It’s Decision Time for Data Privacy (or Will Be Soon)

Chet Dalzell’s recent thoughtful piece on “Our Digital Selves” came along at the same time I (and probably a gazillion others) were pondering the increasingly pressing question of data privacy in the digital age.

Chet Dalzell’s recent thoughtful piece on “Our Digital Selves” came along at the same time I (and probably a gazillion others) were pondering the increasingly pressing question of data privacy in the digital age.

It’s a much bigger question than what data can be used to target potential customers for the latest widget or widget club or to stop you in your tracks at the supermarket in front of the pet food shelves to tell you that Fido, your beloved Fido, seen in the picture on your cell phone, absolutely must have the new, nutritious and tasty Dogbit,s or he may bite your fingers off if you try to give him anything else.

The data question goes to the heart of how we see ourselves in the digital world. And how we see ourselves is in no way clear — even to ourselves.

“Bottom line: If Facebook’s users in the United States are similar to most Americans (and studies suggest they are), large majorities don’t want personalized ads — and when they learn how companies find out information about them, even greater percentages don’t want them.”

That’s what Joseph Turow, a professor of communications and Chris Jay Hoofnagle, an adjunct professor of law, say in The New York Times using various research to support their thesis. The problem is what people tell researchers is not always what they do. Facebook’s quarterly earnings statement showed these enlightening KPIs.

  • Monthly active users (MAUs) — MAUs were 2.32 billion as of Dec. 31, 2018, an increase of 9%, year-over-year.
  • We estimate that around 2.7 billion people now use Facebook, Instagram, WhatsApp or Messenger (our “Family” of services) each month, and more than 2 billion people use at least one of our Family of services every day, on average.

It has been said over and over again that everything has its price. Assuming that this is largely true, how much value or benefit should the consumer expect in return for how much and which data? As I wrote in a comment to Chet’s article, this is sure to be the data-use question we’ll all be turning in our minds as the algorithms get smarter and the temptations greater.

Imagine that you could put a value on each element of your personal, demographic, psychographic and behavioral data, and anyone wanting to use that data would have to pay your price, whether or not you ended up making a purchase or taking a desired action? Imagine further that a data user wanted to use $20 worth of your data to try to sell you a product you wanted, priced at $100? It would be an easy transaction, if the seller were willing to offer you a 20% or even a greater discount for the specific permission to use the data. You would have the product, the seller would have the sale and everyone would be happy.

However fanciful that scenario, it is not nearly as crazy as it sounds. In fact, in one form or another, that is exactly what is happening in the real marketplace; although without your specific permission. As a marketer, I have to spend money to acquire your data and, by making an attractive offer (say a 20% discount), I am offering to compensate you for your data, which allows me to talk to you.

Of course, I have over-simplified the argument. As stated earlier: How much value or benefit should the consumer expect in return for how much and which data?

I think we would all agree that this determination is much too complicated, so we let the “invisible hand of the market” do its magic. Which reduces the decision to a very simple one: Do we perceive that we get enough value from having our data out there in the marketplace to be manipulated however the marketers wish to and simply lie back and enjoy all the offers and benefits? Or should we bite the bullet, give our cell phones to a needy child, do without Waze and get lost again and again, be prepared to stand in the endless line at the bank, throw the “delete everything” switch and effectively remove ourselves from the digital economy? It is getting near decision time for all of us.

I remember many years ago in London, as “one of those Americans,” being lectured over lunch by a very traditional British publisher about the horrors of books being sold by mail order and direct mail and assuring me that the British wouldn’t have anything to do with book clubs or the like. Just when the bill had been paid and we were preparing to depart, she reached into her handbag and pulled out an all singing and all dancing mailing piece from the Readers Digest, offering a very handsome discount on their superb motorist bible, the “Book of the Road.”

She was going to order it right away.

 

Gen Z College Students Weigh-in on Personal Data Collection — Privacy Advocates Should Worry

Some GenZers don’t mind giving up their personal data in exchange for the convenience of targeted ads and discounts; others are uneasy, but all are resigned to the inevitability of it. However, the language they use to describe their acquiescence to data collection should be troubling to privacy advocates.

Some GenZers don’t mind giving up their personal data in exchange for the convenience of targeted ads and discounts; others are uneasy, but all are resigned to the inevitability of it. However, the language they use to describe their acquiescence to data collection should be troubling to privacy advocates.

After reading “Sharing Data for Deals? More Like Watching It Go With a Sigh” (NYTimes 12/24/18), some students in the Consumer Analysis college course I teach expressed discomfort, even outrage at the extent of the data collected via their social media posts, geo-tracking on their mobile phones, shopper loyalty program and smart home devices. But they all accepted their conscious and unconscious data surrender as a fact of life.

