Consumers are growing increasingly concerned about data privacy - and the future of marketing depends on the decisions that legislators and private businesses will make in order to assuage these concerns. 2020 was shaping up to be a landmark year for privacy regulations around the world – but after the COVID-19 pandemic, most legislation and enforcement were placed on the backburner. In 2021, marketers need to be ready to embrace a year of radical change.
Marketers need to ensure they are compliant with existing and upcoming legislation, and ensuring compliance means a fundamental reimagining of how they collect, store, and analyze customer data. Otherwise, their organization may be responsible for expensive fines, or they may damage customer trust irreparably.
Marketers are meant to be the guardians and custodians of a brand’s image, and violating privacy legislation or grossly misusing customer data will have consequences – in fact, a study has found that 8 out of 10 customers will abandon a brand that uses their personal data without their knowledge. Read on to make sure your brand and organization are primed and ready to confront the major data privacy trends of 2021.
1. Increasing Customer Concern
Consumers are becoming increasingly aware – and increasingly uncomfortable – about data collection in their day-to-day lives. A recent survey found 97 percent of consumers are somewhat or very concerned about protecting their personal data. The role of a marketer demands that they respond to customer needs, and when almost every consumer is concerned with privacy, it’s necessary to fundamentally change the world of marketing.
Continued Controversies Will Heighten Data Worries
The environment around data protection and privacy has been propelled forward primarily by data scandals that affected consumers. One such event was the infamous Cambridge Analytica incident, where millions of Facebook users had their personal data collected without their consent for political advertising.
Events like Cambridge Analytica gave the wider population an idea of how their data was being stored and used in ways that they may not approve of. However, this controversy was not the first, and won’t be the last – and each new controversy will cause consumers to make new revelations regarding how companies use their data. Data misuse or breaches seem to occur on a near-annual basis, and each instance further damages consumer trust. 2021 will continue to encourage businesses to re-evaluate how they access, collect, store, and leverage consumer data.
Choosing Privacy-Conscious Brands
Due to the growing prominence of data misuse, consumers are demanding that private businesses commit to protecting their privacy. This goes beyond a simple “we’ll let you know if we are collecting your data” or “we’ll do everything we can to protect against breaches.” Consumers want brands to protect them against the malicious practices of other companies too – and those brands are listening. For instance, the following companies have taken significant steps to limit access to consumer data:
- Microsoft is planning to honor the California Consumer Privacy Act (CCPA) in all areas of the United States.
- Apple recently changed how they allow marketers to engage with user data, no longer allowing insights by device.
- DuckDuckGo, a search engine that touts increased privacy for its users, has seen a 65 percent increase in traffic, with a large surge occurring near the year 2018.
- Firefox provides enhanced data privacy options that allow users to circumvent trackers
While there’s great value in privacy, there’s also value in protecting consumer data. Marketers should contemplate if there’s anything they should offer to assuage privacy concerns without compromising revenue. Additionally, they will need to adapt to changes that other privacy businesses put forth – for example, increased privacy options on all Apple smartphones could slash your ability to cater to certain markets. Marketers need to find the right balance between privacy and performance to succeed in the coming years.
… And They’ll Continue to Expect Personalization
While almost every consumer is demanding more privacy, an entire 63 percent of consumers believe personalization should be standard when they’re being served or sent promotional offers. This has left marketers wondering how to meet consumer demands without access to a wealth of consumer data.
2. New Policies
The data protection and privacy environment has shifted significantly in recent years. While some consumers and thought leaders have been discussing the importance of data privacy for a decade or longer, it wasn’t until 2016 that a set of data privacy regulations called GDPR were proposed in the European Union. While some countries had previously enacted privacy laws, this marked a fundamental shift in how organizations were allowed to collect and leverage a consumer’s personal data.
For years, GDPR dominated headlines as marketers wondered how such a radical concept would play out in practice – and pontificated about how it would affect their jobs and the internet at large. If they wanted to conduct business in the European Union, they had to follow a long list of regulations that were designed to protect the privacy of their citizens. This did have some positive effects – such as setting basic standards for online privacy – but it also led to an increase in the amount of unwanted advertising and poorly targeted messages, showing that many marketers were not prepared.
Now, other countries are drafting their own privacy legislation – and marketers need to watch closely. Before long, brands will have to contend with more than just Europe’s GDPR. Innovative brands and progressive advertisers must invest the time and energy to not only ensure compliance with current legislation, but become more transparent and accountable to prepare for future legislation.
