hurtful to developing countries such as Morocco, where agriculture may be only
14 percent of GDP but 44 percent of the workforce. Developed countries spend over US$ 318 billion in sup-
ports for a minor percentage of their population (below 1 percent in the US). In Europe, rice costs 5 times the
world price, beef costs 2 times.
True or false - All things being equal, a company will move its work overseas on price alone.
Save enough on production costs and nothing else matters.
Q:
A survey by McKinsey and Company of companies who had moved production overseas concluded
that tax and financial incentives are not all that relevant, something this writer has observed over 30
A: years of international business. In a close case they may be decisive, but they are down the list a
long way.
On a scale of 1 (least important) to 10 (most important), what matters is infrastructure (10),
trained workers (9), a fair and transparent regulatory environment (9) , and ease of access for foreign
management (7). Financial incentives, such as tax breaks, rate (5).
In short, as Friedman noted from his interviews with executives at major companies around the world, if
you don‘t have reliable electrical power, I can‘t make (whatever, such as computer chips), and if you don‘t
have good roads and railroads, I can‘t get my (whatever..chips) to market overseas.
Why this should surprise anyone is beyond me. I learned in 8th grade history that the first thing settlers

16 Continued on next page

Volume One Issue Eleven / December 2009
did in northern New York State was to build dams and mills to install water powered machines to grind corn
and saw timber. In short, production capability and energy infrastructure.
The second thing they did was improve the carpentry to make barrels. (Shipping capability) And the
third thing was to improve the shipping system down the rivers to the St. Lawrence River and Montreal so they
could sell their corn whiskey quickly. Transportation infrastructure.
Fermented corn ground with waterpower, packed in barrels made with waterpower. Shipped to market
with waterpower. Maybe it‘s true, India was cursed for too long with too many economists who didn‘t like
bourbon. If only a few more had gone to the University of Kentucky instead of Chicago, history would have
been different.

True or false. Globalization encourages a “race to the bottom” in social and environmental

Q: standards. Workers make less and are exploited, and foreign companies exploit the environ-
ment for all their worth.

False. Not as easy an answer as you thought it would be, I bet. For the most part, investments by

A: developed country companies and multinationals are done on the basis of world-class standards. The
OECD has found that wage rates in foreign-invested companies are about double that of local-
invested manufacturers.
Wages in India‘s BPO companies are 50 pct to 100 pct above local white-collar sector jobs
requiring similar skills. Thomas Friedman noted the same thing. Moreover, since major companies tend to im-
pose similar standards and requirements on all their facilities, they tend to import and impose the same high-
level environmental standards that they observe in developed countries.

True or false. So everybody loves globalization?

Q:
Surprisingly, that is false. Well, what did you expect? Of course Argentina believes it is above it all,

A: now that it has paid off the World Bank and has a healthy balance of payments situation. But in fact,
the rest of the world believes globalization is improving their lives, even Brazilians, 66 percent of
whom think it‘s good, compared to only 35 percent of Argentines.
In fact, Argentina is the only country that feels it is bad, with 39% of respondents disapproving of glob-
alization. Globalization is viewed positively in the US (62%), China (76%), and Kenya (82%). Even the
gloomiest and most pessimistic country on earth, Russia, was more positive (31% than negative 14%) than Ar-
gentina (35% for, 39% against). Ah, even in France, where they burn down McDonald‘s, 72% of those below
age 30 say globalization is a good thing, more than their elders over age 50, of whom 58% think it‘s good.

17
Volume One Issue Eleven/December 2009

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ISSN 1949-3320
© 2009

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