The article reports on the study of 1,500 consumers by Professor Joseph Turow of the University of Pennsylvania who found that “people are uncomfortable with surveillance, but they don’t know what to do.” One student summed up our mass acquiescence, saying:

“I do not feel it is ethical for companies to distribute our activities to others. Despite my feelings on the situation, it will continue — so I must accept the reality of the situation,” said one.

Some don’t really mind having their personal data exploited for marketing purposes. While most of my students agreed that marketers gain the most from the exchange of data for convenience, one student embraced the inevitable data surrender as being more beneficial to consumers, because they can choose whether or not to act on the marketers’ targeted messages:

“… I feel as though consumers gain the most from this value exchange. Marketers can do pretty much whatever they want with the information that they collect, but they do not really ‘gain’ from this exchange, until people actually purchase their products, and a lot of effort is required to get them to do so. We are all educated consumers, so it is our responsibility to respond to these marketing attempts wisely. No one is forcing anyone to make a purchase they don’t want to, so even if this exchange allows marketers to play with people’s vulnerabilities, it is ultimately consumers’ choice on whether or not they want to buy something.”

The rationalization that the consumer is still in charge is a good argument for those opposed to limits on involuntary data collection. But more troubling is the belief that there is no potential for bad actors to exploit the personal data that’s collected. One student writes:

“Personally, I feel as if consumers benefit more from this exchange of data. Even though their information is constantly being monitored and collected, it is not being used to hurt them. Marketers are using the information to make people’s lives easier so that they spend more money on their products. There is no going backwards with technology, only forward. So, consumers need to be able to trust that marketers are using their information only to help them. While marketers are benefitting a lot from the money they are making, consumers lives are getting better and easier, day by day.”

Here’s another red flag for privacy advocates from a student who’s OK with smart devices collecting information from private conversations, but concerned only about how that information is stored:

“Articles from The New York Times, ‘Home Items are Getting Smarter and Creepier, Like It or Not’ (01/07/19), cited an example of these devices recording more information than we thought. The author stated that ‘background conversations may be stored with the voice recordings and resurface with hacking or as part of lawsuits or investigations,’ (The Associated Press). This finding shows that our speech is kept indefinitely, and the information is accessible upon force or request from a higher power. I believe that these smart devices should only keep the information that was processed through the user’s speech instead of the actual voice recording itself.”

But there’s hope for those who want more transparent privacy policies. Reacting to “How Smart TVs in Millions of Homes Track More Than What’s on Tonight” (NYTimes 07/05/18), one student wrote:

“Marketers are gaining money and information through various means and have the ability to do so without risk because consumers are not going to read 6,000-word privacy policies just to be able to work a television.”

Marketers Must Take Stock of Their Data-Driven Power Now

With the 2020 elections already underway, social media marketing is in the spotlight. Although I am not sure if the spotlight was ever really off of its data-driven science since the 2016 election. Although all of the major social networking platforms have been dragged in front of congress to discuss how they use data, it was the relationship between Facebook and Cambridge Analytica that drew the most media attention and become the poster child.

With the 2020 elections already underway, social media marketing is in the spotlight. Although I am not sure if the spotlight was ever really off of its data-driven science since the 2016 election.

Although all of the major social networking platforms have been dragged in front of congress to discuss how they use data, it was the relationship between Facebook and Cambridge Analytica that drew the most media attention and become the poster child.

What data-driven marketers need to recognize is that what happened with Facebook and Cambridge Analytica was not some off-the-books, sneaky misuse of social data. Rather, it was executed very much in line with the broader vision of social media marketing. That has implications for how we use social media as part of our digital marketing mix.

Why Data-Driven Marketers Must Take Stock Now

What makes social media a powerful platform for marketers is that it not only targets individuals based on demographics, but it could also targets based on their location, personality and current context.

Considering all of the conscious and unconscious information users can share on social platforms, there is a powerful amount of information algorithms can mine to generate marketing content and messages most likely to resonate with users. Not only can social media know where you are and what you like, but also your closest friends and your emotional state on any given day. It is even likely that social media algorithms have a better understanding of your underlying emotions and motivations than you do. To anyone who has spent time micro-targeting, this is not a surprise. Given enough data, a shockingly perceptive algorithm can be developed. This is why social media had mile-high stock valuations even when platforms were still hemorrhaging cash.

