Data privacy: How marketers can navigate this new era
Data privacy is a hot topic. Companies are more aware than ever of the risks associated with collecting and storing customer data. In the wake of high-profile data breaches at companies like Equifax and Facebook, the Cambridge Analytica scandal, and GDPR making headlines, consumers have become warier about sharing their personal information with businesses. 84% of customers will actively abandon an online purchase if their data is sent over an insecure connection.
At the same time, we live in such a media-rich world that customers don’t have the time to deal with marketing that is of no interest to them. They’re saturated with so much content that their trust levels have reached an all-time low. Traditional techniques like blanket advertising campaigns no longer receive the engagement levels they once did. Customers don’t want to give their data to companies unless they are sure they will get a personalized experience tailored to their needs.
So with data privacy at the forefront of consumers’ minds, marketers must find new, more efficient ways to engage and gain trust for their brand.
What is data privacy?
Data privacy focuses on how personal data is collected, used, and shared for its intended purpose. It also defines proper data handling in compliance with laws and regulations to protect it from unethical use and unauthorized distribution to third parties.
Personal data refers to any information relating to an identified or identifiable individual. In the context of digital marketing, this can be anything from a name, or an email address, to location data or an online identifier.
All businesses have to process personal data in some form. But to be compliant, organizations of all sizes have to manage data transparently, be accountable for any personal data they process, and adhere to privacy laws and regulations.
Data privacy laws and regulations
Most countries have some form of data privacy laws to regulate how personal data is collected and processed. Generally, any personal information must be obtained lawfully and through explicit consent. Failure to follow applicable data privacy laws can incur fines, lawsuits, and even judicial proceedings.
When it comes to digital marketing and the use of consumer data, the two most notable comprehensive data privacy regulations are:
The European Union's General Data Protection Regulation (GDPR). Coming into effect in 2018, GDPR governs how companies and individuals collect, store, and process personal data. Companies that violate GDPR can be fined up to 4% of their annual global revenue or €20 million (whichever is greater).
The California Consumer Privacy Act (CCPA). Launched by the State of California in 2020, the CCPA legislates how consumers control their data. It gives any California resident the right to tell organizations not to sell their data. It is the first piece of American legislation directly focused on data privacy and comes with steep financial penalties for non-compliance.
Other notable data privacy laws include:
The UK’s Data Protection Act
The Personal Information Protection Law (PIPL) of the People's Republic of China
Brazil’s Lei Geral de Proteção de Dados Pessoais (LGPD)
There are also industry-specific regulations that need to be taken into account. The United States has a number of these:
The Gramm-Leach-Bliley Act (GLBA) – banking and financial institutions
The Health Insurance Portability and Accountability Act (HIPAA) – healthcare providers
The Fair Credit Reporting Act (FCRA) – credit agencies
The effect of data privacy on marketing strategy
Marketers today have to fight harder than ever to acquire new customers and engage the ones they have. But they also need rich data to measure the success of their digital activities.
Data privacy challenges for marketers
With big tech companies like Apple and Google being pushed to prioritize consumer privacy and governments looking to regulate social media platforms, advertisers need to understand the importance of data privacy in marketing.
With data privacy concerns increasingly taking center stage, there is no room for error around obligations to protect personal data. This has understandably left many marketers worried about their data privacy obligations and how this will affect their promotional activities.
Comprehensive regional and international data privacy regulations
Data privacy laws such as GDPR and CCPA have imposed strict rules on how data can be collected and for what purposes it is used. Consumers no longer want to risk businesses using their data in ways they are unhappy with. They want total control over their data and full transparency on how it might be used.
However, new regulations are created every year. The American Data Protection and Privacy Act (ADPPA) is soon to be implemented across the U.S, essentially the American version of GDPR. In August 2021, the Personal Information Protection Law (PIPL) came into force in China, offering users automated processing options to ensure consumer privacy. And in May 2022, the UAE Data Privacy Law launched strict guidelines on processing personal data.
So, marketers don’t just need to know about the latest privacy regulations; they also need to be aware of future ones being launched.
