Can privacy and personalization ever be compatible? It’s not a question consumers regularly ask, even though concerns over targeting and apps that continuously log location data grow greater by the day. For marketers, however, the answer to whether privacy and personalization can coexist, and what happens to location data in the wake of tightening restrictions, has important ramifications.
Will marketers be able to continue to deliver the personally curated experiences their customers have come to expect without storing sensitive data? And how will changes like Facebook’s recent privacy update, which limits how much location data is sent to the company, impact brand marketers in the long term?
As Dan McCormick sees it, retailers and brands right now are caught in a bind. As the co-founder and chief operating officer at Constructor.io, a firm that provides advanced search services to websites, McCormick has worked with ecommerce marketplaces and stores utilizing the latest in targeting and personalization strategies. He says retailers right now understand the extraordinary value of customer data, but they are also keenly aware that more and more consumers are wary of having their data collected.
“Sweeping legislation like GDPR in Europe and Facebook’s recent pivot toward privacy has retailers on edge about how to leverage data while addressing consumers’ privacy concerns,” McCormick says.
According to BIA/Kelsey’s latest forecast, national brands will spend $62.7 billion to reach local consumers this year, a $600 million increase compared to 2018. Multi-location brands are now spending 25% of their budgets on location-based marketing, and more than 50% are using location data to target customers. But tightening restrictions on location privacy could threaten to upend the burgeoning market.
Facebook’s recent pivot and focus on privacy and encryption are unlikely to have a major impact on brand advertisers, at least in the near term. But what happens if other major brands, like Google and Amazon, decide to follow suit?
“In many respects, Facebook is in a unique position in that its perceived creepiness is largely due to its ubiquity across the web: users feel uneasy when they’re browsing a website and suddenly see ads and promotions when they visit Facebook,” McCormick says. “Most retailers aren’t at risk of provoking this worry with their own technology, since consumers are more understanding of their behavior on a certain site being used to power features on that particular site.”
Still, McCormick cautions that retailers should be paying close attention to their customers’ privacy concerns and adjusting their own practices to ensure they continue to earn the trust of their customers.
That means making sure data is aggregated and anonymized, and that any data that’s collected and shared is in accordance with applicable laws. Location intelligence firms play an important role in this equation, since brands are often relying on the firms they work with to help keep them in compliance.
“It’s easy for brands to dip a toe in the water using a location-informed audience in an ad campaign, [but] it’s a different thing to enrich customer records within a CRM system, or to enhance predictive models using location-derived data. These are the real strategic opportunities for location data with potential for big returns, but they also require a bigger investment,” says Jeff White, CEO and founder of the location intelligence firm Gravy Analytics. “While various agencies and regulatory bodies sort through their approach to privacy, we have always found a few simple tenets and business practices to be fundamental.”
In addition to making sure data is aggregated and anonymized, White says his company doesn’t handle any sensitive personal information. They also make sure that data is collected and shared in accordance with applicable laws, and they follow emerging best practices. Where the real trouble can come up, says White, is when customers haven’t been properly informed that data is being collected and when they haven’t given permission for its use.
White sees more concerns with precise and real-time location information than with derivative products.
“Brands should be as transparent as possible about their collection and use of customer data. Sure, no brand wants to give away their secret sauce, but in so many ways, location data is being used to improve their product offerings and the total customer experience,” White says. “Think about it: location data makes it possible to find your phone wherever you left it, and to get driving directions to virtually anywhere. It also tells you where the nearest Starbucks is so you can get your coffee fix. These are features most of us don’t want to live without. So, brands shouldn’t shy away from talking about how they collect and use customer data because most of what they’re doing benefits the customer first — and the brand second.”
Consumers in Control
Consumers are much more likely to open up, from a privacy perspective, when they understand what personalization and location targeting can do for them.
To a certain extent, personalization and targeting are necessary for brands to continue providing customers with the best possible experiences. According to Gil Larsen, VP of the Americas at the mobile location advertising company Blis, the key to making privacy and personalization compatible is to keep individuals in control.
“As long as an individual can feel in control of where and how their personal information is collected, stored and used, the idea of privacy and targeting can work hand-in-hand to create a truly tailored and one-of-a-kind online experience,” Larsen says. “It’s a win-win from a relevancy standpoint — the consumer benefits from a more relevant advertising experience based on their behavior, and brands benefit from creating a better overall customer experience, and typically higher ad engagement.”
Moving Toward Change
White believes that much of the debate over consumer privacy and location tracking right now is the result of fear mongering. Consumers are hearing the nefarious stories, but not the ones about how the benefits of location targeting and personalization actually work. Nonetheless, he says the train has already left the station, and there is too much momentum in the industry for it to not result in some changes.
By this time next year, the U.S. could be on track to implementing regulations that are equivalent to the GDPR. California has already taken a step in that direction with its Consumer Privacy Act, however White doesn’t believe that state-by-state regulation will be the long-term solution as marketers grapple with how to make privacy and personalization truly compatible.
“It’s just not manageable to have different laws and regulations in each state when the data is collected and used nationally. The law of the land will have to be something that comes out of Congress with the FTC as the likely enforcement agency,” White says. “It will probably take some time for Congress to be able to agree to legal principles of legislation, and industry associations have already begun to share their viewpoints.”
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