The Ethics of Data-Driven Marketing: Balancing Personalization and Privacy

Data-driven marketing is (presumably) the norm. Brands have used market research for several decades to understand their target audience and plan campaigns. What has changed now is the way brands acquire and use data to target customers. In many instances, marketers have gone overboard in personalizing campaigns – almost to the extent of stalking and intruding on customers’ privacy. This trend has worried the customers. In recent years, they have become increasingly vocal about how they want brands to restrict how they use their data to personalize marketing. 

Even governments worldwide have taken data privacy seriously. They have developed regulations like the General Data Protection Regulation (GDPR) that have changed how brands collect, store, and manage data. In today’s times, ethical data-driven marketing has become essential to win customers’ trust and drive personalization. 

Let’s explore the challenges marketers face in data-driven marketing and how they can overcome them and make the initiatives ethical. 

Challenges With Data-Driven Marketing Ethically

1. Challenges in Planning Online Campaigns

Gartner’s research reveals that 71% of B2C and 86% of B2B customers expect brands to be well-informed about their personal preferences. However, the increasing emphasis on data privacy has changed how marketers collect, store, and use data. Brad Fager, Senior Director Analyst at Gartner, predicts that 75% of the world population’s data will be governed under privacy regulations by 2025. 

Customers are expressing caution too. In 2020, eight out of ten customers were uncomfortable sharing their personal information with brands they didn’t trust. All these issues have made online campaign planning difficult for brands. 

2. End of Third-Party Cookies

Traditionally, marketers relied on third-party cookies to track customer journeys online and personalize their campaigns. It worked well for brands and helped them generate sales through paid campaigns on social media. However, in 2020, Google announced that it would phase out third-party cookies to protect customers’ privacy. Even companies like Apple are rolling out features like app tracking transparency that require customers to grant permission for brands to use third-party cookies to target them.

All these announcements and updates have created confusion among marketers. They find that the costs of paid ad campaigns on Facebook and Instagram have increased, and the results aren’t that great either. It has impacted small-medium businesses that use third-party cookies to target customers. Although Google has extended the deadline for phasing out third-party cookies by 2024, marketers must find alternate ways to target customers and personalize campaigns. 

3. Backlash from Customers Due to Over-Personalization 

There’s a fine line between personalization and stalking. Unfortunately, most brands lean towards stalking while personalizing their campaigns. 75% of customers find many forms of marketing personalization creepy, and 22% said they would not hesitate to leave the brand if they find the experience uncomfortable. But what makes these experiences creepy? 

Marketers collect a lot of data to target and personalize campaigns. The problem arises when marketers go overboard and recommend products without asking. For example, a brand recommending products to customers based on a conversation they had with a friend is a classic example of going overboard with personalization. Marketers must know where to draw a line. They must know what data to use and when to use it while targeting customers. More importantly, brands must be mindful about using data for the original intent it was collected. 

How Can Marketers Overcome These Challenges?

1. Collect First-Party Data

Besides phasing out third-party cookies, Google is also testing a new privacy sandbox that allows marketers to store first-party data on websites. First-party data is the information brands collect directly from customers through contact forms, registrations, email subscriptions, and other sources with their consent. This information is more secure and aligned with data privacy regulations than third-party cookies. 

Brands must invest in tools to gather first-party data from customers and use CRM to manage them effectively. As the brand owns the data completely, it can use it for programmatic or contextual advertising to target and build meaningful relationships with customers.   

2. Seek Consent from Customers

In his book Permission Marketing, Seth Godin explicitly wrote about how brands must seek consent from customers while sending them marketing information. He emphasized giving customers the option to opt-in for promotional messages. 

Marketers should allow customers to change their preferences and control how they want brands to use their data. Marketers must also be proactive in communicating how they intend to use the customer’s data. Transparency is key to building customer trust. 

3. Don’t Go Overboard with Personalization

Here are a few things marketers can do to not go overboard with personalization:

  • Be transparent with customers about the data collected. Tell them the intent behind gathering it, and give them the option to opt-out. 
  • Use data judiciously. Marketers don’t have to use all the collected data while communicating. Avoid using information like sexual orientation, race, and marital status for marketing, unless the customer consents to use it.
  • Know where to draw a line. Sending recommendations based on conversations is an absolute no-no. 
  • Be mindful of customers’ locations and time zone while communicating with them. Don’t inundate them with messages at the wrong time. 

4. Train Marketers on Ethical Data-Driven Marketing

Data privacy is still new for marketers. Many of them still rely on third-party cookies or follow intrusive marketing practices. The onus lies with brands to train marketers on ethical data-driven marketing. They can support marketers by creating clear consent guidelines to guide them in collecting, using, and protecting data. Make ethical marketing a core principle of your marketing strategy. 

5. Use Tools to Target Customers

Listening to customers’ conversations or using third-party cookies to target customers may no longer be a viable option for marketers. However, they can still use data-driven marketing to understand customers and target them. 

Tools like Ask1 can help marketers pick up customers’ voices from markets and use those insights to make informed data-driven marketing decisions. Tools like Ask1 reduce the barrier and allow brands to reach hard-to-find customers directly and get answers to questions that can improve the brands’ products, messaging, and positioning. 

Balancing personalization and data privacy can be challenging for brands and marketers in current times. But with the proper strategies, tools, and best practices, they can deliver data-driven and personalized customer experiences without compromising data privacy.