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Can Data Privacy and Data-Driven Marketing Coexist?

Last updated: September 14, 2020

data driven marketing and data privacy

In 2018, GDPR marked a fundamental shift in how organizations were allowed to collect and leverage a consumer’s personal data. 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. Some businesses saw the writing on the wall and started overhauling their marketing strategy to match the regulations put forth in GDPR – including businesses that had little interest in European consumers. 

Businesses that did make these radical changes were rewarded. With time, it became clear that 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. At the same time, even private businesses like Apple are restricting data collection.

These changes are enough to make a modern marketer’s head spin. 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.

So, is the era of data-driven marketing over? We don’t think so. However, this will require marketers to completely rethink what “data-driven marketing” is. Let’s take a closer look at how this has affected marketers, and how their strategy can come out of this upheaval in a new and improved state.

Marketers Can't Ignore Data Quality Report

How Marketers are Responding to Data Privacy

In 2019, Forrester surveyed almost 2,000 global marketing decision makers and uncovered some interesting insights. 31 percent had changed their approach to identity resolution in the EU and employed less audience-based digital ad targeting. There’s no doubt that these changes took place because leveraging customer data became incredibly risky in light of GDPR.

With similar regulations in the pipeline, marketers around the world – including those who don’t conduct business in Europe – are turning to the past for answers and leveraging 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 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, it 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.

Thankfully, there are other ways to adapt to these privacy changes. The real answer lies in a flexible approach to marketing analytics.

Why Data-Driven Marketing Needs Flexibility

Between a pandemic, social upheaval, and new privacy regulations, it’s clear that we live in a constantly changing world. If you’re not experiencing disruption today, you should expect disruption tomorrow – and marketers need an adaptable approach to marketing analytics that can evolve to match these changes.

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. Everyone’s excited to be able to opt-out of data collection today, but will they keep that same excitement when they’re served the same, mind-numbingly redundant ad for the 10th time? 

Expect plenty of regulations to be implemented, then rolled back, then resubmitted with changes – this changing environment can either give you whiplash or give you new opportunities depending on how flexible your marketing analytics capabilities are. While organizations can’t afford to violate privacy regulations, they also can’t afford the cost of constantly swapping platforms to meet the changing legal environment surrounding advertising. They need an all-in-one solution. 

Marketers Can't Ignore Data Quality Report

Collecting Data to Form Impactful Campaigns 

While many marketers need flexible marketing analytics solutions, how you use data is only half of the data privacy controversy. Collecting data that respects a consumer’s privacy is a whole different beast.

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.

However, marketers might not be well-versed in where to find high-quality data, especially if they have relied on third-party data providers for the past decade or so. The answer to this lies in your content strategy – by trading information for content that is actually valuable to a customer, you can get reliable, relevant insights. For instance, 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.

To help them while collecting data, consider offering a quiz that will outline which specs the customer will want, 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 broader habits, which can help you recommend more products down the line. For example, someone who likes to play video games on their computer may be more likely to buy a headset or mechanical keyboard.

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. Just make sure that you’re providing a worthy incentive for customers, and they’ll willingly provide high-quality insights. Then, implement those insights into your advanced marketing analytics solution. With a platform like Marketing Evolution, you will be able to compare this new, high-quality data alongside your existing data, helping you get an up-to-date understanding of your customer’s motivations.

Final Thoughts

Privacy is a rising global controversy, and marketers will have to combine grit with creativity to overcome the obstacles in their path. The best way to ensure that your performance will stay strong is by adopting a privacy-positive approach to data collection and analytics before you’re legally required to do so. This won’t only be a selling point for privacy-conscious consumers, it will also help you work out any data privacy kinks before fines and restrictions could be levied against you.

To support proper data vetting and analysis, consider using a flexible marketing analytics solution that leverages 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 become irrelevant due to the uncertain state of our world.

In the end, marketers should use these solutions to test new theories about customers, and marketing leaders should give them permission to be wrong about their analysis as long as they’re right on target when it comes to privacy.

Marketers Can't Ignore Data Quality Report

Written by Marketing Evolution