Let’s face it; marketing has always included an element of manipulation. The function of consumer insights and research is designed to provide marketers levers for manipulation. With some exceptions, we have been able to sleep at night knowing that the consumer stood a chance or that we were also offering a real benefit, so some manipulation was just part of it. When we started using rich data with algorithms to develop more targeted models, many of us saw this as the ultimate example of customer empathy. This was going to empower marketers to become highly relevant to their consumers.

Those who were not on board were behind the times. (To confess, I used to view most cautionary voices as laggards or technophobes. Some were, some weren’t, but they were also right to worry.)

Today, we need to take stock of how that empathy is used. With great empathy comes the power of even greater manipulation. Despite all of the data policies out there, we are not addressing the real question: How much manipulation is too much?

Is it fair to push an antacid ad at someone who posts about a visit to the county fair and winning the pie-eating contest? Seems “big brother-ish,” but benign?

How about pushing anti-anxiety medication ads to a college student going through a breakup during finals week?

While this sounds horrible, we technically can.

Don’t Do It Just Because You Can

How companies manage and leverage consumer data is becoming part of the company’s ethical standards, but we need to extend beyond data privacy to data use.

Just like use of child labor, environmental footprints and other ethical standards, standards on the use of consumer data will be a critical way that companies define their brands and the role they wish to play.

Thankful for Being ‘Reasonable’ With Data-Driven Marketing

Marketers were given an early Thanksgiving: a recognition by the Federal Trade Commission that “data” is indeed the fuel of the digital economy, and that most consumers are pragmatic toward how data, and data-driven marketing, finances the online content they rely upon and enjoy.

Marketers were given an early Thanksgiving: a recognition by the Federal Trade Commission that “data” is indeed the fuel of the digital economy, and that most consumers are pragmatic toward how data, and data-driven marketing, finances the online content they rely upon and enjoy.

Some might call such a view logical. Some factual. Some realistic. Let’s call it all of these and “reasonable,” as well.

On Nov. 9, the FTC, in comments to the U.S. Department of Commerce’s National Telecommunications and Information Administration regarding the Administration’s approach to consumer privacy said:

“The FTC supports a balanced approach to privacy that weighs the risks of data misuse with the benefits of data to innovation and competition. Striking this balance correctly is essential to protecting consumers and promoting competition and innovation, both within the U.S. and globally.”

The comments articulate how the FTC has pursued enforcement action in its existing privacy enforcement, a bright line of various consumer harms: financial injury, personal injury, reputational injury and unwanted intrusion, the latter incorporating the sanctity of their homes and intimate lives.

A Succinct Recognition of Responsible Data Usage

The comments call out the benefits of responsible data flows in our economy (note: footnotes are omitted in excerpts):

“In addition to considering the risks identified above, any approach to privacy must also consider how consumer data fuels innovation and competition. The digital economy has benefited consumers in many ways, saving individuals’ time and money, creating new opportunities, and conferring broad social and environmental benefits. For example, recent innovations have enabled:

  • Better predictions about and planning for severe weather events, including updated flood warnings, real-time evacuation routes, and improved emergency responses and measures, that can allow people to plan for and avoid dangerous conditions.
  • Improved consumer fraud detection in the financial and banking sector, as institutions can obtain insights into consumers’ purchasing and behavior patterns that will allow them to proactively identify and immediately stop fraudulent transactions when they are discovered.
  • Free or substantially discounted services, including free communications technologies (email, VoIP, etc.), inexpensive and widely available financial products, and low-cost entertainment.
  • Safer, more comfortable homes, as IoT [Internet of Things] devices detect flooding in basements, monitor energy use, identify maintenance issues, and remotely control devices, such as lights and ovens.
  • Better health and wellness, as a variety of diagnostics, screening apps and wearables enable richer health inputs, remote diagnosis by medical professionals, and virtual consultations.
  • More convenient shopping, as retail stores track both sales and inventory in real-time via shopping data to optimize product inventory in each store.
  • More relevant online experiences, as retailers provide customized offers and video services recommend new shows.
  • Easier-to-find parking, as cities deploy smart sensors to provide residents with real-time data about available parking spots.
  • Increased connectivity, as consumers can get immediate answers to questions by asking their digital voice assistants and can remotely operate devices, such as lights and door locks, with a voice command or single touch on a phone.

“Privacy standards that give short shrift to the benefits of data-driven practices may negatively affect innovation and competition. Moreover, regulation can unreasonably impede market entry or expansion by existing companies; the benefits of privacy regulation should be weighed against these potential costs to competition.”

