The richness of information about individuals that can be gleaned from the Internet makes it an enormously powerful marketing medium. Consumers’ purchasing intentions, for example—information that was previously unavailable or difficult to secure—can now be collected with the aid of "cookie" and other technologies that record the web sites a user visits. And because the Internet is real-time and interactive, marketers can get constant, up-to-date insights into consumers’ opinions and develop stronger relationships with them more quickly.

The potential for strong online relationships is being threatened, however, by concern over privacy. Publicity about companies’ ability to collect information on users without their consent is prompting some individuals to take evasive action, such as turning off the cookie files in their browsers or logging in under disguised identities. The challenge for marketers, then, is to entice consumers into a "value exchange" by offering them something in return for the personal information they want.

Survey of web sites

It is a challenge few marketers have met. We surveyed the web sites of all the consumer companies in the Fortune 500 and found that many do not even try to gather information about individuals. Those that do tend to ask only for...