Privacy by Design & Customer Trust

In 2023, privacy will be a central focus in the United States. Several states are implementing data privacy laws, granting consumers rights, promoting transparency, and increasing business obligations. Against this backdrop, privacy must take center stage in operational planning and development. Consumers will expect businesses to comply, and regulators will enforce compliance. Those who take these requirements to heart stand to gain customer trust and goodwill, as organizations that are good data stewards will draw gains when compared with less trustworthy businesses.

This post is part of our 2023 Data Transformation Outlook series

Taking Privacy Out of the Black Box

Privacy cuts across multiple aspects of a business, and sometimes those interactions can be complex or hidden amongst the various business processes that may be in play. This was reflected in an August 22 eMarketer study that found nearly half of the respondents reported no familiarity with key privacy efforts slated to impact the industry over the next two years.

Privacy Familiarity
Brands need to be aware of the following changes on the horizon and be prepared, in some cases, to make major changes.

Escalating Regulatory Enforcement Challenges

Europe’s Digital Markets Act and Digital Services Act will transform how online businesses must operate within the Union, CNBC reported that 100+ data privacy and security laws are in place globally, and domestically we will see five privacy laws begin enforcement over the year. An estimated half of brands remain unaware of these changes and so risk being blindsided by enforcement action. A “wait and see” approach has worked in years past, but there is increased risk going forward: As the number of laws increases, waiting for a perfect plan for compliance risks enforcement from multiple states in the meanwhile.

Recommendation: Build Preparedness & Trust Ahead of Regulatory Changes

Succeeding in these challenges can easily set a brand apart from the competition as privacy enforcement efforts likewise increase. Those who fail to incorporate privacy proactively may soon find themselves subject to investigation, bad press, and fines, with budgets curtailed and roadmaps derailed as key staff gets swept up in enforcement investigations.

This is to say nothing of the loss of consumer confidence which often follows as a second-order effect from enforcement action and bad press. A study in The Economist found that following a loss of consumer trust, brands may see up to a 30% reduction in value. Meanwhile, consumers may spend up to 25% more on brands with whom they have established a trusting relationship.

Technology Shift Challenges

Marketing attribution efforts are expected to become more difficult as third-party cookies enter the end-of-life for the Chrome browser. Upwards of 47% of brands will be blindsided by these changes.

Recommendation: Create a First-Party Data Strategy

With the loss of third-party data, we suggest brands consider shifting to a first-party data approach. This simplifies things from a privacy perspective and makes compliance easier. The downside is that this shift isn’t easily done and can affect marketing plans and tactics. It’ll be key to identify replacement plans while there’s still time—before the cookie end-of-life date in late 2024.

Privacy By Design

Since Ann Cavoukian, Ph.D. introduced the concept of Privacy By Design in the 90s, we’ve seen a shift to requiring privacy in product design. This trend has increased in recent years, finally becoming part of regulation with Europe’s General Data Protection Regulation (GDPR), which has acted as a basis for the impending slate of U.S. legislation. For those who claim user privacy is paramount, these principles offer a solid foundation for business efforts while promoting user trust.

The Intersection of Personalization, Privacy, and First-Party Data

The three above issues intersect, and increasingly the net result is less (fewer) data to make decisions with. While data modeling has been proposed as a solution, we feel there’s another path to creating a clear value exchange between the organization and the consumer.

Recommendation: Offer Value for Value

The shift to a more privacy-focused brand isn’t minor, and it starts at the top. Rather than just check a box for the minimum regulatory compliance, embrace the spirit of the laws and the technological shifts to support what consumers are looking for, and reap the benefits of increased consumer trust. Your users, customers, and stockholders will thank you.

Conclusion: Immediately Focus On Privacy & Reap Rewards

We’ve gotten a huge head start on identifying humans (and bots and fraud) at Search Discovery. We’re looking forward to talking about it more soon. I don’t expect our industry to completely change in 2023, but I expect that the smart, early adopters will want to pull back the curtains to see what’s there.

Addressing the Analytics Fraud Problem

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