How Does Internet Privacy Affect Your Customer Data Strategy?
Customer data solutions are predicated on the assumption that organizations, marketers, and advertisers are able to access user information. In light of website cookies being phased out and the rise of stricter internet privacy laws, that accessibility has been threatened.
While consumers may have more choice in how their online behavior is tracked and recorded, it may come at the expense of poorer personalization. In a recent study, 41% of U.S. consumers expressed that they had switched brands in the past due to poor personalization and lack of trust. Unfortunately, the collection, sale, and utilization of online customer information contributes to both of those variables. This combination of stricter privacy laws and increased data tracking stigma has set the foundation for an entirely new customer data environment. One in which customer data solutions will have to be more efficient and insightful when it comes to data collection and analysis. To truly understand the implications of these new internet privacy laws, you need to first understand the importance of online marketing data when it comes to powering your customer data solutions.
The Importance of Online Marketing Data for Customer Data Solutions
Customer data solutions are powerful tools in the hands of executives and marketers because they allow organizations to create accurate, up-to-date profiles of their consumer base. The more accurate and timely this information is, the more likely the insights and strategies drawn from this data will be effective revenue-promoting activities. According to Invespcro, 83% of the marketers that employed data-driven marketing tactics experienced a return on investment (ROI) worth five times their marketing spend. Statistics like this and others demonstrate the value of a well-developed and integrated customer data strategy like a customer data platform (CDP) where multiple data sources are aggregated into one accessible, segmentable database. This study, however, was conducted in early 2018, prior to the implementation of the California Consumer Privacy Act (CCPA) and the initial version of the General Data Protection Regulation (GDPR); two pivotal internet privacy laws that are reconstructing the customer data environment and threatening the value of data-driven marketing.
Cookies Being Phased Out Means Digital Insights are in Danger
The reason why privacy policies like the ones put forth by the California state government, the EU, and other tech companies are significant is that they provide users the choice to opt-out of the sale and collection of their personal data. Prior to this legislation, websites like Facebook, for example, had the opportunity to share and sell the personal information of its users to advertisers looking to target a specific segment. Facebook later extended this service to small businesses in order to localize and expand some of their revenue streams. If a hairdresser wanted to target women in their 30’s and 40’s, Facebook, for a fee, could share the hairdresser’s ads with their desired demographic. This is a fairly redundant point but one that is worth remembering when evaluating the financial impact of the new internet privacy laws.
Almost three years after the GDPR has been introduced, companies across the world have had to re-evaluate how they collect information for their customer data platforms. Organizations like Google have already been sued by European companies for failing to comply with the GDPR’s mobile and internet policies. In a 2019 report, eMarketer highlighted that just one year of the GDPR had resulted in spending shifts (from open exchange to private marketplace), forced advertisers to use less third-party data for targeting; facilitated the adoption of consent management platforms (CMPs); encouraged U.S. publishers to block European traffic; and eliminate EU ad exchanges. Some marketing tech vendors even pulled their activities out of Europe out of fear of violating the new policies and receiving a hefty fine. Landscape disruptions this large can be extremely costly for all stakeholders involved, not just traditional businesses. Organizations like Google and Facebook, who previously relied on the value of their user data, now have a more limited scope of insights than before. Unfortunately, the full set of consequences from this legislation may still be yet to come.
The Impact of Digital Security on Customer Data Collection
Digital security is a growing concern of many businesses, and for good reason. A recent TechRepublic article highlighted that while the number of publicly disclosed data breaches fell, the volume of assets that were compromised rose by more than 140%. In a remote work, pandemic environment, individuals and businesses have become more vulnerable to cyberattacks due to an overall lack of IT visibility and an increased reliance on web applications. The recent Microsoft Exchange Server hack, which has impacted an estimated 18,000 organizations worldwide, has demonstrated just how vulnerable internet users are to cybersecurity attacks of this magnitude.
As consumers, businesses, and governments begin to fear the increasing threat of cybercriminals, the CCPA and GDPR may not be the final iteration of internet privacy laws. If laws become stricter, enterprises may worry about more than just cookies being phased out. They may have to re-evaluate the size and scale of their business models altogether. As bleak as this seems, however, there is still plenty of opportunity to collect consumer data and extract profit-driving insights.
How to Navigate New Online Privacy Laws as a Marketer
One of the biggest obstacles for CMOs and executives to overcome with regards to the new online privacy laws is public image. According to Media Post, about 54% of consumers do not trust companies to use their personal online data in an ethical manner. By collecting and extracting data in an ethical way, consumers may be more willing to relinquish their privacy. A report from Inc. highlighted how 61% of Americans would prefer to share their personal data for more personalized marketing interactions. The only question that remains is ‘How do you ethically improve your customer data solutions?’
By partnering with Enabled Concept, you can receive high-quality, accurate, and customized data solutions that accommodate your needs and account for the uncertainty of these unprecedented times. To learn more about how we can provide the foundation for your customer data solutions, contact our team for more information.