While we may believe the FTC is stating the obvious here, such matter-of-factness about marketplace observations cannot be taken for granted. An entirely new Internet regulation and regimen emanating from Europe  with its own U.S. fan base among some academics and privacy fundamentalists would take direct aim at these social and economic outcomes through cumbersome, inflexible, rigid consent schemes. These must be resisted not because privacy protections are not worth pursuing (they are), and not because consent is important (it is) but because, as the FTC comments also show, effective privacy enforcement is already soundly in place in America. And where new regulations are enacted, they ought to be flexible, measured and a balanced approach. “Reasonable” is the concept in play here.

A Risk-Based Approach

Thankfully, “a risk-based approach is in the FTC’s institutional DNA,” the FTC reports. For example, in this important area of consumer control, the commission writes (again, footnotes omitted):

“The FTC has long encouraged a balanced approach to control. Giving consumers the ability to exercise meaningful control over the collection and use of data about them is beneficial in some cases. However, certain controls can be costly to implement and may have unintended consequences. For example, if consumers were opted out of online advertisements by default (with the choice of opting in), the likely result would include the loss of advertising-funded online content.”

This is a pivotal moment. In effect, this is a recognition of two decades of responsible data collection and use at work in the Internet economy, and perhaps another 100 years of similar data use in the offline economy. In both cases, advertisers and marketers have implemented effective self-regulation conduct codes (disclosure, my professional relationships supports such codes), that are backed by enforcement and accountability that can refer companies to government agencies. The FTC actually used the NTIA comments to call out enforcement cases where private firms purportedly failed to follow self-regulatory codes of conduct.

As we debate public policy for privacy and security in the next Congress, and state legislatures, too and among ourselves as citizens and industry participants it’s wise to understand and appreciate what responsible data collection and use has brought forth in our economy, and how reasonable, risk-based approaches to policy making can best serve us all.

While I say “thank you” to the FTC for recognizing this I’m also thankful for an industry of practitioners who recognize and understand how and why data stewardship matters.

Marketing and Beyond: The Evils of Inertia vs. a Bias to Act

Inertia is a terrible thing. In marketing and beyond, inertia breeds complacency. It defeats initiative. And often leaves us stuck in life and work situations that very much prevent progress.

“The chill of inertia, the failure to make an ongoing effort to progress, is the greatest barrier to success and happiness in life.” Yogananda

Inertia is a terrible thing.

In marketing and beyond, inertia breeds complacency. It defeats initiative. And often leaves us stuck in life and work situations that very much prevent progress.

In our free democracy, where we have full opportunity to act with will as citizens, as voters, as employees (and employers), as consumers, as individuals too often we find ourselves victims of inertia; often ,in the form of our own indifference, or bias to do nothing.

This summer I’ve seen three instances of inertia local, national and global, each with their own potential for terrible outcomes. All are preventable.

Inertia Hurts My Savings

For three of the past four years, my cooperative has sought to introduce a transfer fee where the seller of an apartment pays a fee to the cooperative as a sort of “kiss” goodbye. The funds generated from the sale are dedicated to a reserve where such proceeds can finance many predictable capital projects over time. Building such a reserve lessens the need for high maintenance increases and/or a series of one-off assessments to fund necessary capital projects. In a buoyant New York real estate market, the fee often can be recouped in the sale price. Having such a reserve in good standing also keeps our building attractive to buyers. These are all wonderful benefits of having a transfer fee in place and why it’s part of a fee structure in many New York co-ops.

Yet getting the necessary two-thirds of our shareholders to pass such a common-sense measure had been trying. Despite pleas and prods from the board, we could never muster enough votes at our annual meeting. It wasn’t that shareholders en masse opposed the proposal a far majority of those who voted did favor it it’s just that we couldn’t get enough favorable ballots to meet the mandatory two-thirds threshold of our governing rules. So this year, we took a “vote over time” approach, where we used the summer months to garner the two-thirds majority. It took one tremendous effort interacting as we could with each shareholder by phone, email and visits and we achieved our goal.

Still, nearly a third of shareholders did nothing, said nothing, and paid no attention … inertia. Even when confronted with a worse outcome, they failed to take notice and act. Thankfully, in this situation, enough neighbors picked up the slack. A potential financial emergency has been averted.

Inertia Hurts Democracy

It’s the day after Labor Day and now we start our march to vital mid-term elections. Left or right or in the middle, the decisions of our elected officials matter during the next two (Representatives), four (Governors) and six (Senators) years. Guess which age cohort of voter could hardly be bothered?

A new survey from NBC/GenForward reveals insights on inertia and ambivalence on a growing and key voter bloc Millennials and there’s a potential high price to pay through inertia.

