Some time in early 2018, Cambridge Analytica became Public Enemy Number One. In the perfect storm of scandal and regulation (think GDPR, which rolled out in May that year), public trust in how companies utilise and share their customers’ personal information became paper thin.
For consumer brands, the pressure was on to address concerns and change the way data was used in marketing and beyond. Without action, brands risked becoming irredeemably tarnished.
The fallout meant 2018 signalled the beginning of the end of what I like to call ‘data gossip’ - the aggregation and trade of personal data without consumers’ explicit permission.
But it doesn’t have to mean the end for data-driven marketing altogether.
Cutting the reliance on data brokers
Consumers may have had marketers in their crosshairs, but the real villains in the questionable trade of personal information were the data brokers, sucking up everything from hobbies and shopping behaviours to credit risk and spending history.
Before the GDPR came into force, these practices weren’t always challenged. Today, they are a serious concern, even taboo. Consumers and watchdogs are increasingly questioning how advertisers obtained certain information, and are quick to lose trust in brands if their approach to targeted advertising seems too creepy or pervasive.
The problems with third-party data aren’t limited to damaging consumer trust, either. Information gathered through ‘data gossip’ has also been found to be less accurate, with a Deloitte study discovering errors ranging from 10% to 50% in data supplied by a leading consumer information broker in a wide variety of categories. This resonated with a Financial Times report from earlier this year, where a privacy campaigner who requested his data from a third-party data company found he was bizarrely listed as someone ‘likely to suffer from an overactive bladder’.
For marketers, the direction of travel is clear - cut your reliance on third-party data, and become more transparent about the use of customer data.
Not all data is bad data
It’s easy for marketers to feel spooked by this, but ditching unethical, third-party sources should not mean the end for the use of customer data altogether.
It can still be used to take the guesswork out of marketing, create thoughtful, personalised campaigns, and build amazing digital experiences - all of which customers crave.
The distinction? The data used must be first-party. Put more simply, that’s the data that customers have consented to share directly with the company, and that sits within its four walls.
With it, marketers can:
View a clear and actionable view of the customer journey, to pinpoint the areas where marketing should be focused
Automate key parts of the marketing effort, helping to convert leads more quickly and effectively
Streamline the customer experience, removing inconsistencies and cutting the risk of contradictory or tone-deaf interactions
Tailor messaging and personalise campaigns
Understand campaign performance in real time, so investment is always going to the right places
In other words, when gathered and used with consent, respect and transparency, first-party data transforms marketing for the better, with clear benefits for the end customer.
If harnessed properly, first-party data can have a transformative effect on the business as a whole, reaping benefits for teams beyond the marketing department. For instance, the product team can find out exactly what customers want, and build products and services which solve their real-world pain points.
Calling time on the gossip
Though times have changed and the industry is embracing new standards, there are still some outliers using customer data from dubious third-party sources.
It’s great to see that regulations like the GDPR and CCPA are helping to make prioritising first-party data over third-party data more of a requirement than a choice, and making it compulsory for companies to be more transparent in how they collect and use data, while the standards for valid consent are much higher.
In an age in which consumer trust is more valuable than ever, marketers must act now to cut their reliance on third-party data. If they don’t, they risk damaging customer relationships beyond repair.
Written by Chris Sperandio, Lead Product Architect at Segment.
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