Memo to European Marketers: The Sky is Not Falling


eu-marketing-digital-privacyEarlier this week, it was announced that European Union officials reached agreement on the pan-European digital privacy law, the General Data Protection Regulation (GDPR), which will ultimately impact marketing in Europe. Despite popular opinion on the subject, let me assure all the marketers out there that everything is going to be okay.

Spoiler alert: “okay” might come at a premium.

Let’s get to the bad news first. Marketers risk losing a maximum of four percent of their revenue penalties for breaking the rules. While these penalties are obviously intense, it’s unlikely some, or any, companies will be hit with this maximum. We’re in the nascent stage of regulations around customer data. Much like when cybersecurity regulations first became a standard, companies moved beyond the shock and grief and found a way to comply while staying competitive in their markets.

The primary challenge, and one which marketers can act upon and succeed, is the shifting balance of power between companies that sell customer data and the providers of that data – the individual customer.

Under the new regulation, gaining permission to collect an individual’s data just became more difficult. The opt-in can’t simply be a check box presented in the process of buying something. The customer will have to be more informed and more proactive in allowing personal information to be collected, and will require the opportunity to determine whether that information can be used even in anonymous analysis. Significantly, the regulations bestow to consumers the “right to be forgotten.” Like Keyzer Söze in “The Usual Suspects,” they have impact but cannot be found.

Just prior to the latest GDPR vote, the Wall Street Journal reported that “…executives spanning sectors from cloud computing to online advertising say the new law is likely to raise risks and costs for their businesses in Europe.” The paper quotes Townsend Feehan, chief executive of the Interactive Advertising Bureau, worrying that “…the transition to digital for publishers has already been troubling, so to threaten the business model on which they rely seems counterproductive.”  But the fact is that the landscape won’t become uninhabitable; it’s simply going to take more imagination and effort to succeed.

In order to tackle this challenge of a change in power, companies need to improve their side of the deal. Businesses have been collecting personal data with the most meager of incentives, or no incentives at all. That will change. People will be looking for something more valuable in return for their information, and businesses will have to respond. A free ringtone or coupons won’t cut it, so they’ll have to find incentives that will. And why shouldn’t the consumer get something substantive in return when they’re sharing their valuable data?

Personal information will have a greater value because it will be more difficult to acquire. The consumer – the EU consumer at least – knows that the “seller” is in a position to haggle, and smart companies will quickly find the sweet spot for these transactions.

In my conversation earlier this week with Direct Marketing News, I explained that creating the “Golden Record” for key customers will become much more challenging from a technological standpoint. Right now, the industry is focused on ways to take all the breadcrumbs a consumer leaves to calculate that ideal 360-degree customer view. As people opt out, there will be more holes in the data — fewer breadcrumbs.  That doesn’t mean the Golden Record is now out of reach. In addition to incentivizing our customers, we’ll have to develop analytic techniques that can bridge those data holes. This will make it harder and more expensive to succeed, but the goal is still eminently achievable. There is time, since the regulations won’t go into effect until 2017.

No doubt there will be challenges to the scope of the regulations and controversies over how some companies follow the rules. Marketers will have to be more creative about incentives. Tech companies will need to quickly develop new algorithms and the push to employ artificial intelligence. Machine learning will become an even greater force in marketing.

The GDPR is the first of what will likely be many future legislative acts reflecting consumers’ newfound awareness that companies are monetizing their data, so they  should be compensated for providing it. Because after all, data is the new currency.

If marketers creatively incentivize customers for their data and develop technologies to fill in the data gaps, the GDPR won’t be anything to lose sleep over.

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