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Since launching the EU-led General Data Protection Regulation (GDPR), consumer data privacy has been the focal point of government regulators. Data breaches and corporate scandals about how companies manage user data have led to record-breaking fines. Immediately after the implementation of GDPR, France’s data protection agency imposed a $57 million penalty on Google for not asking for user consent before showing them ads.
With other regions taking a similar approach to data privacy, it’s apparent that regulators do not trust businesses to take the necessary steps in protecting user data. Because of the recent high-profile data breaches to Marriott, Facebook, and Microsoft, consumers are becoming wary as well. Cybersecurity statistics don’t lie: 78 million Americans are concerned about their cybersecurity, but only 30 million are doing something about it. Poor cybersecurity leads to data breaches, which lead to identity theft. 13.1 million Americans were affected by identity fraud in 2019, with a mean fraud amount of $1,409 per victim.
Rethinking Trust in Data Privacy
Due to sweeping privacy reforms, consumers are now more conscious about their digital footprints and their approach to trusting a brand. These policies have pushed companies to review and assess how they go about collecting and processing user data. Consumer disillusionment was already at an all-time high, to begin with, and many have installed ad-blocking tools to stop annoying and potentially dangerous ads from disrupting their daily browsing.
While ad-blockers undoubtedly help users, they also slash vital online advertising revenue for businesses that rely on ads. The combination of ad-blocking tools and declining print advertising profits have led many companies to seek subscription-based methods and other business models to dampen the effects. Marketers are now turning to smartphone ads by way of free apps to try and get their message across. Consumers don’t seem to mind these ads as long as they can use a free app in return.
What is the True Value of Personal Data
There’s an exchange of value in online advertising: consumers give up some personal information in exchange for ads that are targeted, meaningful, and relevant to them. Some consumers understand this, while others do not, and with all the new regulations in play, they need to give their consent first now. Most consumers are beginning to view this practice as redundant.
For companies, data is a critical player in driving the growth needed to enable them to become more competitive and set themselves apart from everyone else. However, many organizations monetize their data by directly selling it to third parties or advertisers, which has touched a nerve with data privacy advocates and consumers. Online businesses value consumer data and are willing to do anything to acquire it.
People are now more guarded when it comes to the real value of their personal information and what it means for the brands they trust. Brands need to be creative in how they can attract and convince consumers to share their data.
Privacy Risks and Trust Between Businesses and Consumers
The trust issues that people harbor against brands are real. Consumers are becoming increasingly wary of businesses not doing enough to protect their data. In essence, 69 percent believe companies are vulnerable to cyberattacks, and only 25 percent trust that these organizations are doing enough to handle their data responsibly. The problem is that consumers feel they do not have complete control over their data and will stop doing business with a company if their data is given away without their permission.
Businesses must do whatever it takes to safeguard the personal data of their consumers or face losing them forever when a cyberattack occurs. Taking the necessary steps to increase cybersecurity preparedness and not sharing consumer data with any third party are steps in the right direction.
With all the new data privacy regulations in place, organizations need to do a better job of making sure consumer information is handled with the utmost care or risk getting fined by government regulators. The most significant factor, however, is that any breach or attack is guaranteed to produce a lot of negative feedback that will affect consumer retention rates. Companies should start looking at ways to prove to consumers that their data collection is trustworthy by being transparent about their purpose and how they protect the information once they have it.