Data privacy and personalisation: Why marketers can have their cake and eat it

(c)iStock.com/john shepherd

The use of data to personalise company communications is axiomatic in digital marketing. Marketers were among the first to leverage the vast amounts of data companies now collect to allow them to offer more relevant products and services to consumers.

And these methods are only becoming more sophisticated. The world’s largest companies are now thinking of ever-more inventive ways of collecting data through the rising number of devices and channels we connect to. With Gartner predicting that 25 billion devices will be internet connected by 2020, it seems likely that the levels of personalisation we currently enjoy will look primitive in a few years time.

The benefits of using data for greater personalisation are clear. Advertisers are able to target their messages at the right consumers at the right moment, while also being able to see the effect of their efforts in real-time. They can elevate their work from an educated guessing game into a science, with every aspect of their ads and target audience tested and tweaked. The result is less waste and more impact from marketing budgets.

Consumers get a better deal too. Less irrelevant adverts is something most of us would support and many people also want to be actively exposed to new products which fulfil an interest or need. With good targeting advertising can become a valuable service rather than an unwelcome irritation.

A lack of consumer trust, however, could derail the bandwagon.  Currently most people will, albeit grudgingly, hand over personal data to companies in exchange for the, often free, services they provide, like search engines or products with a “freemium” model like Spotify. Consumers may not be happy about their personal data being used, but don’t see it as actively dangerous or overly invasive.

However this perception is shifting. Every week there seems to be another high-profile security breach where customer data is compromised. From Ashley Madison, to eBay, to the TalkTalk breach, awareness of technology-related privacy issues is greater now than ever before. Uber has even bragged about its ‘God View’ which lets employees track specific users on individual rides.

Companies are becoming acutely aware of growing consumer concerns and are racing to find solutions that are a combination of governance frameworks and privacy-enhancing technology. The traditional approach to data protection is, logically enough, to try to stop hackers getting in. Companies invest vast amounts in encryption, firewalls, intruder detection systems and other forms of ‘perimeter’ security. The problem with this approach is hackers are just as ingenious when it comes to breaking in as security professionals are at stopping them.

To make consumer data more secure, we need to seriously reduce the incentives of stealing the data in the first place. Paradoxically, it is the differences in the data that makes us individuals but the similarities in the data that provide value to marketers.

This insight leads us towards a new solution for digital privacy. If it were possible to dynamically cluster your data with that of others like you, it remains valuable for business and for society while at the same time being rendered untraceable to the individual. This way, you stay private and data stays useful.

What this means in practice is fully anonymising data. Hackers are only interested in personal data when it remains personal. They need to be able to tie it to individuals in order to use it. By contrast, the value in data for marketers is largely in the similarities. Marketers need to know about the behaviour of crowds of similar consumers, tying data to individuals is much less useful.

If users are to have any confidence that their private information will remain private, companies need to think very seriously about how they protect and anonymise user’s data. As customers become more aware of the vast amounts of their own data stored by companies they interact with, it will become even more important to return their loyalty by being loyal in return and protecting their data. Without this trust, marketers risk losing an indispensable asset – their customers.

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