Public and legal pressure regarding data privacy is slated to be one of the greatest disruptors of the coming decade. Right now, forward-thinking marketers are reading this writing on the wall, and thinking of new ways to market to a privacy-conscious populace.
In previous years, the vast majority of marketers expected that today’s successful style of personalized marketing would only become more sophisticated over time. After all, privacy regulation has been proposed again and again, and rarely managed to take hold in a way that was disruptive to their business. However, the reality of the situation is starting to dawn on certain marketers – this time, consumers, brands, and legal entities are all making privacy a priority.
These changes will force marketers to re-evaluate their media plans and the ways that they collect and use customer data. It’s crucial to become aware of how consumers perceive data privacy, how an increased focus on privacy will affect marketing efforts, and find tools to endure a major shift in the marketplace. In this whitepaper, we will explain why the landscape is changing, what those changes represent for marketers, and how your marketing team can start adapting today.
The Changing Consumer Landscape
Personalized campaigns were originally designed to help audiences and brands interact in ways that were never before possible. For decades now, marketers have been excited at the possibilities that personalized, customer-centric marketing could bring, and have strived to push the envelope of what’s possible.
They expected that these initiatives would provide their target audience with more relevant and valuable advertisements – creating a mutually beneficial arrangement that keeps both consumers and the business happy. Unfortunately, the reality is that their ambitions went a bit off the rails in the eyes of the consumer.
Before 2010, data privacy was scarcely discussed by lawmakers, consumers, and businesses. Even as data collection practices expanded in the 2010s, most consumers didn’t seem to mind until midway through the decade. So, what happened?
Controversies Lead to Heightened Consumer Anxiety
Consumers today are increasingly uneasy about personal data for a few reasons. Some are just uncomfortable with the feeling of being “watched,” but a rising segment of customers have grown tired of businesses wildly mishandling their sensitive data. They didn’t mind getting personalized offers sent to their email inbox – but they did mind when a data breach compromised their credit card information, or when businesses sold their data unknowingly.
A recent survey found that 97 percent of consumers are somewhat or very concerned about protecting their personal data. It’s no wonder why: 59 percent of consumers claim they know little to nothing about what companies do with their data, 79 percent don’t expect companies to take responsibility if they misuse data, and 69 percent of consumers believe businesses use their data in unsavory ways. Ultimately, distrust is what’s shaping the world of marketing today.
This led consumers, and the lawmakers that answer to them, to push for stricter data privacy regulations. The first of this was GDPR, which was created in direct response to European authorities recognizing that increased data privacy was a rising area of public interest. In a few short years, people around the globe have started pushing for increased privacy regulation in their country.
Meeting Customer Expectations While Maintaining Data Privacy
We previously established that an entire 97 percent of consumers are concerned about personal data – but did you know that 63 percent of consumers believe personalization should be the standard for promotional offers? Unfortunately, consumers want to have it both ways – and this puts marketers in a difficult place.
Generally speaking, an increased focus on privacy negatively impacts a marketer’s ability to collect and derive insights at a rapid pace, and even makes some of their previous marketing technology investments obsolete. In fact, 73 percent of marketers fear that privacy concerns will negatively impact their analytics efforts. However, there is a balance that marketers can strike with the right creative and technological solutions – but it will require a reimagining of how the marketing department collects and analyzes data.
What the Future of Data Privacy Means for Marketers
Privacy compliance is one of the leading challenges facing marketers today, and many teams are predicting an upheaval in the status quo.
Surveys have shown that 97 percent of organizations plan to spend more to protect consumer data, and nearly one out of five marketers reported privacy compliance as their main concern across marketing channels. The impact of this is clear: Marketers need to adapt the way they measure success and collect consumer data, or risk falling behind. Let’s look at three things that could be disrupted due to the new data privacy environment.
Legal Compliance
GDPR created a ripple effect across the globe, igniting debates about how user information can be used or stored in a multitude of communities and legislative bodies. Now, marketers need to not only comply to GDPR, but also the Californian Consumer Privacy Act (CCPA), while preparing for legislation like the Massachusetts Data Privacy Law, New York Privacy Act, and even North Dakota’s HB 1485.
Some organizations believe they still have time to adapt to GDPR and similar regulations. However, in reality, the grace period for GDPR has unquestionably ended. Hundreds of organizations have been fined and paid over €220 million collectively, with Google paying the largest fine of €50 million. Businesses need to take all of these regulations seriously, or else they may risk fines from several legislating bodies in the coming years.
Industry Self-Regulation
Legal challenges are usually the most pressing concern for marketers, and it’s evidenced by most conversations about privacy revolving around GDPR. However, imagine if legal authorities could implement any privacy restrictions they wanted overnight. Of course, the vast majority of governments couldn’t pull that off if they wanted to – but a business could.
