Surveys routinely show that consumers are concerned about data privacy, but they also want personalized experiences. For marketers, this leads to among the most urgent challenges of the emerging privacy-aware era of marketing: how do we give customers the convenient, helpful, personalized experiences they crave while respecting their right to privacy, which can make it difficult to acquire the data that drives personalization?
Despite concerns, the demise of third-party cookies and mobile identifiers does not mean the end of personalization. On the contrary, improved data privacy practices can make personalization more effective. Instead of making assumptions based on covertly acquired data and offering personalized experiences that consumers may find creepy, tomorrow’s marketers will ask consumers exactly what they want and deliver the precise experiences their customers desire.
Three steps organizations must take to deliver personalized, privacy-safe customer experiences are sourcing privacy-safe data at scale, using customer feedback to drive personalization, and meeting a high standard of consent for data collection. Here’s what each of those steps entails.
Source privacy-safe data at scale
The fading era of third-party data dependency encouragement marketers to be relatively uncritical about the origin of the data they used to craft personalized experiences and ads. Marketers often used data that was several times removed from their direct interactions with customers. This led to personalized experiences consumers were likely to perceive as creepy because the consumer herself could not understand how an advertiser or publisher knew what she had previously browsed or purchased. Perhaps needless to say, “creepy” is a bad end result for personalized marketing.
The new imperative is for organizations to build up their own first-party data assets, establishing direct relationships with consumers, verifying consumer identities, and most importantly, offering transparent value in exchange for data. Organizations should also explain exactly how they will use customer data and make the case for its collection so that consumers actively and happily provide their information.
To be sure, not all organizations will be able to develop first-party relationships at scale. For example, CPG brands have millions of customers but often do not interact directly with them. Organizations in that position should identify all the marketing use cases for which they need data — for example, targeting, product recommendations, and measurement. They should then identify key partners, such as media organizations, retailers, and sponsorship partners such as sports leagues, who do have direct relationships with consumers and implore those partners to get consumer consent to share data with the CPG.
Ultimately, this value exchange should benefit all parties. The consumer gets value, such as loyalty rewards or more convenient and engaging experiences, in exchange for sharing their data. The first-party data collector builds more effective marketing strategies, and the user of second-party data, such as the CPG, gets to do the same. Non-competitive businesses will need to work together to make privacy-safe personalization possible.
Use customer feedback to drive personalization
When it comes to personalization, marketers have touted the potential of one-to-one marketing for years. But truly individualized marketing has always been both less feasible and less desirable than its advocates suggest. First, one-to-one personalization is possible within authenticated, direct relationships between organizations and customers, but once the consumer leaves the realm of email marketing or navigating an organization’s website, 1:1 personalization is all but impossible.
Second, to achieve individual personalization, marketers have relied on data disintermediated from their relationship with the consumer, eroding trust with the customers personalization is supposed to delight.
What is the alternative to 1:1 personalization? For one, marketers should put less emphasis on covertly collecting the maximum amount of customer data and more on directly asking the consumer what they want. By collecting consumer information directly via panels, surveys, and questionnaires, marketers can deliver not just personalized experiences but the precise experiences consumers say they want.
Secondly, marketers will benefit from using AI and developing powerful profit models that allow them to do more with less information. If marketers build engines of personalization based on very high-quality, directly sourced customer data, they can better understand what customers desire and provide more relevant experiences to all, even newcomers who have not yet provided much data about their preferences.
Meet a higher standard for consent
To establish a privacy-safe data supply chain for the long term, organizations cannot content themselves with a consumer clicking “yes” once on a pop-up asking them to enable first-party cookies. Privacy standards are only going to rise, as exemplified by the shift from the California Consumer Privacy Act to the California Privacy Rights Act, which closed the loophole on data sharing by stipulating that sharing should be subject to the same consent requirements as data selling.
Forward-thinking organizations will ensure data privacy compliance for the long haul by implementing systems that allow them to ask the consumer for consent for specific data-driven marketing use cases such as ad targeting and recommendations. Proactive marketers will also set up channels to renew consumer consent over time, and they will clearly explain with whom they share data and why. All these steps will prevent the next big change from a powerful platform or regulator from taking a buzzsaw to an organization’s data privacy compliance model.
It is understandable that marketers are concerned about the impact and higher data privacy standards will have on their ability to provide personalized experiences. The old ways of using data to drive personalization will no longer pass muster. But by re-engineering their data supply chains to emphasize clear, comprehensive, and consistent consent, marketers can invent a better form of personalization that more deeply caters to their customers’ desires.