Marketers’ Balancing Act Between Value And Privacy
How can we collect valuable data while respecting consumer privacy? Columnist Josh Manion explores the issue.
The White House Summit on Cybersecurity and Consumer Protection kicked off this past February with a research symposium hosted by Stanford University exploring questions about our cybersecurity future.
The issue of privacy for the individual internet user was paramount in these discussions, spanning as it does business, education and almost every sphere of daily life.
Panelist John Mitchell, Stanford professor of computer science and Vice Provost for Teaching and Learning, put his finger on a core issue when he talked about challenges the university faces as it expands educational opportunities with online learning via free public courses, which generate data that can be collected on individual learning patterns.
“It’s a balancing act,” says Mitchell, between using data and protecting the individual’s privacy.
Finding that balance is the subject of considerable debate among government policy makers, courts and leaders around the world. The Obama administration, for example, recently unveiled the Student Digital Privacy Act, a proposal that would restrict use of student data for educational purposes only.
Meanwhile, data breaches cast a harsh light on the scale of security threats and the exposure of highly personal information. Just last month, Anthem, the second-largest insurer in the U.S., reported its customer database had been breached, potentially exposing as many as 80 million patient records.
The Implications For Marketers
All this brings me to how marketers are using consumer data extensively to track buyers across digital platforms, channels and devices, and even combining it with offline information for contextual insights. The objective: increase relevance based on what the marketer learns about the consumer’s buying patterns.
Consumers are aware their privacy can be compromised in a variety of ways through security breaches and aggressive use of marketing data. Yet at the same time, they appear to be forgiving if there is a balance − value delivered for privacy diminished.
A study last year by Accenture captured the dichotomy perfectly. Eighty percent of the 2,012 consumers surveyed from the U.S. and the U.K. in this 20-40 age group believe privacy is a thing of the past. Even more — 87 percent — say that safeguards are insufficient to protect personal information.
Yet, about half (49 percent) say they wouldn’t object to companies tracking their buying behaviors if it resulted in more relevant offers. And just as significantly, Accenture reports that 64 percent of these consumers would welcome text messages while in a store, with on-the-spot offers in line with buying preferences.
What does the Accenture survey tell us? Consumers are cautious — in effect, striking an unstated bargain with brands. They are concerned about privacy, yet many consumers seem to be saying, “Yes, you can track my buying preferences. You can interact with me in real time. But you must deliver value in return.”
The clear “ask” is a value exchange between targeted advertising, promotions and free online content, as well as clear communication of the process and parameters of data use.
The issue of consumer privacy is set to ramp up dramatically as the internet becomes so pervasive and so much a part of our lives that it becomes part of the background. As Google’s Eric Schmidt said at the World Economic Forum in Davos, Switzerland:
[blockquote]There will be so many IP addresses … so many devices, sensors, things that you are wearing, things that you are interacting with, that you won’t even sense [the internet]. It will be part of your presence all the time.[/blockquote]
So, as an industry concerned with developing new processes and technologies to manage data in support of marketing effectiveness, how can we tread this ever-so-thin line between value and privacy?
Make Data Use Transparent
Our industry has just one fundamental option: the use of consumer data must become transparent. A new generation of tech-savvy consumer appears to be willing to sacrifice some privacy as a trade-off to the benefits of digital technology and personalized marketing, but under their own preferences and conditions.
Consumers need to be informed about data use, and this can be done in a variety of ways. Think about using dialogue boxes to advise visitors and provide full transparency over data collection by all 3rd, 4th and even 5th party tags.
Own & Control Your Data
Brands often are not aware that third parties are tagging their sites. Clearly, you need to gain full control and visibility over third-party tags. And you need to continuously monitor them to identify unusual behavior and non-compliance.
Brands, however, can additionally protect themselves by restricting sale of their data to third parties. Use a marketing optimization solution, for example, that doesn’t require third-party data sales to activate it.
Use Tech That Is Privacy Conscious By Default
It’s critical that marketers use technology that supports all ePrivacy regulations to stay on the right side of law. Our technology must respond to regulations in different jurisdictions, as well as to consumer privacy preferences. This, in turn, will protect brands as privacy concerns are clarified and new rules are developed. What’s clear is that this is a changing landscape.
In the U.S., for example, there is no single regulator for data protection. Rules and regulations are generally enforced by the industry or sector. However, consider that the U.S. Congress is likely to look at legislation this year to enable sharing of internet traffic data between the U.S. government and technology and manufacturing companies (e.g., the proposed Cyber Intelligence Sharing and Protection Act).
And in Europe, there’s continuing concern among marketers about potential changes in the EU Privacy Directive.
Personalize Privacy 1:1
Parisa Tabriz, head of Google Chrome’s security team and a White House symposium panelist, captured the human side of privacy in her remarks. “I want to emphasize the human component to this problem,” says Tabriz. “Privacy is so personal and so specific to culture and your specific situation.”
That means our approach to privacy needs to evolve in the same way as marketing personalization. Privacy needs to become a 1:1 capability. It is fundamentally a 1:1 challenge.
Let me leave you with a final business question. What happens when you view privacy not as a painful compliance add-on, but a matter of enterprise strategy based on who your customers are and how you engage with them?
We need to change our focus on privacy as country- or channel-based, and instead make it an enterprise strategy implemented at the level of individual users. That way, the consumer directs the brand, “Here’s when and how you can use my data. And here’s what I want in exchange.” That’s how we gain, and regain, the trust of consumers!