Today's column is written by Nishat Mehta, executive VP-global partners at Dunnhumby.
Fundamentally, people prefer to be treated personally. We like to be called by name at our favorite restaurant. A resort hotel’s excellence often is defined by the way it recalls the preferences of its repeat guests. How much better is it to return to that Starbucks barista who remembers how we take our coffee? But when businesses take that personal approach online, consumers often feel uneasy because they don’t understand the ways in which their data is being collected and used.
Historically, companies have lacked transparency online, often coming across as ambiguous and untrustworthy. With privacy policies and practices hidden beneath layers of links or hundreds of pages of copy, consumers have felt misled and taken advantage of. Efforts led by the Digital Advertising Alliance and the Network Advertising Initiative, among others, are starting to make a difference, as companies are committing to becoming more transparent about data collection and enabling more intuitive measures for consumers to opt out of online tracking. And even Facebook, often accused of being a laggard on customer data protection, has recently announced its willingness to adopt the industry's AdChoices Icon (Ad Age story) for its display ads, enabling users to choose not to let ads be personalized using their behavior.
As marketers, we understand the balancing act of providing relevance to the consumer online. But, instead of an opt-out approach, what if we considered letting consumers opt in?
Imagine a consumer data marketplace where consumers could choose to provide their data to businesses with controls over how it can be used in exchange for market-driven incentives. Consumers would have the ability to turn off this access if those controls are violated or misused. This open data exchange would drive a personalization experience that is consistent and sustainable across all communication channels, while giving marketers access to accurate, permitted data exchanged transparently with the consumer.
Before concluding this is not commercially feasible for marketers, consider that paying consumers for permission to use their data is not new. It’s been happening for years. The multibillion-dollar broadcast advertising industry is built on radio and TV ratings, assumed to be accurate because consumers are incentivized to allow their media exposure data to be collected. Retailers frequently use discounts to convince shoppers to scan their loyalty card so their preferences can be used to personalize future communications. Even free online services such as Facebook and Twitter (where the consumer is not actually the customer, but rather the product) provide a service worth something to the user in exchange for collecting data about them and permission to commercialize it. However, even within these three examples, we see that the more transparent the incentives are to the consumer, the more likely the marketer-consumer relationship will thrive.
We are beginning to see baby steps in this direction already. The Midata initiative in the U.K. requires companies to release customer data on request. Tesco recently announced Clubcard Play, a gamification initiative meant to familiarize Clubcard members with their data in a “simple, useful and fun” way. But even more interesting, we’re seeing a new market for businesses appealing directly to the consumer looking for more control. Businesses such as Enliken explicitly offer a way for consumers to see their personal information in exchange for payment. Niche social media networks are emerging that offer consumers a “get paid to play” model. And websites like Personal.com are creating entire business models by helping customers decide with whom, when, and where to engage. In the direct mail space, we’ve seen organizations such as Catalog Choice create real traction with consumers who want control over the way marketers communicate with them.
A marketplace where consumers have control over their own data would benefit both consumers and marketers. Consumers get a fair price for use of their data and they retain complete control over whether and how their data is used. Their ability to revoke this data at any time gives them comfort to share it more broadly with marketers. The marketer can replace inferred data with real data that the consumer is incentivized to provide accurately, improving the relevance of customer interactions. The marketer is also able to let the marketplace determine the right balance between personal and intrusive for each customer.
I believe consumers want the ability to develop the same relationships online as they have in the real world. To work, these relationships should be based on information the consumer chooses to share, a belief that the information will be used to benefit the relationship and the power to end the relationship if it is not. As marketers, this should be the relationship we strive for as well.