Sam Brigstock, Strategist@MullenLowe Profero
Data - not as racy as it once was, but the race is most definitely on. Since the GDPR deadline last year brands will have been grappling with their data strategies and generally trying to work out what to do. Expect this to continue in 2019 with increased intensity and fervor as the pace picks up.
The Drive for First Party Data
The momentum of personalisation, AI and other data-hungry work-streams leaves little room for brands to take a step back in the data arena. In fact 71% of companies now use personalisation to optimise their marketing (Econsultancy, 2018). Many brands are aware that the more that data can flow within their organisation the more powerful their marketing will be. And while only a third (34%) have implemented a single data system for data collection this should increase to the majority in 2019 as 28% expect to do so in the next 12 months (Econsultancy, 2018).
Businesses are taking this trend seriously, CMOs are making data management a top priority, second only to ensuring growth (WARC, 2018). Collecting, managing and utilising data effectively in the coming months and years will separate the successful brands from the rest.
The Data Race: the top line
From: Hitting the GDPR deadline
To: Services designed for people’s privacy agenda
2019 Tipping Point: Snowballing consumer awareness of data and privacy issues.
Take Lemonade, the US based contents insurer, as an example. As a young insurance company they started with 0 first party data, competing against organisations with the luxury of over 100 years of customer information, but with equal need to adequately predict claim likelihood and other such metrics on which their business model is based. Their digital and AI driven approach has however allowed them to build products that access much greater amounts of data per customer and as such are poised to overtake their competitors in the data arena within a number of years, developing more streamlined products that offer data driven benefits to their consumers.
Consumers Catching Up
Consumers are also becoming more aware of the way that brands, particularly in big tech, handle their data, and by extension the way in which their data in general is used and owned by others. As a result, we are seeing continued rise of interest in VPN services, encrypted messaging platforms and other such privacy enhancing services that allow consumers to manage the data organisations are able to collect from them. As such, brands have to tread the line between collecting data to improve their services and preserving consumer privacy to keep customers onside.
Data Value vs Data Privacy
As a rule of thumb, there should always be a clear value exchange for the consumer. This is how brands should be thinking in 2019, looking to data as a tool for mutual benefit. From a consumer perspective this value exchange ensures that the motives for the collection of data are clear and that data privacy is of concern to the organisation, an invaluable distinction in a world where trust in businesses is significantly low.
A great example of using data as a tool for mutual benefit is Vitality health insurance. Their health insurance product offers the chance to reduce your monthly payments by tracking how healthy your lifestyle is using wearable tech like the Apple Watch. The more active you are, the lower your premium as your health risk statistically lowers: win-win, and a clear data exchange.
From a business perspective the incorporation of ‘privacy engineering’ — or the process of designing products and services with data privacy as a core principle — will also be of vital importance to the acquisition and retention of customers. In the words of David Gorodyansky, CEO of AnchorFree,
“The first 3 companies to a billion users (Yahoo, Google, Facebook) made money from your privacy, the next 3 will be about protecting that privacy.”
One company doing this well, ensuring their data practices are clear and transparent is Bulb, an energy company, whose work has led to an exceptionally well defined and well explained take on customer data use.
So if this is the trend, let’s take a look at some examples. Starting with an extreme but real and very relevant view from China.
To encourage a culture of sincerity, China are rolling out a social credit system which links into e-commerce giants like Alibaba via the Sesame program. Certain behaviors, like buying diapers, up a citizen’s social credit score whereas others, like excessive time on video games, lower it. As a result of these scores citizens have been blocked from purchasing over 11 million domestic flights. Low scores can also affect the schools available to your children and the ability to take out personal loans.
While this is an extreme example it helps to illustrate the inherent conflict between the desire to collect data for societal or personal benefit and the risks associated with a loss of privacy and control of one’s information. We are certainly not immune in the west either: facial recognition, for example, has been used at Taylor Swift concerts. Attendees were scanned when entering arenas in an attempt to detect known stalkers, a process many fans were unaware of.
From a product/service point of view we are seeing a change in the way in which solutions are built. Systems are being designed in ways that remove the ability for parties to act with greed or corruption, instead being designed with trust inherently built in. Principles such as decentralisation and technologies such as blockchain are paving the way for fairer systems reliant on open, community controlled structures. In other words, moving “From ‘don’t be evil’ to ‘can’t be evil’” — Ali Yayha, partner at a16z.
Taking a Stance
Some companies are ahead of the field; organisations like Apple have taken an early and firm stance on consumer privacy. Differentiating themselves from others by seemingly taking the consumer’s side and going as far as ensuring that private data such as that used for facial recognition is handled exclusively on personal devices and not centrally collected or uploaded.
Tim Berners Lee has been innovating in a similar space. via a new venture, Inrupt. Inrupt is developing a platform called Solid that allows users to own, control and manage their own data on the web. Users store their data in a ‘Solid POD’ and choose which businesses are able to access their information. While providing greater control this approach also opens up new possibilities for developers as they no longer need to harvest large amounts of data before creating tailored services. Instead they can, with your permission, access relevant data from your pod without ever worrying about out of date information and with the consumer always remaining in control of where their data is stored and how it is used.
Data Race Takeaways
1.Ensure that consumers receive a worthwhile value exchange whenever data is collected.
2.Collect data only when needed, excessive collection of data without value serves only to erode trust between consumer and brand.
3.Consider how you of how you communicate your data strategy with customers, transparency can go a long way to building trust.
4.And lastly, keep an eye on the horizon and be aware of how new technologies might impact your data strategy.