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Marketers see data breach danger, remain unprepared

A recent study finds that marketers are aware that customer data breaches can harm their brand, but few have a plan of action in place. Companies need to be direct in dealing with the problem.

Personal data protection has become a major concern in recent years as high-profile data breaches, coupled with a rise in identity theft, have left consumers nervous about who is handling their information.

The names alone should keep anyone worried about their corporate brand up at night -- ChoicePoint, LexisNexis,

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For example, 76% of marketing executives surveyed believe security breaches negatively impact company branding. Yet 60% said that security has not become a significant theme in their company's messaging and marketing communications and only 29% said their company has a crisis containment plan for security breaches and failures. Another 27% don't even know if such a plan exists.

The CMO Council research, sponsored by Symantec and Factiva, surveyed more than 2,000 consumers and conducted in-depth interviews with 25 leading marketing executives.

According to the Federal Trade Commission, more than 52 million account records were placed in jeopardy last year because of security breaches, leading to 9 million Americans becoming the victims of identity theft, with losses adding up to $54 billion. There have been an additional 30 million cases of compromised data in 2006.

However, many marketers remain unconvinced that a data breach significantly affects the bottom line.

"In about a third of our interviews, at some point marketers said, 'I have no evidence that these breaches erode brand trust,'" Van Camp said. "A couple said point blank, 'I don't think I'll lose that many customers.'"

Research is emerging, however, to show that a data breach can be quite costly indeed. A Companies should also have a containment plan in place that deals not only with actions but with marketing response in the event of a breach.

"Being up front is probably the No. 1 thing a company could do," Van Camp said. "A quick measured response and then a plan of restitution."

Finally, companies should be prepared to offer some sort of restitution or monitoring, be it a dedicated Web site or an offer of free credit monitoring.

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