Data privacy and its impact on customer relations

Data privacy legislation is making it more difficult for advertisers to have meaningful connections with their customers. So how can organisations work around this and continue to send out direct and relevant messaging?

Niall Donnelly, MarTech Managing Consultant for Credera UK, looks into this tricky balancing act and asks how customers actually feel about their data being used…

A simultaneous tightening of both legislation and regulations is making it increasingly difficult for marketers to track their customers’ behaviour and utilise insights.

That means, in short, that it’s almost impossible for large organisations to have scalable, one-to-one connections with customers and to be able to advertise to them on a personal level. Increasingly, browsers and applications owned by big tech are restricting third party cookies, meaning that insight is limited to what a customer does on your own website.

This makes it difficult to understand the bigger picture. It’s likely that cookies will become almost completely redundant in the coming years. They’re considered to be an encroachment on the privacy of the user, who hasn’t knowingly – or at least cognitively – provided explicit consent for their information to be used. What does this mean for marketers?

Companies leading the charge are mitigating these changes in two ways: by increasing first-party data collection efforts, or by finding workarounds.

The former is certainly the more ethical option. Customers that willingly hand over their information, via an account or newsletter signup, are giving explicit consent. When marketers use this sort of data, the customer still has the control.

Cookieless pings - a risky business

The alternative is a little murkier. The introduction of cookieless pings, which arguably do the same thing as cookies whilst sidestepping legislation, are in a beta period of testing, and are likely to grow in popularity. Customers don’t always need to accept these.

Google's solutions to cookieless pings do still include a form of consent but the technology could be co-opted by another provider to entirely sidestep the consent process and be technically legal.

Consumers have a right to anonymous internet use if they want it, but there are (at least commercial) benefits to advertisers having access to a certain level of customer data. Sharing information with advertisers isn’t automatically a cardinal sin – not least because it gives a better user experience.

Ultimately, it’s a delicate and often contradictory balance to strike. The best thing marketers can do is be flexible and conscientious when approaching their customers. But the most virtuous of marketers might benefit from shifting their gaze to first party data. How do you sell consumers on first party data?

The value exchange

To convince your customers to share their data willingly, you need to get them to lean in – both through allowing them to steer the ship and demonstrating the value exchange.

On the former, control is key. By letting the customer know sharing is at their discretion, you hand them back the power. Small practical changes to a website, like increasing the prominence of a cookies banner, helps with this.

Demonstrating value exchange is almost gamified at this point. The more novel your approach, the more likely customers will be to engage. Utilise incentives and discounts but be warned – burying the implications in the fine print is a sure-fire way to alienate your customer.

Ultimately, it all comes back to transparency. And for those that remain sceptical? Perfect advertising is saying the right message to the right person at the right time, but marketers don’t need to know their customer intimately to do that – just to be perceived to. For those we can’t know on a one-to-one basis, perfecting customer cohorts is the next best thing.

The more anonymous identifying aspects you can gather, the more robust your models. Savvy marketers that go down this route will leverage AI to make their ads scalable.

A company that does this excellently is TikTok. The average TikTok user spends 90 minutes a day there, which is why the algorithm seems to ‘know’ you so well. TikTok don’t need to know you –they know your behaviour.

That allows advertisers to approach TikTok and give a list of criteria they want to target, rather than a set of users. The advertiser will never know who the user is, and they’ll never need to, either. Customers will click on the adverts because they’re perfect for them.

This emerging phenomenon is known as second party data. Second party data use is incredibly effective when done right, but advertisers remain at the whim of big tech. These providers – known as ‘walled gardens’ - have all the power when it comes to essentials like pricing. It’s certainly an opportunity for marketers – but it’s difficult to pinpoint which aspects of your campaign are getting cut through.

What do customers think of all this? So, we’ve considered the pros and potential cons of more stringent rules around data – but what do consumers actually think about how companies use their information? We’ve all seen tabloid stories about when things go wrong or are taken too far.

Algorithms can piece information together quicker than humans, and organisations need to be careful not to take advantage of that – particularly when most of us live so much of our lives firmly online.

But most companies utilising personalised comms aren’t plotting to exploit customers – they simply want to promote their products and services. And with many users accepting cookie banners on websites, it would seem the public is generally ambivalent towards third party data harvesting.

Leaning in

When things go wrong, a negative perception lingers for a while. But the rest of the time, data collection seems innocuous. Lawmakers and regulators are right to crack down on nefarious practice. But an organisation that genuinely believes they’re erring on the right side of the ethical spectrum, well, probably is. And while there’s certainly a fine balance to strike, marketers shouldn’t be afraid of being bold with campaigns, leaning on innovation to speak to customers who want to be spoken to, and making the most of everything we’ve learned about behaviours and habits in the past few years.

As regulation and legislation both continue to narrow the parameters of acceptability, advertisers should strive to be agile, willing to learn new ways of working and receptive to what their customers want.

By Niall Donnelly

MarTech Managing Consultant

Credera UK