Solving the Privacy Puzzle

ResearchSeptember 6th, 2018

Hero image

Personalization. It’s a thing. When consumers go online, they expect custom-tailored digital experiences that are ‘best for me’–and will navigate away from content and ads that don’t deliver. Privacy is pretty important, too. Users want to control who gets to use and share their personal data. Problem is, it gets challenging to shape ads and content to a users’ needs, if marketers can’t find out who those users are and what interests them.

Analysts call this the ‘Privacy Paradox.’ But how paradoxical is it?

Do consumers really care?  

Over the course of 2018, the digital ad market is projected to grow 15%, which translates to $106 billion and more than half of all ad spend globally. And although consumers have expressed concern over non-consensual use of their data–especially following the recent Facebook scandal and other high profile breaches–their uneasiness hasn’t translated to any real behavioral shifts.  

But that could be subject to change.

A recent Forrester report suggests the rosy projections may rest on false expectations.  For online ad spend to grow at the forecasted rate, consumers would need to keep providing their personal information in exchange for personalization. And studies suggest that tide has started to turn. Over the past four years, consumers have shown a steady decline in their willingness to give up their personal data in exchange for more relevant advertising. So what’s a digital marketer to do?

It’s all about the flow

Compelling research recently published in Harvard Business Review suggests taking some cues from the analog world. According to the authors, the information flows that people tend to object to offline create online backlash as well. Third party sharing of personal data (‘talking behind someone’s back’) and collecting of behavioral analytics (‘inferring information without being told directly’) will translate to significantly reduced interest in visiting websites and making purchases–that is, if a user is aware of such practices occurring.    

Often, of course, consumers don’t realize if and how their data is being shared. But the study authors caution ‘keeping users in the dark’ won’t work as a long term tactic. As consumer awareness and understanding of data sharing and collection practices continue to grow, marketers who opt for business as usual may end up with hard-to-fix trust issues on their hands (similar to the offline analogy of ‘deceiving a friend’).  

Researchers suggest several practices can help customers feel more comfortable with marketers’ use of their personal data. In the context of advertising, these recommendations show a clear interconnection between increased marketer transparency, heightened customer trust, and a rise in purchase intent:

Build trust through voluntary ad transparency. When platforms and advertisers let users know how and why their information is being used (e.g. Facebook’s ‘Why am I seeing this ad?’ feature), customers’ purchase intent tends to increase.

Give customers control of their data.  When customers can choose whether or not to share their data in a given context–and opt to so so–they will be more receptive to ads that draw on it.  

Justify why an ad needs to draw on personal information. When marketers explain why an ad relies on a customer’s data–especially if the customer can see clear benefit from the usage, such as in the case of location-dependent discounts–customers will usually forgive the infringement.  

Recent Beyond research similarly suggests increased transparency around the explanation of privacy policies may lead to a boost in purchase intent. In a recent survey, 20% of respondents stated that a clearly explained data and privacy policy would affect their decision to purchase a product online from a given retailer.  Over 45% of respondents felt retailers did not clearly explain their data and privacy policies. And 56% could not confidently state, after reading data and privacy policies, what websites might do with their personal data in present and future, after granting them permission to access it.  

Can marketers have their cake and eat it too?

These recent studies show the ‘privacy paradox’ may not be so contradictory after all.  Once customers become aware of how marketers use their data, they care. The research also suggests transparency may serve as a ‘permission slip’ for the collection of private information and for data-driven targeting. And that it even increases trust in a way that can become a valuable market differentiator.

To give consumers the personalized experience they want without sparking anxiety and fueling backlash, savvy digital marketers should consider an age-old best practice: handle private information and the users who provide it with respect and honesty.  In other words, treat your customers the same way you’d treat a trusted friend.