Businesses that marketers rely on to collect data are gradually implementing more restrictions with the intention of promoting consumer privacy. For instance, Apple no longer allows marketers to directly derive insights per device, and Firefox blocks cookie tracking by default. Additionally, DuckDuckGo, a privacy-focused security engine, has seen a 65 percent increase in traffic in wake of recent events.
Marketers might be dismayed by some of the moves these private businesses are taking, but don’t blame them – they’re adapting exactly as a business should. Your business should learn to work within their framework, as it will help maintain regulation compliance while keeping your business as privacy-conscious as possible.
Brand Value
Marketers are tasked with protecting their brand’s reputation, but many ignore consumer privacy concerns to the detriment of their brand value. However, this is a significant misstep. Studies have found that about 8 out of 10 customers are willing to abandon a brand if their data is used without their knowledge. This has left marketers stuck in a difficult situation, with consumer opinions on one side, and analytical prowess on the other.
Branding is of the utmost importance for businesses that want to grow in value for years to come – so to protect your brand, it’s crucial to invest in privacy-conscious processes and technology. Additionally, always try to be ethical with how you use consumer data – if you wouldn’t want to tell a consumer why you’re using their personal data, consider rethinking your strategy. If consumers feel your brand is abusing their information, the damage to your brand could be irreparable.
How Marketers Should Address Data Privacy
“As user data shifts from opt-out to opt-in - and before the opt-in economy is well established - systemic gaps will inevitably damage the value of data. That is, unless you are equipped with a deep understanding and have a solution for the missing and distorted information.”
- Dr. Michael Cohen
Over the years, big data has become the status quo for marketers, promising them more impactful campaigns and more precise targeting. However, as consumers take their privacy more seriously, this torrent of data is starting to slow – and some marketers are skeptical about using the data they already have. While most marketers can still conduct business as usual with less data, many fear that it’s only a matter of time until their data stream dries up.
This anxiety has led many marketers to re-evaluate their media plans and the ways that they collect and use customer data. In fact, roughly 1/3 of marketers in the EU have already begun to move focus away from data-driven audience-based targeting due to GDPR, leaving them wondering what to do next. Given the circumstances, there are three main pieces of advice we’d offer marketers:
1. Keep Looking Forward
Don’t turn to the past for answers and leverage imprecise versions of marketing attribution like Media Mix Modeling (MMM). This method takes aggregate media exposure and lines it up with KPIs such as sales conversions and web visits to broadly determine the effectiveness of a campaign.
Marketers expect MMM to be the answer to their data woes, but unfortunately, it treats all consumers as a monolith. In reality, everyone responds differently to various advertisements, and not all traffic is equally valuable. With marketers needing to juggle multiple campaigns across various channels and demographics, it’s easy to see how MMM is hardly practical.
Instead, marketers should search for solutions that use unified marketing measurement. This type of measurement takes all the best features from different models and provides a single, holistic view of all your data assets. This will combine general, impersonal insights with any high-quality person-level insights that your business ethically collects, providing a more precise view of customer habits.
2. High-quality data
How you use customer data is only half of the data privacy controversy. Collecting data that respects a consumer’s privacy is essential to ensuring that your organization is following all industry and ethical guidelines. But there’s a significant upside to carefully collecting data – it will be much higher quality.
Under the current data privacy environment, more is not better. In fact, more data often means more risk. Instead of buying bulk amounts of third-party data and trimming low-quality data later, focus on primarily collecting first-party and zero-party data. If you need additional third- or second-party data to support your models, acquire it through a reputable source that puts privacy and quality first. Then, only keep data that yields campaign outcomes that are in line with your expectation or exceed your expectations.
3. Look for Flexible Marketing Technology
If you’re not experiencing disruption today, you should expect disruption tomorrow.
Nearly 30 percent of marketing leaders believe that a lack of agile and flexible analytics is negatively impacting marketing execution. To successfully navigate a rapidly shifting consumer landscape, marketers must utilize marketing technology solutions that can analyze multiple data sets from different sources.
To support proper data vetting and analysis, consider using a flexible marketing analytics solution that leverages a learning framework such as Bayesian learning and forgetting. As you collect more high-quality information about your customers, the algorithm will vet the data for accuracy. Then, it will analyze the data alongside your existing data and reinforce relevant insights while reducing the influence of insights that have proven irrelevant. This allows you to make more accurate insights with less data.
Conclusion
Consumers expected that marketers would respect and protect their private data – but when they were faced with the reality of what some businesses were doing, they pushed back. Now, marketers need to abandon their own expectations about the future of marketing, and work toward mending the controversy without sacrificing their bottom line.
It will be necessary for marketing teams to combine grit with creativity to overcome all the legal, industry, and consumer-driven obstacles in their path. A platform like Marketing Evolution can help you get started by providing a holistic analysis of various measurement models and sources of consumer data, helping you get a more precise understanding of your customer’s motivations without compromising their privacy.
The earlier you start your shift toward greater privacy, the more prepared you’ll be to meet and exceed the expectations of consumers and regulators alike.