Data Protection Day 2015: businesses must educate consumers about the value of their data

Data Protection Day 2015: businesses must educate consumers about the value of their data

Wednesday 28 January is Data Protection Day 2015. The aim of the day is to raise awareness of online data privacy issues, and it calls on organisations to pledge their commitment to the cause by “Respecting data, safe guarding date and enabling trust”. For one-to-one marketers working in a data-driven economy, earning consumer trust depends on educating them about how their data will be used and about the value of their data.

A common refrain is that the ‘internet is powered by naivety’ – that consumers are unaware of just how valuable their data is that they freely share through social media and making online purchases. This should be of huge concern to the data-driven marketing industry, as no marketplace can thrive in the long run without some notion of fair value exchange. But there is now a clear fair value exchange available to consumers at the moment; businesses must explain why they need their personal data and state how the consumer benefits from this. Consumers will never be a part of a fair value exchange if they are not empowered with the knowledge to understand the choices they make. Businesses must educate their customers on this value exchange to empower both parties.

A study by the DMA, ‘Data privacy: What the consumer really thinks’, carried out in June 2012 found that consumers form three broad groups: ‘privacy pragmatists’ - those willing to make trade-offs on a case by case basis; ‘privacy fundamentalists’ - those unwilling to provide personal information; and the ‘privacy unconcerned’ - people unconcerned about the collection of their personal data. In effect, 69% of the population are either unconcerned or happy to exchange their personal data in the right circumstances. The mission is to convince the other 30% of the benefits of sharing their personal data and that those that are unconcerned should be aware of the value exchange when using their personal data to access products and services. There is a lot more to be done.

The new DMA Code has been designed to shift businesses’ focus from only ensuring their marketing complies with the law to working to a higher set of principles based on consumers’ data privacy expectations. Businesses adhering to the DMA Code are leading the way in combating some of the negative perceptions that exist among the public.

Chris Combemale, executive director at the DMA, believes the new Code is vital to the success of the digital economy:

“Treating the customer with fairness and respect lies at the heart of our Code and is key to fostering trust. Data fuels the digital economy, so earning customer trust is a commercial imperative. Companies must make every effort to ensure that they always collect and use consumers’ data in ways that they expect and benefit from.”

Already there are great examples of businesses leading the way, The Guardian produced an excellent video ‘Why your data matters to us’ , it explains the key reasons why data is collected and reassures people that their data will be kept safe and above all not sold on to a third party. Guardian customers are rewarded with personalised content, exclusive offers, invitations to events and better targeted advertising. These benefits are only gained if people are willing to share their personal data. In turn targeted advertising allows for increased revenue, which means even more quality content for Guardian customers.

Another excellent example is Channel 4’s 4oD service, which now has over 11 million registered users. Customers are incentivised to register with 4oD for a range of benefits, such as exclusive content and tailored recommendations. Channel 4 use its data insight to enhance its special not-for-profit commercial model; for example it now offers advertisers targeted ad packages on 4oD, which means more can be spent on content for the viewer.

David Abraham, chief executive at Channel 4, said:

“Encouraging people to share their details in the first place can be a challenge, which is why we launched our Viewer Promise giving our viewers complete control over their data and transparency on how we use it. Our growing database is testament to its success.”

At the moment not enough consumers are aware of the great benefits to be had in sharing their personal data with businesses but neither are enough businesses doing their bit to educate consumers and show them the value exchange. It is up to marketers to maintain the trust of consumers and show people that sharing their data is not something to shy away from but something to embrace, which crucially delivers fantastic benefits to people.

The one-to-one marketing industry is at a turning point and it must embrace the new era of transparency. While many consumers remain naïve of the benefits, it is up to businesses around the UK to change this and educate people about the benefits. Today, on Data Protection Day, each marketer and organisation should pledge their commitment to recognising one-to-one marketing as an exchange of value between its business looking to prosper and its customer looking to benefit.

Want to know more? Attend the DMA's annual conference Data protection 2015 on 27 February