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.

The Sustainability of Data and the Skeptical Consumer

As long as I’ve been in this business, privacy has been an industry priority for marketers. Just as it should be. When our entire professional lives depend on continued commercial access and application of data, the sustainability of such data depends on trust.

Database & CRMAs long as I’ve been in this business, privacy has been an industry priority for marketers.

Just as it should be.

When our entire professional lives depend on continued commercial access and application of data, then consumer acceptance must be a first-and-foremost focus.

First-party, second-party, third-party — the sustainability of data depends on trust.

But permission is not the only arbiter of consumer acceptance. Relevance matters, too. What do we do with such data — and do we do it effectively? Can we demonstrate wise, responsible use of consumer information to improve the customer experience?

Yes we can, and yes we must.

It’s been a busy two weeks for data “love.”

First we had the Direct Marketing Club of New York presentation (downloadable at link) last month pointing to the heady growth in direct/digital data-driven marketing. While U.S. general ad spending is projected to grow just 1 percent this year – almost shockingly small in a Presidential Election and Olympic year — “direct and digital” are projected to grow 6.4 percent, and digital spend alone by 15.3 percent.

Then this past week, the Direct Marketing Association’s Data-Driven Marketing Institute released its “Value of Data / 2015” study — with an even more remarkable finding: The U.S. Data-Driven Marketing Economy is now $202 billion in net economic contribution and more than 50 percent of this ecosystem “depends directly on individual-level third-party data. Thus the value to the U.S. economy is greater than $102 billion.”

That’s us folks.

Now to consumer skepticism.

TRUSTe has released its “State of Online Privacy 2016” research findings. They include sobering findings:

Today, 56 percent of Americans trust businesses with their personal information online. “Consumers demand transparency in exchange for trust and want to be able to control how data is collected, used and shared with simpler tools to help them manage their privacy online,” the report stated. In addition, 37 percent think losing online privacy is a part of being more connected. Nearly three out of four Americans have limited their online activity last year due to privacy concerns.

A new study by Verint Systems may point to a paradox: 48 percent say they are suspicious about how data about themselves is used — but 89 percent believe good customer service makes them feel positive about the brand. When data is deployed, truly, to improve the customer experience — then the data-driven marketer has done her job.

In both these surveys, the data-for-value exchange is a baseline proposition.

On a macroeconomic scale, consumers and the economy obviously benefit from our increasingly data-driven world. At the customer level, many consumers aren’t so sure. We need to do the best job we can communicating transparency and control to consumers, treating them with respect, and using data to improve customer experiences.

Now, who will be my data Valentine?

Will There Be a ‘Snowden Effect’ on Marketing Data?

I didn’t even want to write this headline or blog post, given the fault-filled linkages some people make between marketing and something completely different from marketing. But it never seems to fail: Whenever some big news event captures the media’s attention, politicians’ attention surely follows. And when it has to do with consumer privacy, the results for the private sector—and use of marketing information in particular—are rarely favorable

I didn’t even want to write this headline or blog post, given the fault-filled linkages some people make between marketing and something completely different from marketing.

But it never seems to fail: Whenever some big news event captures the media’s attention, politicians’ attention surely follows. And when it has to do with consumer privacy, the results for the private sector—and use of marketing information in particular—are rarely favorable. This is true even when the responsible use of marketing data has NOTHING to do with the scenarios presented in the news.

U.S. legislative history is strewn with such evidence, linking (erroneously) marketing with some sensational occurrence other than marketing. Here are just three of them:

  • An actress is murdered in Los Angeles (1989). It turns out the murderer hired a private investigator to get her address from the state motor vehicle department, and then stalked and killed her. A bevy of state and federal anti-stalking laws are passed—but Congress passes an additional one, the Driver’s Privacy Protection Act (1994). Would you believe, state motor vehicle registration and license data is curtailed for marketing purposes (data that had been worth millions to the states, never mind losing the beneficial impact to automotive and insurance marketers and consumers), even though such data had nothing to do with the crime?
  • A child is kidnapped and killed, again in California (1993). A grieving father goes on a publicity rampage against presence of children in marketing databases—even though the horrible crime had nothing to with marketing, and even with state law enforcement officials testifying in public hearings following the crime that perpetrators of crimes against children most often stalk their victims physically (from an era prior to social media). Nonetheless, California and national media go after compilers of marketing data related to children. The stage is set later that decade for new privacy restrictions for children’s marketing data online.
  • Judge Robert Bork is nominated by President Reagan for the U.S. Supreme Court (1987). An enterprising reporter manages to publish a list of video titles rented by the nominee (all of them benign, by the way). A concerned Congress—no doubt thinking of its members’ own video rental history—passes the Video Privacy Protection Act (1988), shutting down marketing access to video titles from customer rentals/purchases.

And this summer, we have the National Security Administration revelations from Edward Snowden regarding public surveillance of U.S. citizens in the name of anti-terrorism. Now, we can only guess on what potential debilitating effects may be ahead for marketers, but you can bet some politicians or regulators are drumming beats for a response.

Privacy law in America should be about protecting individual liberty from abuse of information by the public sector—and leave the private sector alone, except in cases where there are demonstrable or probable harms from data misuse or errors. Such is the case with personal financial, credit and health data, for example, where the U.S. government wisely has taken a sector, pragmatic approach.

But Snowden’s government surveillance revelations could very well have a “chilling” effect on more broad marketing data collection and use, too. Politicians, in the name of protecting consumer privacy, may very well rush to curb data-driven marketing activity, rather than tackling the much-harder and real culprit, that is, spying on innocent Americans (and government acquiescence of such activity).

Concurrent to the NSA revelations, the Federal Trade Commission increasingly is vocal on “data brokers” and marketing activity—and trying to link data collection for marketing purposes to non-marketing purposes. Yet, it is dishonest, disingenuous and spurious to do so—and doing so fans fear and hypotheticals, instead of rational thought. There is no relationship between responsible data collection for marketing purposes—which only delivers benefits to the economy, and tax revenue, too—and data used for insurance and premiums, hiring purposes, and certainly the federal government’s activities to monitor internet and telecommunications in order to profile or detect would-be terrorists.

Marketers—for 40 years—have operated under a successful self-regulation code of notice, consumer choice, security and enforcement—and central to this is the use of marketing data for marketing purposes only. That’s as true online as offline. Where would we be without consumer trust in this process?

It may be very appropriate here to legislate what government may access—and how they may access—when it comes to personally identifiable information for surveillance or anti-terrorist purposes. But don’t even utter the word “marketing” in the same sentence. Let marketers continue with self-regulation: We offer consumers notice and opt-out, we focus strictly on marketing purposes only—and everyone benefits in the process.

Trade Associations Bond on Industry Self-Regulation

With the threat of an online privacy bill looming, some of the nation’s largest media and marketing trade associations released self-regulatory principles on July 2 to protect consumer privacy in ad-supported interactive media.

With the threat of an online privacy bill looming, some of the nation’s largest media and marketing trade associations released self-regulatory principles on July 2 to protect consumer privacy in ad-supported interactive media.

The seven principles will require advertisers and Web sites to clearly inform consumers about data collection practices and enable them to exercise control over that information. The collaboration includes the American Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association and the Interactive Advertising Bureau.

The Council of Better Business Bureaus is also part of the effort and has agreed, along with the DMA, to implement accountability programs to promote widespread adoption of the principles.

This is a big deal: Taken collectively, the participating associations represent more than 5,000 U.S. companies, and the task force represents the first time all advertising and marketing industry associations have come together to develop self-regulatory principles.

And it should be a big deal, quite frankly. Concerns around government regulation on the use and collection of data on the Internet has been swelling in the industry over the past few years as the medium has become all-encompassing. What’s more, the House Communications Subcommittee Chairman Rick Boucher (D-Va.) is preparing an online privacy bill right now that may contain an “opt-in” provision that would prevent companies from targeting consumers without their explicit permission.