Apple Mail Privacy Protection (MPP)
Apple was one of the first big tech companies to respond to data privacy concerns from customers. After deciding to limit third-party cookies in iOS, the Apple Mail Privacy Protection was launched in September 2021 for iOS 15 and macOS 12 Monterey devices.
The purpose of MPP is to stop senders from using pixels to collect a user’s data. It also masks a recipient’s IP address, making it impossible to determine their location or track other online activity. It changes how marketers look at email engagement and nullifies tracking the effectiveness of specific messages.
Google ending third-party cookies
Third-party cookies have been used to track visitors since 1994. They were initially designed to improve a site user’s experience. However, cookies quickly evolved into seeing visitors’ views on a website and collecting identifiable personal data to tailor digital ads.
However, Google will begin phasing out third-party cookies from its Chrome browser in the second half of 2024. This is big news for digital marketing because Google Chrome has 70% of the overall market share.
About 80% of marketers still rely on third-party cookies to reach prospects and customers online. With the death of third-party cookies, behavioral data will become limited, and performance measurement less effective.
Data privacy opportunities for marketers
With data privacy here to stay, marketers must evolve to find other avenues to target prospective customers. The days of personal data abundance are over, but It opens up new opportunities for your business to focus on personalization and provide an emphasis on creating quality content.
Personalize customer experiences in real time without relying on third-party data
With the end of third-party data, companies of all sizes can use first-party data to inform personalization and create outstanding customer experiences. With first-party data, you can better understand your prospects and customers and make your personalization efforts much more effective. For example an eCommerce site like Amazon personalizing shopping recommendations based on recent purchases and browsing behavior.
The best companies use an omnichannel approach. which goes far beyond just adding a name to a bulk email. Companies need to touch base with customers through a variety of different interactions
B2B buyers are already 57–70% of the way through the buying process before the first meeting with a sales representative. Customers do their own research, which means shifting from a traditional lead generation approach to one that offers quality content at each stage of the buyer’s journey, personalized with messaging that will resonate and helping them with their purchase decision.
According to McKinsey, “When done well, personalization can deliver impact and growth quickly while creating better experiences for your customers. Personalization plays a critical role across the full customer lifecycle—acquisition, customer engagement, basket size, frequency of purchase, cross-sell, and/or churn prevention, among other things.”
Establish robust value exchanges for customer data
Customer value is the core component of any data relationship. 74% of consumers are frustrated by irrelevant advertising but they are happy to share their data if they get something out of it in return. As long as you communicate a clear value proposition that offers a compelling narrative, you will get an audience willing to connect with you.
A good example is a loyalty program with exclusive customer benefits. Marketers can then provide tailored offers and more personalization. This makes customers feel like they are getting more value from the relationship with your business. It encourages repeat purchases, making them feel understood and heard.
Compare this with sending out generic email communications or ad hoc promotions. These aren’t targeted and often come across as insincere. They don’t directly speak to the customer and treat them as someone to be sold to rather than individual humans with thoughts and feelings.
Blanket marketing efforts create less engagement as they are not tailored to individual customer needs. They also often lead to customers withdrawing consent for their data to be used. They don’t want to be constantly spammed with marketing communications. Data is a precious commodity, and customers want their consent to mean something.
Build more profound and more meaningful relationships with customers
Customers no longer want to deal with faceless companies. 79% of Americans say brands must actively demonstrate “they understand and care about them” before considering purchasing. By building a relationship with your customers, you can:
Increase sales. Keeping an ongoing relationship with customers means you keep your brand at the top of their minds. It is much easier to sell to an existing customer than to acquire a new one.
Reduce customer churn. One of the main reasons why customers choose to abandon a business is because of a poor relationship. If you have developed a strategy to engage with customers, you will see reduced churn and increased growth rates.
Boost word-of-mouth referrals. If your customers are happy and have a great relationship with you, they will tell others about their experience. This will encourage new customers to come to you to receive the same high-quality service.
Improve employee morale. With happy customers comes a happy workforce. If customers feel valued and advocate for your business, it helps to develop a positive work culture for your employees.
