Lightspeed Blog

Data-driven marketing and the privacy paradox

Posted by Terry Wiley on Apr 12, 2015

As our lives become ever more digital so too do the means of technologically amplifying our reach to consumers. Data driven marketing is now commonly accepted as standard practice for the industry. This is no surprise, as online intertwines itself with our physical world through the devices we have come to rely on.

Our phones not only show us how to get somewhere but track our location, our computers help us locate our next purchase but also record our internet searches. And with the introduction of time-savers like automated fridge re-stocks based on the appliance reading levels, it is no wonder that marketers, researchers and consumers are all excited by the prospect of convenience brought by technological advances.

With this comes great responsibility, ensuring protection and interaction are carefully balanced. Privacy has long, and rightly so, been discussed in online market research; from protecting PII to more recent developments in the serving of cookies. As the world becomes more digitally driven, the number of ways to collect data and the appetite of brand owners seeking and utilising data has exploded. Never has the need to understand and uphold privacy standards been more pertinent.

From a business perspective knowing what people are looking at, engaging with and creating can provide in depth insights into their potential buying behaviour and other consumer-driven decisions. But for the individual, how much is beneficial? And how much is dangerous?

Consumer concerns
According to Truste, 87% are hesitant about data being gathered and used for corporate purposes beyond their knowledge or permissions, in comparison to a recent Lightspeed GMI survey which found a lower concern at 68.5% panellists, perhaps as a reflection of a slightly more online segment.

There have been arguments that this is beginning to lower further due to the intimate relationship we have with our devices. However, our study showed that, in fact, 70% of respondents are very concerned about data privacy on their smartphones specifically, in comparison to 58% on PC and 55% on tablet.

With these concerns, they are also not afraid to act, with a 59% average deleting cookies, messages or browser history to control their security risk. Deloitte found that 70% of consumers would consider breaking off a relationship with a brand if that company failed to protect their data. Another 56% said that selling anonymised data - that is, information that has had personal identifiers removed - would result in similar decisions.

Company compliance
65% of global panellists believe current regulations are not good enough. Privacy reforms in light of data growth are a key area of business ethical and legal policy. In fact, this time last year saw the Privacy Amendment (Enhancing Privacy Protection) Act 2012 take effect. Why the reform? Because, as ADMA’s Jodie Sangster sums up, the world was a different place when the 2001 legislation was passed- there was no social media, online and mobile data. It needed to be reformed in order to reflect the current environment.

Transparency is key
Many of the concerns about data collection are related to a lack of understanding and knowledge of how their information will be used. "The lack of transparency as to what's being done post-data generation causes a lot of fear," said Kord Davis, author of Ethics of Big Data.

66% of our respondents would like to be more informed about how their personal data may be used. Common sense, for the most part, tells us that if we ask politely for something reasonable, with some rationale explained, our request will be granted. Ask respondents or customers for the information rather than just taking it.

More so, it is about using it in a way that makes the share of data useful to the consumer in their future actions and experience. That’s ok and the consumer will appreciate this as the transaction, which was seamless for them then benefits them. As Nick Bowditch brought to life at AIMIA’s Future of Digital Advertising, we appreciate walking into our local bar and the barman having our favourite drink already poured because he recalls what we like. But it would be weird if he had the same drink in our kitchen when we came home from work. There is a fine balance between being relevant and being creepy.

It impacts us all
ACCC Chairman Rod Sims recently stated “our action in this area serves a dual purpose. When advertising is untruthful consumers are misled, and honest traders are put at a competitive disadvantage.”

The consequences are grave, as Google found out the hard way. Privacy issues around many public places in the US ultimately led to the demise of the Google Glass project in January of this year.

Privacy will remain at the forefront of our activity, this is clear. There is a level of hand-holding needed, from data suppliers to brand owners, marketing insights teams to the consumer. As technology revolutionises the access to data, it will also revolutionise reforms and amendments to policies that protect all involved in this multi-way relationship. Connecting whilst protecting is imperative and it’s up to us all to get it right.

 

Topics: Data Driven Marketing

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