Yes, that’s 43 percent who are uncertain or will probably not or definitely not vote. I understand why many younger individuals may have less faith in our political institutions than prior generations, but we get exactly what we deserve when we don’t show up to vote. Staying home cedes control to someone else. Is this purposefully not voting to stoke some imagined revolution or is this ambivalence? The effect, in any measure, is inertia and the status quo is hard to change when we keep sending the same people back to high office. Voting is the means to change, if you show up to vote.

We healthfully debate guns, police brutality, immigration, healthcare access and affordability, gender equality, climate change, conflicts of interest and Russian meddling. This voter bloc diverse as it is is the very generation who is empowered to make a difference! Folks, we just need to vote for the change and culture we believe in! There’s a lot more behind these survey results, I fear, that I have room to expand upon in this blog. Suffice it to say inertia, again, hurts all our interests.

Inertia Hurts Advertising

And now to a marketing issue wholly predictable and preventable. Europe has instituted a data freeze called the General Data Protection Regulation. I doubt it’s helpful to the average European and I know it is harmful to American interests. It actually institutes inertia as public policy.

Whole categories of beneficial information use in marketing the use of web-viewing and app-usage data for more relevant messaging, for example have been prohibited subject to opt-in permissions. Let’s revisit my co-op example: how many people opt-in to “anything” when it’s wholly desirable and beneficial for them to do so? Very few. Add a little doubt and fear political scandal, hypothetical evils not based in reality and the opt-ins are even harder to come by.

With a stroke of well-intended but ill-informed law, European Parliament slammed publishers, advertisers and consumers alike all in the name of privacy and they are proud of this accomplishment! Time will tell the true toll. But already, Europeans have less information, less choice, less competition, less revenue and more generic advertising all in the name of chasing ad tech profits as a privacy surrogate. These negative effects may not be immediately apparent to the consumer how do you count a beneficial offer not received? The familiar retort behind this law is “privacy is a fundamental human right.” Well, we can see how well that’s going again, all very predictable and preventable.

Let me be clear: I believe in privacy rights, too most certainly. [Disclosure, I work with a digital advertising privacy program for U.S. consumers, the YourAdChoices program.] But let’s make sure that mere annoyances a pop-up ad, for example don’t get conflated with government surveillance of citizens, or personal information misuse by the private sector where consumer harm is likely where privacy concerns as a society are truly legitimate. There are annoyances, which can be managed by ethics and best practices, and there are scenarios where privacy indeed is at risk. One needs to grade privacy protections accordingly. I’ve long argued U.S.’s current and extensive privacy regimen a thoughtful sectoral approach dutifully enforced, complemented by ethics, self-regulation and business contracts is far superior to Europe’s one-size-fits-all prescriptive approach. In short, Europe has mandated that inertia freeze (or even undo) responsible data use. Thus, in this zeal for consent, the tremendous flow of benefits accrued through responsible data deployment largely ceases.

In short, I’m hopeful, stateside, that we shun this European import. Transparency, choice, security and sensitive data we have effective, existing means in the United States to deliver toward these laudable aims. We have other ways to assert such privacy protections, yet we still allow beneficial information flows and innovation to continue.

So, will this be a summer and fall where we let inertia win? Or will we have a bias to act, to keep all-too-predictable sorry outcomes from happening?

GDPR Leads Brands to Better CX

A year ago, most companies had no clue where all of their customer data resided, let alone whether or not it was secure. With the implementation of GDPR, and California’s digital privacy law scheduled to take effect in January 2020, companies have started taking their customer and prospect data, and its security, much more seriously.

A year ago, most companies had no clue where all of their customer data resided, let alone whether or not it was secure. With the implementation of GDPR, and California’s digital privacy law scheduled to take effect in January 2020, companies have started taking their customer and prospect data, and its security, much more seriously.

Most organizations keep their customer data in a customer relationship management (CRM) database. However, prior to GDPR, the information was incomplete, the accuracy of the data was not taken seriously, and the data was not secure due to a lack of business process management and master data management policies.

Based on the interviews I have conducted with IT executives involved in databases, big data, AI/ML and security, there has been a significant change in the past year; whereby, companies are now implementing and enforcing data management best practices and creating data Centers of Excellence. Employees are learning the importance of data and its security.

Given that a well-maintained CRM is necessary to deliver a great customer experience (CX), we can expect to see companies begin taking CX seriously, because they are getting their data in order and their competitors will begin using that data to deliver improved CX. We’re now in a race to see who can use data first and best to improve the CX.

