Big Picture

Are Marketers Responsible for Protecting Customer Data?

It has been more than two years since Google announced its plan to minimize third-party cookies in its Chrome browser in the name of online privacy. Google promised that by early 2022, it would devise an alternative that would increase its user privacy while simultaneously satisfying internet users, advertisers, and publishers alike.

To be fair, the tech giant has rolled out a few attempts, including the controversial Federated Learning of Cohorts, though none seems to have emerged as a worthy cookie replacement. So in June, Google pushed the phaseout timeline back to 2023 to give companies more time to sort out their plans for a cookie-free world.

The end of cookies will mean brands lose a powerful, proven tool for tracking internet browsers and serving relevant targeted ads along the way. It is still unclear what will succeed cookies, but Google claims that 30-plus proposals are in progress, four of them currently being tested. However, according to Electronic Frontier Foundation staff technologist Bennett Cyphers, “This is all just part of the trend away from generally available third-party persistent identifiers.”

Data privacy and security concerns have been around for as long as computers themselves, but privacy concerns have grown to become an era-defining cultural issue. In the past few years, we have seen the implementation of measures like Europe’s General Data Protection Regulation and the California Consumer Privacy Act, but they are just the tip of the iceberg.

Today, the EU is moving forward to create “a safer digital space where the fundamental rights of users are protected” with two mammoth pieces of EU tech legislation: the Digital Markets Act and the Digital Services Act.

In the U.S., states such as Washington, Virginia, Oklahoma, and Minnesota are considering some form of data privacy regulation, but a patchwork of laws could create confusion and leave companies vulnerable to litigation. Lacking a federal stance on privacy regulation and facing increasing consumer pressure, companies would be wise to rethink their consumer messaging around data usage.

A New World Order on Data Privacy

Gone are the days when consumers were willing to trade their privacy for a free browsing experience with no questions asked. A 2020 poll of 1,000 Americans determined that 93% will switch to privacy-minded organizations, 91% prefer to patronize businesses that guarantee them access to their personal data, and nearly 40% will spend more money with organizations that value their privacy. Furthermore, consumers do not take kindly to entities that make it hard to exercise their data rights: Respondents said companies that do not offer them clear access to their data are untrustworthy (59%), unethical (44%), and lazy (16%).

In light of this, savvy companies are placing a heavy emphasis on privacy and security to win back consumer trust. Unlike Google, browsers like Firefox and Safari have blocked third-party cookies by default for quite a while now. Apple, in particular, has used privacy as a competitive differentiator, evidenced by the September launch of iOS 15. The update boasts a range of privacy upgrades intended to obstruct ad trackers, mask Safari web browsing, and reduce the user behavior data that apps like Facebook can collect.

However, the best organizations do not base their business models on selling user data. Internet search engine DuckDuckGo, for example, has become a paragon of consumer privacy because it does not identify searchers or tie their search queries together.

The Right Messaging Can Make All the Difference

Despite data privacy concerns being at the fore of public discourse, not all privacy changes are made with consumers in mind, even though they can and will impact them. To preserve the delicate consumer-brand relationship, the latter must be more transparent about the adjustments they make in the ways they collect, store, share, and delete data.

Consumer distrust, after all, is at an all-time high. One 2021 KPMG report showed that nearly 90% of consumers are concerned about data privacy, another 68% are nervous about the amount of data being gathered, and 40% do not trust businesses to manage that data ethically. The answer is greater transparency.

Approximately three-fourths of consumers want clarity around how their data is used, yet only about half of business leaders are delivering that transparency, per KPMG. Nonprofits have stepped in to address this gap. For example, The Markup, a nonprofit newsroom that investigates Big Tech companies, created a tool called Blacklight to help internet users see who is watching while they work, learn, explore, and shop.

Being open about any privacy changes will provide a strong point of competitive differentiation, especially for smaller or younger companies. The fact remains that if a customer does not have an established affinity for a brand, they will move on to one they can trust.

The Future of Consumer Data Use

Consumers’ ever-increasing understanding of the value of their data has made them more protective of it, but businesses can and will continue to use that data until there are more comprehensive laws in place. However, that day may be closer than one might think.

By 2023, Gartner predicts, modern privacy regulations will protect nearly two-thirds of the globe’s data (up from just 10% in 2020). In the U.S., we are seeing a bipartisan congressional effort to revive conversations around data privacy and security through a series of hearings, a boost in Federal Trade Commission funding, and the proposed creation of a new privacy bureau to check Big Tech. Meanwhile, the EU is pushing forward with the Digital Services Act package.

Who knows what will come of that, but it shows that representatives are beginning to feel the heat and that regulations are on the horizon. Apple demonstrates that companies can leverage the value of privacy to attract customers and fend off competitors, and they do not need to wait for government oversight to get started. Companies that fail to read the room will not emerge unscathed. Some have already taken note. By the end of 2022, more than 1 million companies will have named senior-level privacy officers to ensure compliance and improve customer satisfaction, per Gartner.

In a world without cookies, businesses can and should focus their attention on first-party data. Gathering data directly from customers is the cleanest, most valuable option. Acquiring enthusiastic permission from customers to collect their data requires openness, strong tactics, and high-quality marketing tools, but it is well worth the effort. The aforementioned KPMG report showed that 40% of consumers would share more data if companies were transparent about how it was collected, used, and shared.

Data privacy has undergone several notable changes in the past few years in attempts to assuage consumer concerns over data use — and it’s safe to bet that more are ahead. Future-minded companies should take a proactive approach and begin positioning themselves as responsible corporate citizens dedicated to privacy and transparency.

Written by Christine Alemany.

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Christine Alemany
Christine Alemany is an advisor at TBGA. She has a passion for helping emerging companies grow and scale. Christine has more than 20 years of experience reinvigorating brands, building demand generation programs, and launching products for startups and Fortune 500 companies. In addition to her work at TBGA, she advises startups through Columbia Business School’s Entrepreneurial Sounding Board and is a teaching fellow at the NASDAQ Entrepreneurial Center.

Christine Alemany is an opinion columnist for the CEOWORLD magazine. You can follow her on LinkedIn.