CCPA's Effect on Personalized Marketing and How to Adapt Your Strategies
The California Consumer Privacy Act (CCPA) came into force on Jan. 1, 2020, and it greatly restricts how brands collect and manage consumer data, thus affecting personalized marketing. Under the CCPA, consumers will know when personal data is being collected and where that data is being sold. They will also have the right to access that data, refuse data collection, and request that a business delete their personal information.
The CCPA is the latest in a set of measures being introduced to protect consumer privacy. When Europe’s General Data Regulation Protection law went into effect in May 2018, businesses operating on a global scale had to update their websites to comply with the data access and deletion requirements. Facebook launched new tools for user privacy and opt-in options, Apple launched a privacy dashboard, and Google updated its products and privacy policies.
If you were proactive in 2018, complying with the CCPA might require little to no additional work. If you did not, you need to take note. As a company operating in the U.S., the CCPA will most likely affect you. After all, somebody in California will eventually use your app or click on your site. You need to update your privacy policies, and you may have to consider which data your consumers actually want to share with you.
Privacy Vs. Demand for Personalized Marketing
When the GDPR took effect, most consumers did not even notice. Many companies set up a policy wherein if consumers did not click “no,” they implicitly were clicking “yes.” Rarely is someone going to choose to browse anonymously and lose out on the benefits associated with data aggregation — unless that person finds out that data is being sold elsewhere.
On the one hand, consumers benefit from personalization. They often choose to share behavioral data for ease of use or a better overall experience. For example, Google recently partnered with Ascension, one of America’s largest healthcare systems, to crunch personal health information in order to create a health platform with personalized treatment plans.
American companies have always had the ability to commodify consumer data, even though they often did it poorly. But increasingly, people are becoming aware of the value of their information. Data catastrophes have left consumers feeling powerless, and today, 79% of them feel companies know too much about them.
Expected Consumer Responses
Businesses already know the value of the data they collect. The CCPA will be a good indicator of how much consumers value that same information.
If you divide the annual digital advertising revenue in 2017 ($83 billion) by the number of Internet users in the U.S. (287 million), you can determine the average value of a single consumer’s data: It comes out to about $289 annually.
Most people have no idea that their data is worth that much, and that is just one use of it. Their shopping habits, fitness habits, viewership data, and more are sold to a variety of sources. Yet consumers have little control over this data — nor are they compensated for it.
Data-driven brands know how much they pay for data and how much it is actually worth. When consumers come to the same understanding, they may begin to opt out. Nobody knows whether it will happen, but theoretically, consumer data will become increasingly more valuable as awareness rises.
Develop a Plan to Adapt Your Strategies
Under the CCPA, brand leaders will have to establish a strategy to comply. It is not the first time, and it will not be the last. Technologies change, consumer habits evolve, and preferences shift. Here are a couple of suggestions for how your marketing strategy can evolve with them:
- Work to gain the consumer’s trust. With personalized marketing, marketers will have to invest more resources into gaining permission to use consumer data. There will have to be a compromise between individual privacy and companies that rely on data to improve their services. Brands will have to provide tangible value and earn trust before expecting consumers to provide them with their personal data.
- Use focus groups and panels. If it gets more difficult to extract individual information, brands can turn to focus groups or panels — which offer a degree of anonymity to the consumer. In a panel, users agree to share data about the items they purchase and watch, and the panel acts as a representative of that demographic. This data is used only for research, and the identities are never shared beyond the party conducting the research.
- Offer increased benefits. Those who truly benefit from access to personal data should consider incentivizing their customers. Brands today offer a discount when a user opts into a newsletter or text alerts, and they could do the same for a customer opting into personalization. Each brand must determine the price sensitivity of its own customers. These incentives do not have to be monetary. Many could offer increased benefits or services over a dollar amount. For example, instead of paying for increased storage on Gmail, a user could release his or her data in exchange for the upgrade.
Change is on the horizon — no matter what strategy you implement. As technology continues to change and new laws are created, businesses will continue to evolve and find ways to meet consumer demands while fulfilling their own needs.
Christine Alemany is the CEO at Trailblaze Growth Advisors. She has a passion for helping early- to midstage companies grow and scale. Christine has more than 18 years of experience reinvigorating brands, building demand generation programs, and launching products for startups and Fortune 500 companies. In addition to her work at TBGA, she advises startups through Columbia Business School's Summer Startup program and is a teaching fellow at the NASDAQ Entrepreneurial Center.