Updated privacy policies and security protocols will increase the opportunity to deliver personalized and relevant information of value. In addition to getting consumers’ explicit permission to communicate with their customers and prospects, organizations will want to enact progressive profiling; whereby, they learn more about each customer or prospect every time they interact with your website or organization. The more you know about a customer, the more relevant you should be able to be to them by providing information of value while anticipating needs and wants.

Organizations need to learn what customers and prospects need and want to make their lives easier. This is key to building a disruptive business and earning a customer for life. Lyft has done this for me. Every time I need to travel to or from an airport, I no longer need taxis, rental cars or parking at the airport. Lyft has made my life traveling much simpler and easier. Lyft has earned a customer for life — or at least until its business model is disrupted.

A good CRM with proper data management processes is beneficial to organizations on several fronts:

1. The CRM serves as the repository for all customer data and enables customer-facing employees to have a 360-degree view of the customer so they understand the customer’s relationship with the company — interactions, products/services bought, considered, feedback. All customer-facing employees are able to see the actions that have taken place and know what actions need to take place in the future based on sales and CX processes.
2. Organizations are able to provide more relevant help and information; thereby, making customers’ lives simpler and easier. Some organizations, e.g. financial institutions, are already using predictive analytics to recommend the “next best action” for the customer to the employee.
3. The CRM can be integrated with calendars and marketing automation software for appropriate follow-up before and after a sale, for nurturing marketing qualified leads (MQLs) to sales qualified leads (SQLs) or to market to “lookalike” prospects.
4. The CRM provides real-time metrics enabling team members to see where prospects and customers are in the sales, post-sales, follow-up or problem/resolution cycle.
5. A sound CRM enables the organization to scale in a thoughtful way with proper data management, security and updates. Leveraging even more data to improve the CX.

How has GDPR affected your organization and its data management practices?

How a CDP Can Be Used to Build Consumer Trust & Comply With GDPR

How a CDP can be used to ensure accurate first-party data and consistent brand messaging – which help build consumer trust – while also maintaining compliance with consumer data protections such as GDPR.

For anyone who has ventured into the “Quotes” section of Pinterest, you’ve seen thousands of quippy memes dealing with loss of trust. The gist is once trust is lost, it’s hard to regain. Although mostly focused on romantic relationships, the same can be said for relationships with brands and business.

Consumer trust in businesses is low and dropping. According to the industry standard measure of consumer trust, the Edelman Trust Barometer, overall consumer trust dropped 10 full percentage points during 2017 from 58% to 48%. Coincidentally 2017 was a record high point for US data breaches (1,579 data breaches in all), as well as ushering in the birth of the Cambridge Analytica/Facebook debacle.

In this series on specific customer data platform (CDP) use cases, you’ll see the core competencies of CDP’s go a long way toward maintaining consumer trust. In this post we’ll look at how a CDP can be used to ensure accurate first-party data and consistent brand messaging – which help build consumer trust – while also maintaining compliance with consumer data protections such as GDPR.

Managing First-Party Data

All communication from a brand/business to its customers and prospects is an expression of its brand. Many brands and businesses have relied heavily on third-party sources to provide targeting options for reaching prospects and customers.

Understanding the flaws in this method is as simple as creating an account at https://aboutthedata.com. Sponsored by Axciom, the leading aggregator of third-party targeting data, this portal will allow you to access your digital profile. Each of the characteristics in this profile identifies how you are being targeted. Now think about brands and marketers crafting messages directed to YOU based on this data. A mismatch between messaging and targeting will chip away at authenticity and brand trust.

First-party data collection and activation are the reasons the CDP exists. By ingesting, organizing, reconciling, segmenting, and activating first-party data across all customer data siloes, the CDP creates the opportunity to communicate around specific data gained from the direct, first-party relationship between brand and consumer. Imagine the following:

  • Adjusting the content of your website based on the user’s past content tastes and interests. Right message.
  • Determining the appropriate channel for your message based on the behavior of an individual target. Right channel.
  • Choosing the appropriate timing of your message based on the intensity of your customers behavior. Right time.

GDPR and Data Management

Aside from creating more consistent and authentic conversations between customers and brands, a CDP also creates a potentially smoother path to compliance with recent privacy policy legislation including GDPR and the California Privacy Act. Key to compliance are two factors, both of which should be core capabilities of any CDP system.

