Addressing Privacy Challenges in Retail Media Networks

We’re currently seeing a growing trend toward retail media networks, in which retailers create advertising platforms within their apps or websites. These networks present great opportunities for your advertising partners, but they also create a more personalized experience for your customers.

However, if companies aren’t careful with how they build their retail media networks and use customer information, they can end up with data breaches, significant fines and ultimately the loss of customers.

Clearly, trust is an important factor. In fact, three out of 10 consumers will stop buying from you if they believe their data isn’t secure. You might think you could just bring in new customers, but that would be a mistake: just 5% of repeat customers can produce up to 40% of your revenue if they’re especially dedicated. Just imagine how much potential revenue you could lose by driving off 30% of your customer base.

To help you avoid that possibility, here are some things to watch when you’re building out your retail media network.


Transparency is Key

The top reason that consumers cite for mistrusting how companies handle their data is a lack of transparency. Customers know at this point that companies are collecting their data. And many of these customers won’t mind that you’re doing it, as long as you’re upfront about your intentions and give them a clear choice about whether they consent to have their data collected and shared.

What’s more, recent privacy laws have increased the need for companies to shore up data security or face the consequences. In the European Union, there’s the General Data Protection Regulation (GDPR). In the U.S., laws vary by state, but California currently has the most restrictive policies thanks to the California Consumer Protection Act (CCPA). Companies that have run afoul of these laws have incurred fines as big as $800 million.

Clearly, online retailers that already have — or are considering implementing — a retail media network should take notice and reduce their reliance on third-party data sources that may cause trouble from a compliance standpoint.

Retail media networks typically use first-party data to create targeted advertising right on the retailer’s website or in-store. On the whole, consumers are receptive to advertising based on products that they are currently searching for. But retail media networks can become sticky from a privacy standpoint when you’re sharing that data with third parties.

Maintaining Transparency

You can improve your relationship with customers simply by building transparency into everything you do. After all, the GDPR and CCPA, which will likely be followed by similar laws over the next few years, demand transparency whenever you collect and share your clients’ information.

In other words, you have to let customers know what data you’re collecting and how you’ll use it. In the EU or California, you need to offer consumers the opportunity to opt out of sharing their data. While these laws have not yet spread through the whole of the U.S., they’re a good benchmark to help companies prepare for tougher data standards to come.

The first way you can do this is to switch your “opt-out” policies to “opt-in” policies. In other words, the default should always be privacy. This means allowing customers to opt into your data-sharing plans rather than forcing them to opt out. For example, you can ask users upfront whether they consent to allow you to create targeted advertisements and share data with third parties. Giving customers the ability to choose maintains transparency and increases customer trust. Along with providing a clear opt in, it’s vital to then maintain easy to access opt out.

The next thing you can do is explain exactly what benefits customers can derive from sharing their data. For example, when you present customers with a survey, state at the top how you will be using this information and how it will benefit your customers in return.

For instance, you could have a survey asking about favorite brands and products and explain that this data will help you choose which brands to feature in sponsored advertisements. For customers, this means an easier and more personalized shopping experience. Giving your customers a voice in whether to share their preferences while respecting their privacy will both increase customer retention and ensure that advertisements are targeted correctly.

Build your retail media network on a strong foundation of transparency and privacy for all of your customers. Not only will this give you a competitive advantage in a crowded market, it will also help you to prepare for a future of increasingly strict data privacy regulations.

Timur Yarnall is the founder and CEO of Neutronian, a SaaS company that provides data quality and compliance verification services. Neutronian also developed the NQI Certification, a comprehensive data quality, compliance, and transparency certification, to bring more trust and transparency to the marketing industry.

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