Governments are putting under the scanner companies that have tailored data to reap unfair benefits.

By Sapna Arora

Digital marketing and advertising rely extensively on data, more importantly on personal data. Companies have for long collected data on consumers to determine potential customers, market swings and to figure out what consumers want. Regulatory control is now disrupting online data collection. Due to the increasing concern about privacy among consumers, technology giants are moving to strengthen privacy protection for their users, making it tougher for advertisers to track them online. Apple’s iOS 14 update gives users a handle on whether they want their activity to be tracked online. Google too has added a feature similar to Apple’s App Tracking Transparency, to Android 12. With Android and iOS jointly accounting for over 99 per cent of the global market share of mobile operating systems, the issue of opaque ad tracking, consent and privacy is now centre stage.

Though too early to gauge the exact scale of the impact, micro-targeting and interest-based advertising on online platforms is facing headwinds. India’s Rs 17,000 crore digital advertising market is at the cusp of change and needs to ascertain the opportunities and the threats of these implications. The government’s recent stance on WhatsApp data sharing policy sent a strong message to tech platforms to ensure privacy first. Globally, privacy is being strengthened through new laws.

Government tightening screws
 Governments are putting under the scanner companies that have tailored data to reap unfair benefits. For example, how Amazon decides which merchants appear in the crucial “buy box” is up for a review in Britain. There are stringent laws like the European Union’s General Data Protection Regulation, California’s Consumer Privacy Act, Singapore’s Personal Data Protection Act, and so on. In India, though the Personal Data Protection Bill is yet to be passed by parliament, the government is strengthening consumer privacy and swatting unfair advantages, wherever applicable. Social media influencers will be required to disclose paid promotions as per guidelines enforced from June 14, 2021.

These developments have left companies scrambling to create stronger ties with customers, and look for better ways to mine and manage data. How online targeted advertising so far has been working is that marketers assign your device an ID and monitor your web and in-app behaviour across different platforms. The advanced AI then steps in to generate composite profiles of demographic information, purchasing habits, and life events. The digital advertising business relies on micro-targeting audiences.
 
Mega tech companies have reaped huge benefits through such data collection: Google made an astounding $147 billion from digital ads in 2020 and Facebook made $84 billion, as per statista.com. The model is simple: provide a highly useful service for free, and then vacuum up data about users through a code. All the data is then used to train AI through the ad targeting algorithm.

Tailoring marketing to meet consumer demands

Marketers will now have to respond to the new regulatory landscape, and to the changing consumer preferences. Behavioural change for a marketer means a huge reset! CMOs need to start conversations in their own organisations, to move from a reactionary stance to a more helpful one, that anticipates customer needs and enhances business value.

The issue is complex because on the one hand there is a desire for more and more customisation, and on the other hand is the issue of privacy. Deloitte research shows that over 50% of consumers would like more personalized experiences in various categories, such as hotels, flights, and furniture shopping. On the other hand, consumers are concerned about privacy and want control over the ways their data is collected and used. In another Deloitte consumer study, 81% of consumers reported taking some action due to data privacy concerns in the past year, with 40% deleting an app and 43% deleting their browser history.

The Way Forward

There is no denying that data is needed across all aspects of modern businesses, starting from the product/service design stage. Going forward, customer engagement strategies will need to be realigned with changing customer preferences. A strong cultural emphasis, on privacy first within the organisation will see the message percolated across all verticals.

There have to be new ways to engage consumers to foster lasting relationships. When customers’ needs and aspirations drive the approach to first-party data collection, the value exchange becomes more relevant and trustworthy. Innovative solutions, with a deep underpinning of privacy ethics, need to be incorporated at all levels of the product journey, from the production-end to customer-facing departments like marketing and advertising. Customer outreach programs can still take place with customer consent.

Google’s decision to delay removing third-party cookies to late 2023 gives more time to digital marketers to refine their strategies. A new approach to data-driven marketing should be considered, but not with a tick box mentality.
This is the era of personalised and relevant campaigns. The way ahead is not about fixing a problem or working around it somehow. Instead, building strong, trust-based customer dialogues, a trust strategy, may hold the key to a more effective data strategy. Some brands may eventually put privacy at the front of the pitch to consumers. There could be a data relationship management ecosystem too that includes data by consent, stringent security walls and data dialogue for customised online advertising. How organisations overcome the odds and build better engagements will be the mark of their resilience. What’s for sure is that the cookie is set to crumble. And the customer still needs to be served but will the customer follow the crumbs?

-The author is regional head for OLX Autos Brand, CMO and head public relations (India). Views expressed are personal.