  1. Choice: A core capability of CDP technology is the identification and reconciliation of known and unknown users. As unknown users are accessing your site, the ability to offer them the appropriate experience (cookies for tracking or not) can be offered or directed and the preference maintained. More and more tools in the marketing technology stack are offering this capability, but maintaining these preferences in one environment that is used for all customer data collection and interaction makes the most sense.
  2. Transparency: The portability aspects of the GDPR and California Privacy Act specifically relate to delivering a comprehensive profile of all data points and their use for an individual. Whenever asked, an organization must be able to produce a succinct and complete picture of the user’s data and how it might be used within the organization. There is really no better place to create and extract that comprehensive picture than the CDP.

Being a steward of your customer data is not just a nice thing to do but an absolute requirement in an age where consumer trust is rapidly eroding and regulations on data protection are mounting. Adopting a philosophy and discipline in growing and activating first-party data from customers and prospects pays off by creating more authentic relationships grounded in trust. Statistically speaking, a highly-personalized relationship steeped in authenticity converts and performs optimally every day of the week. To cite one of those Pinterest quotes, “To be trusted is a greater compliment than being loved.” For marketers, trust is the pathway to business success.

Why GDPR Matters More Than You Think

The GDPR grants European Union (EU) citizens power over their personal information, giving them a literal off-switch for how their personal data is used. While this gives more control to consumers, it creates more work for marketers and potentially more litigation. This matters more than you think.

GDPR is here, and yet the world still spins. For some all is well, for others all is not well. Nonetheless, let me take this opportunity to share with you a story.

Fresh out of graduate school I was on a mission to prove myself capable in the business world. I took a position as number two at a privately held accounting firm. This was the halcyon days of Sarbanes–Oxley. Google was not yet the dominant species and your personal information was as likely to be in a file cabinet as it would be on a server. Back then, protecting customers’ digital information was a certain form of alchemy. An alchemy I was able to practice during my first tax season.

For the uninitiated, tax season is a non-stop cavalcade of social security numbers, W2s, receipts, and bank routing numbers. We were a midsize firm, hosting our own servers, with twenty thousand or so clients. We looked like a tasty (and easy to acquire) target for the nefarious sort. In the middle of my first tax season, we became a target.

Our founder came crashing into my office, and of course, I was with a client. He yelled in a panic, “We’re being hacked! What do we do?” As I calmed our client’s nerves, assuring them their information was safe; I walked into our server room, and turned off the power. I then calmly turned to our founder and said, “Now they are not hacking us anymore.”

We had an off-switch.

A way to protect our data by simply removing our system from the source of the problem: connectivity. In a lot of ways, that is the spirit behind the European Union’s (EU) new data privacy law, the General Data Protection Regulation (GDPR). The GDPR grants EU citizens explicit power over their information and the right to decide what companies keep, how it is used, and whom it can be shared with. It also grants the right for EU citizens to take their information back (and in essence removed from a company’s servers). For a fantastic primer on GDPR compliance for marketers, check out Heather Fletcher’s guide.

It is an off-switch for the storing and use of personal information.

More Control for Consumers

The GDPR is not just about protecting privacy. It is about shifting control of personal information into the hands of consumers and away from businesses. A strangely anti-libertarian move that introduces conflict between data retention laws in regulated industries (such as banking and securities in the U.S.) and the individual rights it grants to consumers (something the inevitable case law to sort out). The intent is clear; consumers should have control over their personal data, not corporations.

While the implications for marketing are not yet be fully known, the GDPR requires (massive) changes to systems. Especially niche ones that specialize in consumer data and analytics. Entire industries may vanish and new ones are already emerging. The impact of the requirements, and how they are enforced, effects marketing technology as it is now, and how it is developed. Not to mention the impact on the development of AI, machine learning, and other emerging marketing technologies.

This is not conjecture, the GDPR text specifically calls this tension out. In the provision on Legitimate Interest one section reads, “Abiding by all this likely drastically reduces the amount of personal data a controller or processor is able to freely process both due to subjects not opting in and the loss of prior collected data.” The framers of the GDPR expect a sizeable decrease in the personal information that can be used in marketing. Opening the door for a new set of regulations FinServ marketers need to manage.

More Regulations for Marketers

Ahh yes, the fiery ritual of regulatory compliance. The ebb and flow of pushing boundaries and finding leverage points in regulations. Teetering on that fine edge marks the life of a marketer in the FinServ industry.

Raise your hand if you have had an excellent marketing piece rejected because it did not pass regulatory muster.

While the job for marketers is to find creative and engaging ways to generate interest in products and services, for many in the FinServ industry, it is their compliance officers job to make sure it is within the legal boundaries of what is acceptable. GDPR may make the relationship between marketing and compliance more crucial.

Up until now, all FinServ marketers had to worry about was regulators liking what we say about our products and services. With the introduction of stricter consent rules, comes the introduction of more regulations.

