Are regulators more concerned than consumers about data privacy?
By Chantal Tode
May 29, 2014
Marketers continue to be confused by conflicting messages around data privacy, with consumers expressing a desire for relevant offers driven by tracking their behavior, while the Federal Trade Commission is dialing up its demands for tighter controls on the brokers who handle much of this data.
The confusion over how to proceed in terms of data-driven marketing is particularly significant in the mobile space, where the volume and sensitivity of data are both much greater at the same time that consumer expectations are elevated due to the personal nature of the devices. The lack of a clear mandate is causing some marketers to hesitate about jumping into mobile.
“The fact that most of your shopping loyalty card data and much other data about users has now linked to your mobile phone by third parties certainly has added a layer of additional privacy concern,” said Jules Polonetsky, executive director at the Future of Privacy Forum, Washington.
“IOS and Android now provide users with Limit Ad tracking settings, but app developers need to respect those settings and users need to know about the options,” he said.
Relevant marketing communications
The FTC this week released a new report that calls for specific legislative action covering data brokers. The agency is calling for greater transparency that it feels can be achieved through giving consumers access to their data through a centralized online portal, disclosure of data sources and prominent notice of how marketing data is being used.
At the same time, a new report from Accenture reveals consumers expect the kind of relevant marketing communications that are driven by behavioral tracking.
One key finding is that 49 percent said they would not object to having their buying behavior tracked if it would result in relevant offers from brands.
Mobile is driving consumer interest in receiving relevant offers, with 64 percent saying they would welcome text messages from retailers when they are in a store alerting them to offers matching their buying preferences.
Also, relevant and useful customer experiences trumped advertising, loyalty programs, promotions and endorsements in influencing purchase behavior. When asked to rank the factors most influential in their purchases, 61 percent named sales and competitive pricing, 36 percent superior products, 35 percent super customer experiences, 31 percent loyalty programs, 26 percent relevant promotions, 6 percent engaging advertising and 3 percent celebrity endorsements.
Some concerns subside
The Accenture report reveals that consumer concern has dropped as it relates to behavioral tracking. In the most recent report, the percentage of consumers concerned about Web sites tracking their buying behavior dropped to 64 percent from 85 percent in a previous report two years ago.
However, consumers also want data transparency although 80 percent believe total privacy in the digital world is no longer possible and 87 percent believe adequate safeguards are not in place.
The FTC appears to agree there is a need for better safeguards.
The FTC’s study of nine data brokers reveals that while consumers benefit from their practices, they also raise privacy concerns because they are often collecting data without consumers’ knowledge and that the data is often shared among multiple brokers. Another concern is that online and offline data is being combined to market to consumers online.
The report also addresses how data brokers are making inferences about consumers based on the data they collect, including potentially sensitive inferences related to ethnicity, income, religion, political leanings, age and health.
However, industry groups assert that adequate protection is already in place.
According to statement from the Direct Marketing Association about the FTC findings, the calls for notice, choice and transparency are consistent with existing industry standards that the organization already enforces.
The organization also suggests that further regulation or legislation in the area of Big Data could adversely affect the growing benefits from such data.
The takeaway for marketers, according to Accenture, is the need for customer-centric digital experiences, with brands using advanced analytics to drive real-time recommendations while at the same time balancing the need for security and data privacy. The question remains just how to accomplish this.
“The more responsible data companies already do follow much but not all of the FTC guidance and more could provide transparency like Axciom has done,” Mr. Polonetsky said. “But equally important is the need for companies to pledge that they are using the data only for acceptable purposes.
“The challenge is getting agreement on the purposes that are discriminatory in a way that should be discouraged,” he said.
Chantal Tode is associate editor on Mobile Marketer, New York
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