Increase customer lifetime value (CLV). CLV projects the total lifetime revenue you can expect to receive from a customer that uses your products or services. This affects how profitable your business is.
If your CLV is low, you will need to spend extra effort attracting new customers. However, if your CLV is high, you won't have to spend time and money acquiring them again. This means you get the total profit margin from any future purchases they make, covering all of the customer acquisition costs from the first time.
Provide value. Your content should always be focused on audience engagement. A good rule to follow is the Pareto principle AKA the “80/20” rule. 80% of your content should be educational or entertaining. This is what truly engages people. The other 20% can be used for promotional content that encourages someone to purchase from you.
Customers don’t just want to hear from you when you want them to pay you money. So, if they receive relevant content, they’ll be more likely to engage with you. Examples would include how-to guides, product demonstrations, and educational webinars.
Maximize every interaction to deliver real engagement
With this new era of data privacy comes the opportunity to optimize for better business growth. This means using every channel at your disposal to provide personalized content to your prospects and customers. For example, media like email signatures can often be overlooked in favor of other digital advertising activities.
However, with over 350 billion emails sent daily, intelligent marketers can turn every message into a vehicle for delivering targeted and personalized marketing throughout a standard business email chain. By using email signatures effectively, you also give yourself a competitive advantage in today’s digital world. You can create targeted marketing opportunities in a way that is organic and not obtrusive. It also means you better control your media spend and delight an engaged customer base.
How marketers can navigate the era of data privacy
Be transparent about data collection and use
If you want customers to trust you with their data, you need to be clear about what you will do with it. If customers understand what they consent to and how it benefits them, they will be much more willing to give up their data. Transparency builds trust, which turns into loyalty. This is the perfect formula for creating long-lasting customer relationships.
According to Google, collecting data responsibly is the best method for balancing data-driven marketing and privacy protection. Your privacy and cookie policies, as well as your terms and conditions, must be easily accessible on your website. This makes it easier for visitors to opt-out of any data practices and provides a secure site experience.
It helps if you are also transparent with your data usage policy. In particular, the data you collect should only be used for your stated purposes. If you say you are only collecting data for research purposes, you cannot then use the data for marketing purposes.
Get explicit consent
Remember that privacy laws such as GDPR have a very high standard for consent. Explicit consent must be given directly and via a positive action, i.e., the contact has provided their data freely and of their own volition. In some countries like Germany, it is best practice to use a double opt-in process.
This follows a two-step process:
The subscriber fills in and submits a consent form
A confirmation email goes to the subscriber with a link to click. This verifies their email address, which is added to your mailing list.
Keep personal data secure
If someone has willingly given your organization their data, it is your responsibility to protect it with robust data security methods. Hackers continuously evolve how they execute cyberattacks, with phishing efforts becoming more sophisticated. This is why data protection is a vital part of company operations.
Customer trust evaporates instantly if your company loses (breaches/hacks) or misuses data (selling to third parties/spamming). This will then affect your engagement marketing strategies. Customers use massive amounts of faith when they provide their data, so you must ensure it is always protected. Being a trustworthy custodian of customer data is a marketing responsibility as important as lead generation and brand awareness.
Respect user privacy preferences
Digital marketing cannot work without rich data and relevant customer information. However, if customers don’t want you to use their data, you must respect their wishes. This means offering options for communicating with them (email, direct mail, SMS, etc.) and clear opt-out measures. It is their data you have access to, meaning they can decide how they want it to be used.
The old ways of advertising are no longer as effective as they used to be. Consumers have more control over their data and do not want to share it with those businesses that do not offer a tailored experience that suits their needs. Data privacy has fundamentally changed how marketers reach new customers and speak to those they already have.
But these changes come with fresh opportunities. The focus is now on evolving your marketing strategies to deliver tailored and personalized experiences to customers. So, build trust in your marketing communications, keep up-to-date with data privacy regulations, and develop genuine value exchanges with customers. You will then build lasting relationships, engage your audiences through every stage of the buyer's journey, and offer a richer customer experience that leads to a better return for your business.