At the beginning of the summer, the General Data Protection Regulation went into effect, requiring marketers in the EU to obtain explicit consent from consumers before collecting and using their data. Companies refusing to comply could be fined up to 20 million Euros, which has been a motivating factor for brands around the world to update their policies and focus on educating the public about how their data is being used.
Early estimates show that as many as 93% of companies weren’t prepared for GDPR, and even major players in the media landscape, like The LA Times and The Chicago Tribune, opted to block European users rather than risk the fines. Still others, like Facebook, simply took the fines rather than change policy.
But brands were probably remiss to have collected so much data for so long in the first place, according to Ian Woolley, chief revenue officer for Ensighten.
“The GDPR is what companies should be doing anyway,” Woolley says. “This is how you should treat your users.”
In the very near future, experts say that heedlessly collecting data, regardless of the country’s laws around privacy, may create more problems than it solves.
A recent study by Pega showed that consumers are fed up with feeling resigned to hand over their data with no control of it’s used. According to the Pega study, 90% of respondents reported that they’d like direct control over how companies manage their data.
And while new rules place the responsibility for consumer education on the shoulders of data collectors, early studies show that some brands are using ignorance of the GDPR to obscure the real reason behind changes to privacy policy.
Though constant mention of the GDPR in the news may make it seem like the whole world understands what’s going on, an eye-opening survey by Amanda Zantal-Wiener at HubSpot showed that only 34% of consumers in the U.K. knew about the GDPR, and a full two-thirds of Americans had never heard of it.
That could be because brands like AirBNB are bombarding consumers with messages about privacy without explaining that they’re now legally obligated to do so. In fact, Zantal-Wiener found that of every policy update email in her inbox, just three mentioned the GDPR.
It seems that some brands are hoping to become GDPR compliant while keeping consumers clueless about their rights. However, such an opaque strategy might not work in the near future as first-party data becomes increasingly important for staying in touch with customers.
In the heyday of big data, most brands went for quantity over quality, hoarding and storing third-party data even if they weren’t planning on using it. A 2017 survey found that 59% of responding businesses were collecting data, though 61% didn’t have a solution for using it.
According to Bill Magnuson, co-founder of Braze, stockpiling irrelevant data no longer makes sense in a post-GDPR a world.
“We’re already seeing more scrutiny in the tool space after GDPR,” Magnuson says. “Previously, it wasn’t uncommon to send data to a giant warehouse even if you weren’t sure what you’re going to use it for. Now, there’s no point in collecting data you can’t use to send a message or personalize content.”
One example Magnuson uses is Spotify; “To recommend songs, you only need to know what people are listening to for the past 30 days, not the past 10 years.”
An increasing number of brands are choosing to stop relying on third-party data and instead focus on first-party data to serve relevant content and form more transparent relationships. First-party data is the information consumers voluntarily give brands about themselves, such as email addresses or mobile app downloads.
Many brands are even going beyond traditional routes to get to know their customers without being intrusive. Nestle, a packaged food brands, recently laid out its plans to analyze user reviews on sites like Walmart and Amazon in order to mine for consumer insights rather than rely on third-party data.
Getting to know your customers on their own terms, such as through online reviews, could (and probably should) become the new normal for marketers, according to Magnuson.
“One of the biggest things we’re seeing is that GDPR and additional scrutiny have accelerated the importance of first-party data and fostering relationships through channels,” Magnuson says. “Banner ads to lure anonymous eyeballs based on data collected from other sites doesn’t make for real relationships.”
In fact, customers actually hate being harassed for months by images of a lamp they clicked ages ago on a different website, with many reporting that they actually find it pretty creepy. Companies that are upfront about where and how they got their data are much more likely to see ad success.
Quite the opposite. In fact, studies show that transparency could be just what the industry was missing. Columbia Business School recently found that 75% of consumers are happy to share their data with brands they trust.
Building relationships with customers means being honest, not just about cookies and data usage, but also the changing state of the industry and the GDPR. If you’re asking users to click agree without explaining what’s up, you could just be setting yourself up to lose trust in the future.
“The GDPR is really good for the industry because it means more respect is being paid to the customer,” Magnuson says. “Now’s the time to start deeper conversations.”
