When it comes to big tech and their data, know what to expect if and when restrictive privacy rules go into effect.
In part one of this article posted last week, I wrote about how data is used for personalization and how personalization benefits numerous aspects of user experience. I also used Cambridge Analytica’s misuse of Facebook data to highlight the need for a thoughtful, comprehensive and well-defined framework of regulation.
But with all of that said related to questionable corporate data privacy decisions, bad actors, naïve consumers and the clear need for a regulation, I wanted to loop back on what I said about a risk of overcompensation that could negatively impact businesses and consumers alike. For this reason, I believe it’s important for those of us in the industry — agencies, clients, media companies, marketers — to educate ourselves on this issue, make our voices heard and help our industry advocacy groups align on appropriate action.
WHAT’S THE WORST THAT COULD HAPPEN?
In this next section, I’ve provided a series of scenarios related to what could potentially happen if U.S. lawmakers went so far with privacy regulations that it limited or eliminated the use of non-personally identifiable data, or broke up tech giants in a way that limited their data collection and mining capabilities now accessed and leveraged by a large portion of the marketing industry.
Sales Cycles and Cost Per Sale
The efficiencies gained over the last 10 or 15 years related to data-driven marketing would absolutely be at risk. Think about the evolution in this time period to more and more targeted marketing, some of it highly audience-specific and served to users who actually have an interest in that particular product or service.
If, due to restrictive privacy laws, we could no longer measure what content resonates with a potential customer, the ability to match content and message to every point in the customer’s online journey would be compromised. This would prevent us from creating multi-touch attribution modeling and media mix optimization. Sales cycles could increase; sales revenue could decrease.
Basically, marketers could expect increased time and costs to meet the same marketing objectives.
The Google Bounty of Investment
So, what happens if privacy regulations, or even a breakup of Alphabet, prevent Google from using data in advertising as it currently does? Could there be a reduction in revenue? And if so, would it be enough to impact the availability of Google’s suite of free software?
In short, I doubt it. Google’s advertising business produces a staggering amount of revenue. In Q3 of 2018, $24.1 billion of Google's $27.77 billion revenue for Q3 2018 was from advertising. So, I really don’t think there’s much risk of Google pulling back on all of the free software (like Gmail, Google Analytics, Google Drive, Docs, Sheets, Slides and many more) it provides to businesses and consumers. And thank goodness for that. I don’ think I could go back to the days of worrying about version control for collaborative documents stored on a server.
But what about Google’s investment in innovation? Would Google moonshot projects (defined as the intersection of a big problem, a radical solution and breakthrough technology) become a thing of the past? If so, projects like Wing (a drone delivery service) and the Loon project (attempting to beam the Internet to the entire world via router-equipped hot air balloons) may never come to fruition. And while you might be thrilled with these ideas, think about the ideas that haven’t been discussed yet. The next idea equal to Google’s driverless car may never make it off the drawing board.
What Consumers (B2C and B2B) Can Expect
Prices will rise. When it is less efficient — i.e., more expensive — for a marketer to reach a given audience, those costs are logically passed on to customers as a cost of doing business.
Also, the online search and shopping experience — which has become easier and more seamless with each passing year — will slow down. It will take more clicks to get to information a user is looking for, with online marketing messages showing up that are less relevant to the user.
What Media Companies and Publishers Can Expect
Advertisers would probably be looking at a trip down memory lane on this one. Without the ability to use data to “find” targeted audiences anywhere they might be browsing online, advertisers would be forced to pursue audiences based on contextual relevance alone. Broad-based publishers and channels would suffer, as advertisers would no longer have a way to split out or target defined subsets of users and viewers. And highly niche publications and media channels with content developed for defined audiences would likely come out ahead. This means one-to-one ad buys, requiring a substantial amount of incremental time, as well as an equally high increase in media cost.
The Impact on Our Economy
Severely limiting the ability of the tech companies to monetize their user data could certainly have a potentially massive, negative impact on the entire martech and adtech industries. These companies (hundreds and perhaps thousands) exist with business models partially or wholly dependent on targeting users based on data. DSP/programmatic ad markets and ad buying would be especially hard hit, as would small publishers that depend on programmatic ads for a sizable portion of their revenue.
Jobs at risk. Companies at risk.
What We Can Do
I’m sounding this alarm because, as a professional who has seen the evolution of data-based marketing, I know it has benefited companies and individual people in ways we do not even think about any more.
The marketing success of almost every company in every industry is dependent on understanding customers’ wants, needs and behaviors. This has become so much easier and more efficient over time with the advent of the tools and data made available by the tech companies that are being vilified based on the actions of a small number of bad actors. Having a firmer grip on what customers are interested in and making it easier to help them find it is a good thing.
Yes, we need privacy protections. Yes, the tech companies themselves need to take their heads out of the sand. And yes, an appropriate level of regulation would be welcomed. But all of us in marketing need to understand how dependent this industry is on access to customer data. Once hampered or stopped, we will see a ripple effect on business, our own industry and pretty much everyone who uses a digital device.
Get educated. Get involved. Be sure our collective voices are heard. If we are silent and our industry remains sidelined, we will not like the results of what could be a data disaster.
Mark Robinson has been a part of the digital marketing industry since the mid-90’s when he became an early employee of one of the most successful Silicon Alley startups in NYC. Since that time, he’s held client-side digital strategy leadership roles for well-known companies in the financial services, retail and education industries. Most recently, his roles have been agency-side, delivering digital marketing and media services for both B2B and B2C clients, including his current role as Director, Integrated Media and Digital Analytics at CBD Marketing in Chicago.