Marketing Insights

Why Data Privacy Matters for Consumers and Advertisers

Data Privacy Matters

The Push for Data Privacy 

It’s no secret that the consumer push for data privacy is strengthening. With a steady trickle of news stories on data privacy breaches and ways consumer data has been used over the years, it is no wonder that there is a growing number of consumers who want to know upfront what information they are handing over to companies and how those companies are using it.

With the European Union’s General Data Protection Regulation (GDPR), California’s Consumer Privacy Act (CCPA) and California Privacy Rights Act (an expansion of the CCPA), we’ll likely see more states hop on the privacy bandwagon or a federal law providing a baseline for the ad tech industry over the next few years.

Understanding How Data Collection Works in Advertising and Upcoming Changes for the Marketing Industry

In marketing, advertisers use the information they collect on consumers, often coming to them via web “cookies” (a data file that can store browser behavior or other information about each person who visits a website), to make sure their ads are targeting the right audience – the audience who would most likely use their products or services. 

Think of it like this: Say you have a business and decide to run an ad on a local television station. That ad is being served to each of that TV station’s viewers who have the television turned to that channel at that specific time. This includes consumers of all demographics and with many interests. However, though linear TV is great for brand awareness, you know your ad might not interest all of that station’s viewers. 

In the online space and through the use of those web cookies, advertisers can target JUST those consumers who have similar interests or who have viewed their company’s website before. In this way, companies hope to spend their advertising funds wisely by only interacting with interested audiences while also not pestering consumers who don’t care about their products.

The two main types of cookies are first-party cookies and third-party cookies. First-party cookies are stored in the same domain as the website you visited. They work to provide a better user experience. Some of the things they do include remembering your login information or form fill-out information so you don’t have to enter it each time you want to log in to a platform. 

Third-party cookies are created and placed by third parties onto the domain that you are visiting. Advertisers use these cookies to place a piece of code on websites to then facilitate cross tracking, or the collection of browsing data that details your activity. This information is then used to determine if you are an appropriate target for their advertisements based on your browsing interests. No personal identifying information – like name, address, IP address – is being collected.

However, with the increased push for data privacy, there’s a big change coming to the marketing industry: the removal of cookies. But that is not necessarily a bad thing.

Marketing in a Cookieless World

Since more awareness has been brought to the topic of data privacy, internet browsers are making some hard decisions. Safari and Firefox have already blocked third-party cookies. Google said Chrome started phasing out third-party cookies in 2020. 

Advertisers relied on internet cookies to track their campaign performance, including audience building, targeting, optimization and more. Cookies allowed advertisers to find specific attributes about consumers so that they could target their ads to the most relevant audience. The ultimate goal of using cookies, for advertisers at least, was to make their advertising campaigns as effective as possible. 

With the crumbling of cookies, advertisers will have to find new strategies for measuring campaign performance. In all honesty, cookies weren’t the most reliable method of gathering data to begin with. When cookies came on the internet scene in the 1990s, it was pretty safe to assume that most Americans used one internet browser (Internet Explorer) and lived in a house with one device – the family computer. This meant advertisers could be fairly confident that by using cookies to determine which consumers would most likely respond to their ads, they were targeting the right audiences in their homes. 

The accuracy of cookies declined as multiple internet browsers were created, consumers used ad blockers on their internet browsers, and society moved toward having multiple internet devices per household and per person. This led to the need for a complex map of information for advertising, a cookie map, but that came with latency issues and consumers being unaware of the use and sharing of their private information. 

To continue providing a robust and ad-funded internet, a solution that ties in data privacy and protection needs to be found. 

Data Privacy’s Impact on Advertisers and Consumers

Consumers want to know what information about them is being collected, how it is being collected, where it is being stored, how much control they have over their own data and how they can get rid of the data collected on them. 

Right now, there isn’t an industry or federal standard on data privacy. Different tech companies are taking different approaches. Once a federal law is put into effect, the legislation will hopefully provide clear guidelines for advertisers to follow.

Our Director of Analytics John Morgan says while there will be a shift in the way that data is collected, the collection of data itself will likely not go away. Morgan says there will likely be a shift in methodology rather than a shift in how much data is collected, but we will likely see more emphasis being put on consumer awareness and consent when it comes to data collection.

Under the current California regulation, consumers have the right to know all data a business collects on them, the right to say no to the sale of their information and to require the company to delete data it has on them, the right to know the purpose of collecting their information and much more. Privacy measures will be strengthened as the CPRA takes effect.

To be compliant with GDPR, businesses at the very least need to provide a pop-up notice on their website explaining what kinds of data they collect and track, allow users to accept or deny access to this data and, if denied, shut off all tracking scripts of the user’s activity on their site immediately. This includes Google Analytics information, web cookie tracking, etc. Users also have the right to request what information a company has stored on them, such as form-fill data, and have it deleted, and companies must securely store the personal information they collect. For a full list of requirements under the GDPR, visit here.

At MHP/Team SI, we stand in agreement with the 4A’s mission to support federal legislation that provides a comprehensive baseline regarding data privacy and the proper use of data.  While we wait on federal guidelines, at the very minimum, advertisers should expect to provide consumers with a consent banner that allows them to opt-in to data sharing. Beyond that, the user experience likely won’t be impacted much at all for now.

Our team is trained to understand the expectations from consumers on data privacy and to build websites that comply with them. To understand more of what we do and how we comply with consumers’ data privacy needs, get in touch with us.