In 2021, global digital advertising spend hit $455.3 billion and is projected to reach $646 billion by 2024. But we’re currently in a rough patch of economic growth, which has forced brands to scale back and, for the first time in more than two years, seen them spend less on digital advertising.
This is significant as brands and marketers are also shifting their data privacy policies to comply with legislation like the California Privacy Rights Act (CPRA), which is great news for consumers as it requires brands to be transparent about where, when and for how long they can use consumer data. For brands, it presents a long-term opportunity to (re)build trust with consumers but, at the same time, it also means they have to implement new data privacy policies that impact how they run their marketing campaigns.
Understanding the Financial Implications of Data Privacy
In short, there’s a lot happening in the world of data privacy and brands are feeling it, as consumer data is what drives digital marketing. So from a financial perspective, there are two major reasons why data privacy laws loom large for brands:
- Non-compliance can cost billions: With the passing of the CPRA, the price of non-compliance has tripled for each violation, so brands that have hundreds, thousands or even millions of these individual violations could see billions of dollars in fines.
- Marketing/ad spend is wasted: Despite budget cuts and shifting resources, brands still need to keep consumers engaged, but if they’re not leveraging consented, first-party data then all of their campaigns will be fruitless.
The first point is significant but it’s the second challenge that I want to discuss, which is how leveraging the right data provides the right signals to inform successful digital marketing efforts. This is the crux of performance marketing, which relies on campaign metrics to inform decision-making and budgeting. But now with data privacy laws on the horizon, these traditional methods of data collection and data use need a complete makeover.
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Enhancing Marketing Efforts with ‘Performance Privacy’
Performance marketing is based on a feedback loop that starts with running a campaign, understanding what works, doubling down on those successful strategies and then repeating the whole process. Demonstrating the ROI is vital to performance marketing as it can be directly mapped to key performance indicators (KPIs), but the entire loop is in jeopardy if it’s based on bad data. And by bad, I mean non-compliant.
So while it’s clear that data is the lifeblood of performance marketing, now the focus has shifted to the type of data being used. In other words, compliance is crucial but it’s so much more than just avoiding hefty fines — brands must look to relevant, consented first-party data to fuel their marketing efforts.
The answer is what I call performance privacy, and it’s built on consent, transparency and the user experience. For example, someone might sign up for a rewards program to get a free gift and they’re prompted to input personally identifiable information (PII) like their home address or phone number. In that exact moment of the value exchange, the brand should clearly state why they’re asking for it (are they mailing you the gift?), but also spell out what else they might use it for (are they going to start texting you promos?). And lastly, how this all happens is incredibly important — the user experience should be simple, intuitive and native to any digital touch point that person prefers.
Make Those Marketing Dollars Count
Brands not only need to identify a clear value exchange for consumers; they also need to ensure transparent data practices along the way to create optimal experiences. This involves dynamic consent, where brands collect consumer data in a way that’s straightforward, consensual and contextual. It’s important to remember that without transparency there’s no trust, and without trust there’s no engagement.
It’s a new era of data privacy, making the direct link between data privacy policies and the user experience crucial. Performance privacy captures the right elements to drive today’s successful marketing campaigns, so brands must adapt to this new world and start collecting data they can use going forward. If not, they risk getting slapped with fines — but also, any marketing spend they put behind these campaigns will be completely wasted. With today’s economy, I don’t think that’s a risk any brand is willing to take.
Jesse Redniss is CEO and Co-founder of Qonsent, the first data privacy enablement and engagement platform built for consumers and brands. Redniss is an Emmy-nominated media, data and technology executive with 20+ years of data strategy, privacy expertise, multi-screen brand building and innovative product development. Prior to Qonsent, he was the EVP of Data Strategy at WarnerMedia where he oversaw the development of WarnerMedia’s Innovation Lab and the WarnerMedia Investments portfolio, and also led enterprise-wide data and privacy strategies. Redniss is also a Co-founder of the strategic advisory and investment firm BRAVE Ventures. Follow him on Twitter (@jesseredniss) and connect with him on LinkedIn.