Organizations impacted by the GDPR, will now have to demonstrate compliance in new areas, including audit trails for how data is acquired and consent was earned. The costs associated with this are enormous. As much of the data that is collected and processed, exist on disparate systems. For some companies, it may be cheaper to pay the fines, then to do the work to come into compliance.

More Gray Areas for Litigators to Sort Out

I take a great amount of joy in using data to solve organizational problems, especially in marketing. There is something about eradicating opinions with a well-executed A/B test. Better yet, using historical customer behavioral trends to build predictive models and forecasting tools. For those who do business in the EU, however, those scenarios are now a bit more difficult.

While gray areas are found in most of the GDPR, a couple of provisions introduce gray areas for common marketing practices. The two provisions that may yet reek havoc on marketing are the profiling and processing provisions.

GDPR compliance requires that individuals be able to opt out of being subject to automatic decision making, which already includes the use of cookies on websites, but can also mean personalized marketing. Further, individuals must also give consent to their information being processed, whatever that means.

While it is uncertain how the inevitable lawsuits and regulatory challenges will shape these areas, what is clear is that the GDPR was designed to force change. This means that EU citizens can say no to being part of marketing automation, and no to their information being augmented by third party services. Both common practices in digital marketing.

You need not be clairvoyant to see the litany of litigation that will challenge these provisions. Especially when business start shutting down or are fined for doing legitimate activities with consumer data. At the very least, many of us will need to start keeping an audit trail of where, how, and why we obtained information about our customers. Just in case.

A New World of Marketing Possibilities

To my boss at the accounting firm, my solution to our hacking problem was unorthodox and revolutionary. It was something that he would never have thought of. A course of action that was as creative as it was pragmatic.

It was literally an off-switch that changed the way we dealt with hackers.

And what do marketers do best? We take constraints and limitations and exploit them, find the leverage points and go. While the GDPR introduces new limitations, it also opens up a whole new world of marketing possibilities we do not know yet. There GDPR is here and make no mistake, while the US may not adopt all of what the GDPR is, similar controls will make their way across the pond.

Consumers will be given an off-switch for their data and that changes the game.

So Why Does GDPR Matter More Than You Think?

Whoever figures out the leverage points within the GDPR and how to use them as an advantage in marketing gets to define how our game will be played.

The Day Marketers Became ‘Big Brother’

Data collection is transactional. Before Google and social media, transactions were, for the most part, financial. But now they’re personal. Every friend, family member, like, love, click, view, search, post, follow, preference, location and comment is a piece of transactional data that can be exploited not only for commercial purposes, but for political purposes, as well.

Every breath you take; Every move you make; Every bond you break; Every step you take,

I’ll be watching you

Every single day; Every word you say; Every game you play; Every night you stay,

I’ll be watching you

It’s a bit ironic, and somewhat prescient, that a band named The Police sang those lyrics in the year before 1984. We’ve finally found the Holy Grail of one-to-one marketing … but do we like it?

Back in the ’90s, I was working with a client using credit bureau customer data to build models of people who were likely to be interested in home equity loans. Some people would chide me about invading people’s privacy for commercial purposes, but I would always respond:

“We’re not interested in the personal information points about John Q. Public; we’re only interested in the fact that he belongs to a segment of people who meet a specific set of financial criteria. We market to that entire segment of people without paying attention to any one of single individual’s personal, customer data points. I don’t care about your specific home value or mortgage balance; I only care that you belong to that group of people who would qualify for a home equity loan.”

But now I’m creeped out.

Customer Data Is Integral to the Credit Economy

Customer data collection is transactional. Before Google and social media, transactions were, for the most part, financial. But now they’re personal. Every friend, family member, like, love, click, view, search, post, follow, preference, location and comment is a piece of transactional data that can be exploited not only for commercial purposes, but for political purposes, as well.

And we give it up so willingly!

In order to participate in the credit economy, we tacitly agreed to have our financial transaction data stored and monitored. (Let’s not get into how that worked out recently, but the value exchange seemed reasonable). Now, we willingly give up reams of personal transaction data, and the value exchange is quite different. We get to access pictures of friends with their food, children and pets, we get accurate turn-by-turn directions to wherever we’re going, and we get that leather messenger bag we looked at online to follow us around the Internet for weeks on end.

Can marketers still make the argument, “we’re not interested in the personal information points about John Q. Public; we’re only interested in the fact that he belongs to a segment of people who meet a specific set of criteria”? Even if now, that segment is a segment of one?

And the customer data collectors? Like The Police, they say, I’ll be watching you.

What do you think? Comments welcome.