At least 87 million consumers, largely in the United States, had their and their friends’ Facebook data used by Cambridge Analytica. Last week, Mark Zuckerberg testified before Congress to address the ramifications of the breach and how Facebook will improve moving forward.
How did it come to this? And perhaps more importantly, where do we go from here?
This week, we hosted a conversation between our own Jonathan Lacoste and Peter Horst, founder of CMO, Inc. and former CMO of The Hershey Company, on the future of marketing after Cambridge Analytica. Topics discussed included the technologies, best practices, and strategies that need to change — and the new ones which should implemented.
Did you miss the webinar? No problem! We’ve got the top three takeaways right here.
1) We’re in the middle of a paradigm shift, and Cambridge Analytica was the tipping point.
In the era of #fakenews, social engineering, and manipulative political messaging, consumers are now hyper-aware of how their personal data is being collected and used. In many ways, consumers have gotten their first peek behind the curtain of modern marketing, and are not liking what they’re seeing.
It’s no surprise that now over 60% of consumers express privacy concerns over how their online and mobile data is tracked and another 68% don’t trust brands to handle their personal information appropriately.
This sentiment, however, has been brewing for a while. Overall, marketers have ignored it. Consumers have been expressing skepticism over sharing their data long before Cambridge Analytica. In fact, the General Data Protection Regulation (or GDPR) has its roots all the way back to 1995 with the creation of the European Data Protection Directive.
Although the skepticism has existed for a while, the digital economy has made it increasingly difficult for consumers to take data protection into their own hands. When “Terms of Service” agreements reach 40-50 pages, many consumers (ourselves included) often select “I agree” to move forward with their digital experience. This, in turn, has unlocked the door for tremendous amounts of data to be captured and sold.
As Peter put it, “People are waking up to the realities of digital life.” And the changes have just begun.
2) Personalization comes at a cost for both the brand and the consumer.
The outcomes of Cambridge Analytica will dramatically impact companies that focus on buying or selling third-party data. This is no small feat: Over $10 billion was spent on third-party data solutions in 2017.
Although the weakness of third-party data are obvious (inaccuracies, irrelevancies, staleness, etc.), this data often serves as the foundation for providing personalized experiences across digital channels. And consumers demand personalization.
A recent study by Accenture shows that 75% of consumers expect personalization on digital channels from brands. The rush to personalization, through data capture, was to meet a market need.
Personalization, however, comes at a cost for both for the brand and the consumer. For the transaction to work, consumers must give up their information while brands must capture, purchase and activate the data.
3) There are two big changes looming: where will marketing dollars go and how we will talk about and classify data in the future?
Where will marketing dollars go?
With third-party data on the decline, where will the $10 billion go? The answer is simple – brands will have to shift from renting data to building their own data equity.
Our prediction: Considerable amounts of the spend will be diverted from purchasing third-party data to capturing their own declared data.
Declared data is a type of first-party data that has been willingly and explicitly shared by an individual consumer, often about their motivations, intentions, interests, and preferences. The key difference is that it comes directly from your customers. They actively give you the data.
Brands will have to shift focus from quantity to quality. Unique, first-party data will become a significant competitive advantage.
How will we talk about and classify data in the future?
As choice and privacy become the key talking points and data differentiators, it’s clear that how we classify data will have to change. Current data classifications do not accurately describe method of collection, and a consumer’s choice in the matter.
The differences between of first-party data, second-party data, and third-party data is often misunderstood and misrepresented.
A shift is needed to a more transparent, explicit articulation of what data is gathered, how it’s manipulated, and how it will be used by marketers.
As we do this, we’ll need to get more transparent around several steps in the process:
- What data we’re gathering
- What we’re doing with it in terms of analyzing it.
- How we use the data and who we share it with
- What a customer can expect as a result
As the industry continues to evolve to meet consumer concerns, we know that consumer privacy, protection and transparency will continue to shape marketing data spend and collection.
Food for Thought:
- Could selling third-party data become illegal in the future?
- Could an ad-free social network exist 2021?
- Will more technologists run for political office?
Join the conversation on Twitter with #AfterAnalytica! We’d love to hear your thoughts.