Marketers are facing a continuous struggle with consumers’ perception of data, as new research reveals 71% believe brands with access to their personal data are using it unethically.
The report, which surveyed more than 34,000 people worldwide, reveals 78% of the public also view the threat of negative media coverage as an insufficient deterrent to prevent businesses from misusing personal data.
Brands, therefore, are at severe risk of overestimating consumers’ trust in and willingness to adopt ‘predictive technologies’, according to the report by Edelman and The University of Cambridge Psychometrics Centre, shown exclusively to Marketing Week.
The term ‘predictive technologies’ refers to services, analytical techniques, machine-learning algorithms and other tools capable of discovering and analysing patterns in data to predict future behaviour on the basis of past behaviour.
Concerns over data use are universal across gender, nationality and personality types. The report suggests low levels of consumer trust stem from wider privacy concerns that touch all areas of life, not only those within the remit of the study.
More than half (58%) of respondents say they have not used a digital service because of privacy concerns, which is driving decision making around which apps to download, which email addresses to share and which social networking sites to use to log in to other sites.
“If we don’t explain to customers and readers why we want to use data and what we are going to do with it, there is no reason why they should share it,” warns Julia Porter, Guardian News & Media’s director of consumer revenues.
“If you do explain, you are better able to gain people’s trust and they are more likely to share data. There is a virtuous circle in being open and transparent about what you are going to do with the data and people feeling able to share it.”
Jonathan Hargreaves, global vice-chair of Edelman’s technology practice echoes Porter’s views. He says: “Many companies are beginning to talk about these things and adopt these technologies but nobody has transparently [explained this] to the end user. A relationship [is required to articulate] what you give back to people in data. You need an explanation of what you are doing to make that deal work.”
Marketers’ contrasting views on data
Public concern over data stands in stark contrast to the views of 94% of marketing professionals, who say predictive technology is important in enabling them to understand the psychological attributes of their customers.
The report includes a survey of 4,400 marketing and communications professionals around the world. Unsurprisingly, it finds them to be far more accepting than consumers of the use of predictive technologies.
Marketers view adoption as more desirable compared with the general public, with 78% saying their organisation needs to invest in predictive technologies.
There is also an internal issue within businesses in terms of data use, with 50% of marketers realising future behaviour can be accurately predicted from personal data, compared to only 36% of other teams in a business. Also, while 62% of CMOs have heard of ‘the right to be forgotten’, that figure drops to less than half (47%) for non-marketers.
“Big multinational companies don’t necessarily have the agility and structure set up to be able to organise and design the marketing to build trust, it’s a big learning curve,” says Hargreaves.
He adds: “These technologies are powerful and they can do good things, if they are used in an appropriate way.”
Despite the internal disparity between marketing and the rest of the business, the report states that it is for both marketers and business leaders to address the public’s fears around predictive data and technology.
The report argues that privacy, transparency and relevance are key to achieving this, which means offering accurate, detailed information about how customers’ information is being captured, stored, used and shared.
There is also an issue when data is used to target consumers based on behaviour without added consumer insight. Porter believes there is a challenge in the rise of marketing technology that delivers messages using programmatic advertising, which is based on cookies and “not on a relationship or understanding of who customers are, so lots of the content can appear irrelevant”.
She adds that beyond the need for trust and transparency “there’s an expectation that content will be relevant”, and customers want to know “they can trust an organisation in order to share their data but they also expect them to provide relevant products and services”.
Porter says: “There is pressure to be more targeted but you will not necessarily know what those customers want because you will not have found out who they are and what they are interested in.”
This presents a three-pronged challenge for marketers in tackling data. Internally, marketers and business leaders need to have the same level of education in what these technologies can offer, they need to be adopted ethically and with added insight on what consumers really want rather than targeting based on their behaviour alone.
In just under two years the General Data Protection Regulation (GDPR) will replace the UK Data Protection Act, which will tighten the requirements for brands using data, in particular gaining consent from consumers rather than asking them to opt out of data-based marketing.
However, brands that communicate the value exchange for consumers and build trust can ensure their access to data does not run dry when the new law comes in.
Kim Monney, head of UK marketing at taxi app Gett, says it is “very encouraging” for both brands and customers that the updated data protection regulations coming into force in 2018 will require companies to allow customers access to the data held about them as well as freedom for customers to edit it themselves.
She explains: “Giving power back to consumers in this way will help us begin to bridge the gap between the public and marketer views expressed in the [Edelman] survey.”
