Privacy Laws Are Affecting Third-Party Data (and Your Marketing)
Do you trust organizations with your personal data? How do you feel about them tracking your activity across the internet via third-party cookies?
For decades, marketers have relied on the power of third-party data to gain insights into their customers. Without it, many of today’s most common marketing strategies would look completely different or even become obsolete. Some examples include:
- Programmatic advertising
- SEO and keyword research
- Social media advertising
- Targeting and retargeting ads
- Audience building and segmentation
The shift from third-party data (purchased) to first-party data (business-owned) is happening whether you like it or not. This change comes with novel privacy and security challenges that, if not met head-on, will have dire consequences. In Q3 of 2022, approximately 15 million data records were exposed worldwide due to breaches.
While 60 percent of global consumers think companies collecting their personal data is fine if that means there will be a better user experience, 90 percent worry their data is not secure. Consumers are right to be concerned — data breaches are common and can have serious side effects, from spam calls and texts to proactively replacing a credit or debit card. In a worst-case scenario, these breaches can lead to identity theft.
When data breaches occur, they undermine consumer trust and confidence and can also affect business performance. For publicly traded companies, share prices fall an average of 3.5 percent after a breach, and share prices drop an average 15.6 percent three years after a breach.
We recently conducted a research study to determine how professionals view these changes and how they currently gather and use data. In today’s post, we’ll discuss strategies for protecting yourself from liability and data storage and privacy best practices.
Adapting to New Changes on the Way
Cybersecurity issues are no longer isolated incidents. One recent study found that 53 percent of mid- to large-sized companies have experienced a security breach. Since only 19 percent of respondents said they have complete knowledge of where their data is stored, data storage contributes to security breaches.
But a company’s size does not protect them from breaches. Small businesses are just as vulnerable as larger ones, especially ransomware and stolen credentials attacks. However, unlike their larger counterparts, it’s common for a data breach to put a small company out of business within a few months due to reputation damage, related costs afterward and diverting resources to resolve the issue.
As data breaches have become more common and sophisticated in recent years, cybersecurity has become more than just an IT issue. One Gartner study found that 88 percent of boards view it as a business issue that many stakeholders need to address. Consumers are chiming in, too. More than 50 percent believe companies should be forced to adopt mandatory data protection controls after a data breach.
Consumers, employees and business owners are paying more attention to data privacy and security. In 2022, 35 states and the District of Columbia introduced over 200 consumer privacy bills. And five states — California, Colorado, Connecticut, Virginia, and Utah — have enacted comprehensive consumer privacy protections that have transformed the consumer data landscape.
How Marketers Feel About Third-Party Data and Privacy Laws
One in two marketers strongly agrees that data privacy laws make it harder for them to do their jobs. At the same time, 64 percent worry about the privacy of their personal data. We can appreciate enhanced privacy and security protections for our personal data while feeling frustrated in our roles as marketers.
Add third-party cookies going away in the next few years, and consumer data is more complicated than ever. How resilient you are depends on how your organization treats data and your plan for the future.
After conducting the research, three distinct attitudinal segments emerged: Independent, Data-Reliant and Concerned respondents.
If you’re like the Independent marketers from our research, you’re using very little third-party data and feel confident about the quality of your customer data and how you’re managing it. Often, these marketers work for small businesses that know their customers well. As new technology like AI and cloud-based computing becomes universal, you can adopt technology strategically while keeping data privacy best practices in mind.
Data-Reliant marketers lead with strategy and value data. They also rely on third-party data to craft personalized marketing messages to their customers. Because they use third-party data for marketing initiatives, they’re more worried about the future.
Most marketers we surveyed were in the Concerned segment. These marketers worry about their personal data and think using third-party data is risky. They think third-party data used to target advertisements makes them look like spammers. They know third-party data is going away and believe the best lists are developed in-house. If this sounds like you, put your data practices in place now, not when cookies go away. Start gathering your data today safely and securely.
Protecting Yourself From Liability
Our research shows that 70 percent of marketers use at least two data storage solutions to house data, putting them at risk for data breaches. When your data comes from multiple sources and you store it in different databases, it makes you more vulnerable to attacks. Knowing where your data is and who has access to it at any given time is essential to keeping it safe. Fortunately, following data storage and privacy best practices can eliminate your liability burden.
- Data is only as good as the person who enters it. Make sure you have clear guidelines when you ask a customer to enter their data into a form or when you do data entry for your business.
- Data can be stored for as long as the consumer allows it. While you might want to keep everything you’ve collected, data can go bad (like milk). When thinking about storing your data, consider giving your customers the ability to request their data be deleted from your database and identifying your business data retention plan.
- Data should be cleaned constantly. That might seem daunting, but if you are using it on a consistent basis, you want to make sure it’s kept in order. Reflect this in your data retention plan and communicate it to your whole team.
- Store your data securely. If it’s in an excel file, password protect it. If it’s through a CRM, make sure you know the user policies so you give the right permissions to the right people. If possible, make sure to require two-factor authentication for all users.
As Data Privacy Changes, Change With It
Most marketers know how to duck, bob, and weave when industry changes are out of their control. But we’re all facing dramatic changes in third-party data privacy, security and liability that require a different kind of agility. The more prepared and strategic you are, the easier it is to do your job effectively and efficiently.
Talk with other business owners on how they’re using data. Don’t work through this alone. Use your network to find out how others are dealing with the upcoming changes.
To learn more about the research study, check out our entire Executive Summary. And to explore the data yourself, check it out here.