LGPD
LGPD is a data privacy law that passed through the Nation Congress of Brazil, and took effect on August 15, 2020. It is designed to be similar to GDPR, in the sense that all business activities in Brazil must be mindful of nine new rights for data subjects. This includes the right to confirm the existence of their data, access their data, anonymize their data, have their data deleted, or even revoke consent regarding the use of their data.
Although the law has been passed, no punishments will be issued until August 2021, giving marketers a bit of time to find their footing.
California Privacy Rights Act of 2020
The California Privacy Rights Act of 2020, also known as CPRA, is a piece of legislation that is likely to pass and begin implementation throughout 2021. This bill clarifies and expands the mandates already set by the California Consumer Privacy Act of 2018 (CCPA), which went into effect on January 1st, 2020. It would give consumers in California the right to correct inaccurate information, the right to limit the use and disclosure of their information and would distinguish “sensitive” types of personally identifiable information.
This bill has the support of both politicians and consumers, and if passed, it would apply to any data collected on or after January 1, 2022, and become enforceable on July 1st, 2023. Businesses will need to iron out any noncompliant areas throughout 2021 to avoid racking up any penalties in 2023.
USA Federal Privacy Laws
While nothing is set in stone, US lawmakers have expressed interest in putting forth new regulations that focus on data transparency. On March 13th, 2020, the Consumer Data Privacy and Security Act of 2020 was introduced by a Kentucky senator. There was some initial interest over this bill, although it was quickly overshadowed by the COVID-19 pandemic.
Given the current landscape, it’s unlikely that this bill will be a top priority. However, throughout 2021, businesses need to be prepared for this bill – or a similar bill – to become headline news. A federal privacy law in the United States would shake the world of privacy just like GDPR.
3. Fines Will Be Imposed
Although very few businesses have been fined under GDPR at this point in time, marketers should not lull themselves into a sense of false security. Throughout 2020, data protection authorities in Europe rapidly ramped up enforcement – although they typically only delivered low-tier fines and demanded protective measures. Businesses shouldn’t expect this leniency to expand into 2021, as many EU Member States have increased their data protection budget, giving them more power to respond to complaints, investigate businesses, and offer fines.
Consequently, organizations will need to keep pace with not only GDPR, but any form of privacy legislation in order to preserve their business and avoid fines. A fine isn’t only a financial penalty, however – if consumers are aware your business violated privacy regulations can also severely damage consumer trust.
4. Marketers Will Change How They Use Data
Organizations are beginning to feel the impact of this legal and cultural shift toward data privacy, with 97 percent of organizations planning to increase their spend on protecting consumer data. For years, they’ve been told data-driven marketing and one-to-one personalization is the only way to go. Now they’re being told that if they use data incorrectly in a certain region, significant fines can be levied against their organization.
According to recent research by Gartner, almost one out of five marketers report privacy compliance as their main concern across marketing channels. It’s no wonder why – this 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.
To respond to these massive changes, marketers will need to move beyond privacy and embrace transparency and accountability – which will require an entire culture shift. Data privacy is about more than just responding to the latest piece of legislation. If brands really want to prosper, they need to move toward transparency, convince consumers to willingly give them information, and invest in new ways of thinking about personalization.
High Quality Data Will Be Essential
First and foremost, marketers should focus on the quality of their data. Under the current (and likely, the future) data privacy environment, more is not necessarily better. Instead of buying bulk amounts of third-party data and trimming the fat afterward, focus on primarily collecting first-party and zero-party data. If you need additional third- or second-party data to support your models, collect it through a verifiable, reliable, and reputable source. Then, only keep data that yields campaign outcomes that are in line with your expectation or exceed your expectations and destroy any data without a clear business purpose.
Only using high-quality, compliant data certainly has its benefits – but it also has a clear drawback. For some marketing analytics platforms, less data directly correlates to less valuable insights. Since not every personalized marketing solution will work properly with an inconsistent amount of data, marketers will need an analytics solution that is able to work with varying volumes of data and ensure it is relevant.
Get Consumers Hooked on Personalization and Data Sharing
The fact that your organization uses customer data to provide a better experience for shoppers isn’t a trade secret – it’s common practice that every business and almost every consumer is acutely aware of. Despite this, many businesses try to be secretive about collecting and using a customer’s information.