There is a chance, however, to get ahead. Monney adds: “Brands that don’t wait for the regulations and are proactive in providing transparency in how customer data is used can be at the forefront of creating consumer confidence in marketing and predictive technologies, and especially where the transparency is coupled with evidence of the value that customers can experience as a result of the data and technology coming together.”
Consumer versus brand benefits
“Consumers are most willing to share data, even past purchase history, if there is a clear benefit but they are less willing when you put it as a brand benefit,” says Thomas Ridley-Siegert, research manager at the Direct Marketing Association (DMA).
He says: “From a brand perspective you have to be clear in explaining why you want to collect the data, how it can benefit the consumer rather than the brand and what you’re collecting.”
This can boil down to the language used to gain data consent; undoubtedly a lot of the jobs and required skills within businesses in the run up to GDPR introduction will go to data experts with strong copywriting skills.
A recent DMA report titled ‘Talking the Consumer’s Language’, consisting of a study of 1,000 UK-representative participants, reveals that consumers are most willing to share their data when there is a clear benefit to be gained – such as lower prices, tailored deals or special offers.
Of those surveyed, 40% say they are interested in a service that reminds them about a friend or family member’s upcoming birthday and gives relevant suggestions on what to buy them as a gift; this rises to two-thirds of 25- to 34-year-olds.
Half of consumers agree they would like the recommendations they receive from brands, shops or sites to be better tailored to what they like or are interested in, and 54% of Generation Y (those born in the 1980s and 90s) are interested in a service that detects how they are feeling and sends them surprise offers and deals based on their mood.
Ridley-Siegert says: “We see an increase in consumers’ understanding of data sharing, that’s only going to increase as GDPR comes nearer – you [will] see more press coverage for brands and consumers to explain the changes.”
When consumers are confident of the gains they can make, concerns over how brands are using their data will likely soften.
The DMA report also shows what consumers are willing to share. Over half (54%) would share their email address to get items for a lower price and 17% would share past purchasing history. Again over half would share an email address for better loyalty rewards (52%) and tailored offers (51%) and 15% would share past purchase history for loyalty rewards and 17% for tailored offers.
Ridley-Siegert also believes ‘personal data’ is a broad term and when using this or words such as ‘sensitive data’, it might scare the consumer.
He says: “When you are clear and say, ‘we would like to use your email address so we can send you tailored offers based on things we know you have bought previously’, rather than using a generic term like ‘personal data’, it will get around the myths that consumers might have about what exactly is being collected.”
Not all types of value exchanges need lengthy explaining and clever wording, as there are opportunities where consumers are willing to share data already coming to light.
The Edelman research finds 52% of people see the benefits of smart appliances for the home, such as a fridge that automatically pre-orders groceries or a thermostat that pre-adjusts room temperature, as outweighing the privacy risks related to the collection of such data about their home life.
Over half (57%) of people would like smart fridge data to be used to recommend groceries when they go out shopping and 58% would like to be automatically warned of unhealthy dietary habits.
Regarding privacy, the study finds 27% of consumers are willing to pay $3 (£2) a month to use Facebook without their behaviour being recorded. The report argues that in spite of consumers’ concerns, if executed and communicated properly, the market demand for what they are calling ‘ambient intelligence’ and new privacy-related services already exist.
Porter says: “If you ask people, ‘how do you feel about sharing data?’, it has become somewhat more transactional. They feel more pragmatic about that the fact data will help them get a better customer experience but they often feel that the dice is loaded very much in favour of the company.”
She adds: “The most successful companies are going to be the ones that give consumers more control over what they can or cannot do and help them organise their [own] personalisation themselves.”
Marketers are doing something wrong if they lose the trust of their customers, and the unethical use of data is always a contentious area.
While using available data can assist marketers with better targeting, more strategic campaign planning and enhancing the personalised experience for consumers, marketers need to be wary of overstepping the mark.
In fact, some consumers may not link the bespoke and tailored marketing they receive to the fact their data has been used in order to target them in this way. If brands take a more responsible and transparent approach, telling people how their data is used in a customer-centric way, this will start to build more trust and avoid feelings of betrayal down the line.
This of course means that marketers need to treat the use of personal data with honesty and integrity. The introduction of the General Data Protection Regulation (GDPR) in 2018 will bring updated legislation and the threat of financial penalties to the marketing industry, but this should merely outline what all businesses and marketers should already be doing.
If there is nothing to hide in their data dealings, marketers should be clear with consumers about how they use personal information, which in turn should lead to longer-term and loyal customer relationships. And that’s good for business.