First, here’s what marketing data is not. The data that marketers use has nothing to do with NSA “spying.” And it doesn’t run afoul of information that’s already regulated, like your credit score. Rather, it falls into three main “buckets” of information: data from public sources, such as property records; self-reported data (like information shared by consumers in surveys and contest entries); and what I’ll call “inferred” data.
Inferred data is basically a “best guess.” We mash-up the first two types of data and use a complex algorithm to identify consumers who might be interested in a particular product or service. For example, consumers who live in suburban homes with pools might be interested in pool supplies, so the marketing company presents that group with a relevant ad or offer. In other words, marketing data is used for marketing purposes.
This actually enhances – rather than harms – consumers.
Here’s why. Think about the typical TV-watching experience. When a program breaks for an ad, many consumers will leave the room – maybe to get a snack, or check e-mail, or let the dog out – because the product offered in that TV ad has no relevance to their interests.
With the responsible use of marketing data, the opposite is true. Consider an e-mail offer that comes across from a favorite hotel brand or destination, or a catalog that arrives in the mail. Those pieces of marketing are relevant to the individual because the marketer has the data to know they’ll be of interest.
Data-driven marketing eliminates waste and inefficiency in advertising, along with the clutter of potentially unwelcome, irrelevant advertising. This enables companies to deliver offers and discounts to consumers most interested in their products. Overwhelmingly, shoppers support this. Seventy-three percent of consumers are willing to share personal information if it benefits them, according to international consulting firm PwC.
This, in turn, keeps the internet economy humming along. Today’s consumers expect, and even demand, instant and easy access to content – news, entertainment, social interactions – for free. This content and convenience is largely subsidized by advertising revenues.
Consumers get access to relevant content, and media and advertisers work together to deliver it, with advertisers footing the bill. This cycle is vital to driving commerce, competition and economic growth.
Responsible marketers use data the right way – for marketing purposes alone. Checks and balances are indeed needed to ensure this stays on course, but enforceable self-regulation has worked for 40 years. Currently, the Direct Marketing Association patrols companies engaged in marketing activities, and flags bad players for the FTC to investigate and take action.
So where do we go from here? Consumer education is a start. It takes the mystery and fear out of data collection and use. Marketers need to play a role in this, and companies like Epsilon have been offering a “peek behind the curtain” to let consumers see the information in their databases.
At the same time, consumers need to exercise their power. Marketers provide notice and choice, so it’s important to review privacy policies and – if they’re not comfortable with the way information is used or shared – opt out.
In 2012, data-driven marketing delivered $156 billion in revenue to the U.S. economy and fueled more than 675,000 jobs, according to research from the Data-Driven Marketing Institute. Short-sighted regulations would severely stunt a growing industry and could create a different and unintended harm than what regulators foresee. Rather than control the use of data, regulation might end up controlling the accessibility, choice and relevance that consumers want.