Why data economy and successful online marketing is not a contradiction in terms

Companies that want to use customer data sparingly and responsibly for targeted online marketing are faced with several societal and legal challenges.

© Google

Any user who has spent time online is likely to be familiar with the following thought: if I’m already being shown ads before a video on YouTube, for instance, at least it should be really relevant to me. The advertising should be about topics and products that actually interest me. Rather than simply waste my precious time.

Successful online advertising: tailor-made and moderate

Basically, most people nowadays expect a personalized user experience, one tailored to their actual needs. In addition, personalized advertising online web generally performs significantly better than impersonal measures with a high level of scatter loss – based on the principle of a TV spot broadcast in prime time.

Nevertheless, companies that want to meet this expectation with their online marketing find themselves confronted with some challenges. Particularly if they want to address not only existing customers but potential new customers as well.

Don’t put the trust of users at risk

First off, there are psychological factors involved: As experts at the Harvard Business School and the University of Virginia, among others, have shown, users are highly aware of how and on the basis of which data they are approached by companies.

If users get the feeling that someone has been talking about them “behind their back,”, as it were, and are approached using concrete information that third parties may have shared about them, they become suspicious. If, based on information furnished to website A, a user believes that he or she is also being tracked to some extent on websites B, C and D, the brand perception of the company running the ads may suffer as a result.

Very personal or intimate information is also (rightly) taboo for many users – and that is why Google and other service providers do not offer this information as a basis for target-oriented marketing measures.

“With personalized ads, there’s a fine line between creepy and delightful.”

Harvard Business Review

Gamechanger GDPR: The value of the “First Party” data

On the other hand, of course there are legal factors involved as well: the General Data Protection Regulation (GDPR) went into force in the Member States of the European Union in May 2018 and imposes clear restrictions on companies with regard to how and for what purposes they have the authority to use customer data. The GDPR is intended, among other things, to ensure that only the data truly needed for the particular purpose at hand are collected and, in principle, the principle of data minimization is applied. In a nutshell, this means: collect as few data as possible and as many data as necessary.

Even though users can continue to be targeted after the GDPR goes into effect, and even though the rules for data-based online marketing with the GDPR have become even clearer: many companies have reservations about using data that have been collected with the express consent of their customers for marketing purposes. This is because the GDPR draws a sharp distinction between data that could be used to identify an individual, on the one hand, and data that are so anonymized and pseudonymized that this is no longer possible.

But precisely these “1st-party” data that are by far the most valuable and important data available to a company. These data typically have the highest quality and are the most current and complete. Satisfied existing customers are usually not upset when they are approached by companies based on customer data that have been transparently collected. This is the case, for instance, if the matter involves a contract extension or a new product that could be of interest to the existing customer.

DMEXCO 2019: Personalized marketing as growth driver

The doubts are often even greater, however, when it comes to using such existing customer data in anonymized and categorized form to attract new customers – for example, to address potential new customers in the same target group.

Regular growth is an essential part of a company’s success. And targeted approach of the right users on the right platforms with tailor-made messages is not only more pleasant for every user; for companies, too, in most cases this approach is significantly more cost-effective than advertising in an undirected, non-specific manner and with high scatter loss.

Matt Brittin, President EMEA Business & Operations at Google, will address this issue in detail in a keynote at DMEXCO 2019. He will also show how companies can grow faster with personalized marketing – in a way that is data-minimizing, legally compliant and yields positive user experiences.

The bottom line

The good news for marketeers is: there are technical solutions that both meet users’ expectations and take their concerns seriously, while complying with European and national data protection rules, enabling companies to market online in a targeted, efficient and effective way. The data economy aimed for by the GDPR is then not only in the interests of users, but also in the interests of companies. At the same time the value of the “First Party” data is strengthened. The way there leads however further over moderately personalisierte advertisement with Google & Co.