Customers like personalization. A recent report noted that 91 percent of consumers preferred brands that provided personalized messages, and the majority were willing to share their data in exchange for personalized experiences. And that’s exactly what marketers should latch onto – they should openly trade information for useful recommendations.
Imagine that you’re a technology retailer and a customer arrives on a landing page that shows off all of your computers. For the average consumer, purchasing the right computer for their needs can be overwhelming – they’re not sure if they want a tower or a laptop, a mac or a PC, a gaming computer or a general-purpose computer. This situation provides an opportunity to help the customer have a great experience while collecting high-quality data.
For instance, offer a quiz that finds which specs and traits a customer is looking for, and provide a few relevant recommendations at the end. This won’t just guide them towards a computer they’d like – it will give you insights regarding their broader habits, which can help you recommend more products down the line. Of course, quizzes are not your only option – there are a lot of creative ways to convince customers to opt-in to sharing data for a better shopping experience
Continue to Combat Fraud
When it comes to bad actors abusing personal data and consumer trust, marketers can’t simply look the other way – and they certainly cannot use that abuse to their advantage. When you see fraud in the marketplace, call it out. This could take the form of reputable brands leveraging unethical robocalls, or even a scandal that resembles Cambridge Analytica.
This will have two primary benefits: It will help foster a company culture where data is widely respected, and consumers will appreciate your brand taking a stand against something that affects them so personally. Just be sure to walk the walk – don’t denounce any activities if your brand recently participated in similar behavior.
5. Flexible Analysis Will Be Crucial to Understand Customers
When you look closely at how legislators and private businesses are enacting privacy standards, they’re often doing it with good intentions – but nobody has a crystal ball and can see how the dominoes will fall down. It’s inevitable that some of these changes will be a net negative for consumers. Marketers need to have a flexible analytics solution that can keep up with the ebb and flow of privacy concerns.
Although data privacy concerns are making it difficult for marketers to get a granular view of their data, it’s not impossible with the right attribution models and approach toward marketing analytics. Modern businesses need a marketing analytics solution that can use whatever data is available, so they won’t lose access to relevant insights, and their current marketing framework won’t fall apart.
Don’t Turn to the Past for Answers
With data privacy making personalization more difficult than ever, it can be tempting to go back to a time before the internet opened Pandora’s Box. But marketers can’t look back – they need to go forward and continue to provide the experiences their customers and stakeholders have grown to expect.
For example, don’t turn back to Media Mix Modeling - this method takes aggregate media exposure and lines it up with KPIs such as sales conversions and web visits to broadly determine how effective a certain media buy was. This seems like a good idea on paper since many senior marketers can remember using it with moderate success.
However, MMM falls a bit short since it’s agnostic of how consumers actually make decisions. Different audiences provide different amounts of value to marketers, and they also respond differently to various ad buys. With MMM, there’s no reliable way to tell if you’re reaching high-value customers or not – and this damages your bottom line and disenfranchises your most important customers.
Utilize a Flexible Solution
With consumers, businesses, and even nations scrutinizing existing privacy measures, marketers need an analytics solution that can keep pace with all the changes. Primarily, their solution needs to provide flexible audience analytics, flexible data models, and handle a varying volume of data.
Flexible audience building and identity resolution is an increasingly pressing issue, especially for businesses that operate in the European Union. In fact, in a Forrester survey of almost 2,000 global marketing decision makers, 31 percent had changed their approach to identity resolution in the EU and employed less audience-based digital ad targeting as a result. However, identity resolution is not impossible in the era of GDPR – it just requires a solution that can intelligently patch together various sources of consumer data to get a cohesive, omnichannel view of your customers.
Marketers also need a solution that doesn’t require a wealth of data to function but is also able to process large volumes of data whenever possible. The changing privacy environment is likely to fling marketing teams through a state of feast or famine – and having a solution that relies on small datasets is shortsighted while using a solution that only processes big data can result in some serious knowledge gaps. If a solution can work with a varying amount of data, it can prove its value in a tumultuous privacy environment.
With less data available, it’s harder for inflexible marketing models to determine how consumer preferences are changing over time. To address this, marketers need a marketing analytics solution that uses Bayesian learning and forgetting. This type of predictive data model will analyze the data alongside your existing data and reinforce relevant insights while reducing the influence of insights that have become irrelevant over time. This will help ensure marketers aren’t relying on outdated or unbalanced models.