The seven principles
The self-regulatory program is expected to be implemented at the beginning of 2010. The process, however, started in January, when the task force announced it was working on developing these principles in direct response to calls by the Federal Trade Commission.
The principles are designed to address consumer concerns about the use of personal information and interest-based advertising, while preserving the robust advertising that supports free online content and the ability to deliver relevant advertising to consumers.
The seven principles include the following:

  • The Education Principle, which calls for organizations to educate individuals and businesses about online behavioral advertising. Along these lines, a major campaign — expected to exceed 500 million online advertising impressions — will be launched over the next 18 months to educate consumers about online behavioral advertising, the benefits of these practices and the means to exercise choice.
  • The Transparency Principle, which calls for clearer and easily accessible disclosures to consumers about data collection and use practices associated with online behavioral advertising.
  • The Consumer Control Principle, which requires Internet access service providers and providers of desktop applications software such as Web browser toolbars to obtain the consent of users before engaging in online behavioral advertising, and take steps to de-identify the data used for such purposes.
  • The Data Security Principle, which calls for organizations to provide reasonable security for, and limited retention of, data collected and used for online behavioral advertising purposes.
  • The Material Changes Principle, which calls on organizations to obtain consent for any material change to their online behavioral advertising data collection and use policies and practices to data collected prior to such change.
  • The Sensitive Data Principle, which recognizes that data collected from children and used for online behavioral advertising merits heightened protection, and requires parental consent for behavioral advertising to consumers known to be less than 13 on child-directed Web sites. This principle also provides heightened protections to certain health and financial data when attributable to a specific individual.
  • The Accountability Principle, which calls for the development of programs to further advance these principles, including programs to monitor and report instances of uncorrected noncompliance with these principles to appropriate government agencies.

Sounds like a plan to me. What do you think? Do you think this initiative will stave off government regulation for good, or should these trade groups be doing more? Leave a comment here, and let us know how you feel.

Consumers Know They Are Being Tracked

According to a recently released study by consumer privacy organization TRUSTe and global market insight
and information group TNS, consumers generally know that their internet activities are being tracked for purposes of targeting
advertising.

Are they OK with it? Not really. They study also revealed a high level of concern associated with that tracking,
even when it isn’t associated with personally identifiable information.

According to a recently released study by consumer privacy organization TRUSTe and global market insight
and information group TNS, consumers generally know that their internet activities are being tracked for purposes of targeting
advertising.

Are they OK with it? Not really. They study also revealed a high level of concern associated with that tracking,
even when it isn’t associated with personally identifiable information.

Behavioral targeting, which enables marketers to deliver customized experiences and improved marketing
metrics, also runs up against consumer privacy concerns and calls for greater
transparency around emerging tracking and targeting techniques.

Based on
the results of the survey, lack of transparency may factor into privacy
concerns. In fact, 71 percent of online consumers are aware that their browsing
information may be collected by a third party for advertising purposes, but
only 40 percent are familiar with the term “behavioral targeting.” In addition, 57
percent of respondents said they are not comfortable with advertisers using
that browsing history to serve relevant ads, even when that information
cannot be tied to their names or any other personal information.

Meanwhile, a majority (91 percent) of respondents expressed willingness
to take necessary steps to assure increased privacy online when presented
with the tools to control their internet tracking and advertising
experience, and this, accoridng to TRUSTe and TNS, suggests a need for added education, transparency and choices
for behavioral targeting. Nearly two-thirds (64 percent) would choose to
see online ads only from online stores and brands that they know and trust
and 44 percent of respondents would click buttons or icons to make that
happen.

To the contrary, a similar proportion of consumers (42 percent) said they
would sign up for an online registry to ensure that advertisers are not
able to track browsing behaviors, even if it meant that they would receive
more ads that are less relevant to their interests.

What these results boil down to is that consumers say they want more relevant advertising, but don’t want
to be tracked in order to get it.

What is the key takeaway here? Transparency, transparency, transparency. Consumers today are more sophisticated and educated than ever before. They understand advertising, and in many cases, respond to it and even enjoy it. So don’t take chances–be a trustworthy and transparent company.