August 11, 2021
There’s plenty of warning about growing privacy concerns sparking stricter regulations that will upend a digital marketer’s relationship with customer data. Hello, privacy laws; goodbye, cookies. If you’re blindsided when these chickens come home to roost, you haven’t been paying attention.
“This shift is expected to have profound implications for digital marketers, who may no longer be able to rely on cookies to boost the efficacy of customer outreach,” wrote McKinsey & Company executives this spring in an article, A Customer-Centric Approach to Marketing in a Privacy-First World. “Those marketers and companies that do not figure out a strategy to maintain — and even grow — their access to first-party data may have to spend 10 to 20 percent more on marketing and sales to generate the same returns.”
McKinsey says only one out of three Americans believe companies are using their personal data responsibly. Along these lines, a Deloitte study found that 81% of consumers took some action due to data privacy concerns in the past year, with 40% deleting an app and 43% deleting their browser history. Throw in bad actors who take advantage of personal data, and you’ve got a powder keg in the form of more government regulations.
The European Union’s GDPR arrived on the scene three years ago, followed by the California Privacy Rights and Enforcement Act of 2020, which brings heft to California’s existing data privacy law. By 2023, California will have a new enforcement agency, prohibit businesses from holding onto customer data for longer than necessary, and empower consumers to tell businesses to limit the use of sensitive data, such as location, health, race and religion.
Platform vendors are trying to get ahead of the disruption, too. Apple phased out support for third-party cookies, and Google plans to do the same with Chrome within two years. Apple also plans to take greater action, such as limiting the sharing of digital identifiers.
So what should marketers do? The big idea is to focus on building out your first-party database. According to Ascend2, medium and large companies, as well as small companies, agree that first-party data was most important to their organization’s digital media strategy.
The McKinsey article calls for this, advising marketers to create a new data strategy that consists of four components: data invitation, a data security center, data dialogue, and a data value proposition. McKinsey says marketers should build customer trust through more comprehendible data-permission language, a customer-facing data security center, ongoing dialogue about privacy, and a well-articulated data-value proposition.
In other words, privacy can push marketers to forge a better relationship with customers through greater transparency, clearer communications and honest conversations.
Such a customer relationship can also open the doors to data. According to Salesforce, 57% of consumers are willing to share personal data in exchange for personalized offers or discounts. Nearly two-thirds of consumers say it’s acceptable for companies to send personalized offers and discounts based on items they’ve already purchased.
Simply put, the rising tide of privacy laws will make third-party data more difficult to acquire, and the impending demise of third-party cookies will disrupt the established digital advertising ecosystem. If you’re not preparing for this now, you’re making a major marketing mistake.
Tom Kaneshige is the Chief Content Officer at the CMO Council. He creates all forms of digital thought leadership content that helps growth and revenue officers, line of business leaders, and chief marketers succeed in their rapidly evolving roles. You can reach him at firstname.lastname@example.org.
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