April 12, 2022

The Value Exchange of Data Sharing: is your company holding up its end of the bargain?

Data Privacy is now crucial to customer engagement and business success. Data privacy and the processes and outputs around it have become much more than a tick box compliance matter for businesses. Companies of all sizes have realised that optimising how data is collected, managed, and used is vital to building customer trust, value, and loyalty.  

This collective focus on data shines a spotlight on the well-tested solutions developed and offered by VML. Innovative VML technology enables clients to deliver dynamic data-driven video personalisation to each end-user without compromising data privacy. It liberates static video from one-way inefficiencies by creating a hyper-interactive viewing experience that remains fully compliant with the most stringent data privacy rules.  

What exactly does this ‘value exchange’ involve?

The philosophy around use of data has evolved into a more complex exchange in which personal information is increasingly being seen as 'traded' by the individual to 'trusted' brands for enhanced experiences, rewards, and services. It is up to the recipients of the data to not only ensure that they are data-compliant, but also to make the grant of personal information worth it for the end-user by creating new and dynamic ways to build customer attention, engagement, and loyalty. If done well, the exchange is completed when customers reward the companies using data by flexing their spending power. 

The idea of exchanging value deviates greatly from a more traditional one-way practice of providing data to companies solely for their marketing benefit. Companies have offered little reciprocity for the grant of personal information to date. The changing demands of consumers have motivated companies to rethink the concept of value exchange and have left marketing and sales experts scrambling to find effective technology that enables a tangible return. 

The symbiotic relationship of personalisation

Customers now expect personalised services and experiences closely matched to their needs, tastes, and preferences in exchange for use of their data. Personalisation done correctly enables relevant content, meaningful offers and discounts, and ultimately, an enriched, value-driven consumer experience. The requirement of active approval to share data now gives customers a choice to opt-into potential benefits. The increasing clarity of what is expected in return has created demand for a symbiotic relationship between businesses and consumers.  

First party data has become central to ‘value exchange’ efforts. The ownership of data collected directly from customers comes with both opportunity and responsibility. Companies are scrambling to develop competency in understanding quality and accuracy of data collected. Even more vitally, they are developing systems to ensure that the data has been gathered with the correct consent—central to being GDPR or CCPA compliant. The expanding regulatory environment places collection of data top of mind for companies trying to stay ahead of new laws.  

Examples of newly regulated data include:

● Name

● Age 

● Location

● Data from behaviours, actions from across your website or apps

● Data you have in your CRM

● Subscription data

● Social data

● Customer email

● Purchase history

● Support history

● Loyalty program information

Zeroing in on what the customer needs

In addition, a new and symbolic representation of the data value exchange is a categorisation called zero party data. First referenced by Forrester Research, it is defined as “data that a customer intentionally and proactively shares with a brand, which can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize them.” Zero party data differs from the other data types because it is deliberately provided by the customer with the likely expectation they will be rewarded with an enhanced experience.

Fundamentally, this should be a relationship that creates both a more effective, targeted marketing strategy and a more satisfying, rewarding customer experience. The consumer sees content of specific interest to them, and businesses can promote their services or products one-to-one in the most efficient way possible. 

Prior to the launch of the VML player, technological barriers have limited companies’ ability to utilise consumer preferences to provide this type of customisation on the edge. A customised experience for end-users is now pivotal to how digital marketing and communications operate; marketing and communications strategies have become reliant on providing users with personalised content that interests them.  

How is the tech world adapting to the increasing focus on data privacy?

Growing concerns about how data is used and protected by companies has moved privacy alongside all marketing and communications strategies. While personalisation depends on the sharing of user data, users may be wary of sharing due to possible security breaches and their data being shared with third parties. A survey by KPMG found that 62% of the companies thought they should be doing more to prioritise data-protection.

Major browsers such as FireFox and Safari have blocked the use of third party cookies in recent years, requiring explicit consent and opt-in options from users. Google will do the same, but has delayed this same action until 2023. Amazon has also reportedly blocked the use of Federated Learning of Cohorts (FLoC), Google’s tracking system, an alternative to the third party cookie which gathers consumer data. For a more in-depth look into data privacy read our recent blog Data Driven Engagement in a Privacy First World

Digital marketing has been transformed after seeing the exponential advantages of investing in first party data. Studies have shown that customer experiences are noticeably enhanced by data that is clear, simple, and accessible. Forbes notes that so-called “dirty data”, limits the ability to make data-driven decisions. Only 33% of marketers believe they can rely on their CRM data for decision-making, and another study showed that low-quality data costs the United States’ economy around $3.1 trillion per year. Personalisation strategies therefore reveal blindspots in data hygiene and availability, so more and more marketers are having to become data and data platform savvy.

There are a range of strong influences contributing to a first party data revolution. Notably, the dynamics of digital advertising are significantly changing as a result of the fall of third party cookies. This means that the foundation of all aspects of the advertising and retail experience as a whole must adapt accordingly, and will continue to do so as data privacy legislation, awareness, and understanding evolves.

This revolution is not only applicable to individual consumer use. There are huge benefits to businesses from the value exchange in day-to-day operations. Merkle/CXM America president Michael Komasinski highlighted that in regards to marketing and Artificial Intelligence (AI) providing engaging, effective insights, “outputs that are produced by AI platforms need to be interpreted and made relevant to the business problem at hand.” AI will become increasingly important as this data, while increasingly useful, is vast. AI will be required to configure how to use data most effectively, and to collate and categorise what is most relevant and productive.

A 2021 survey of 2,700 consumers across the US, UK, Australia, and New Zealand found that 69% welcomed personalisation as long as it is based on data they have shared with a business directly, not data which brands have purchased elsewhere or obtained without direct consent.

Fatima Yusuf, Director of Partnerships at Shopify Plus, said that this has come to be “table stakes” in the majority of online retail, with 64% of consumers requesting personalisation from where they spend their money, “and even in a world of heightened privacy, 90% of consumers are willing to share behavioural data if it benefits them and provides them with an easier shopping experience.” These studies suggest that asking customers for information every so often contributes to an up-to-date personalisation model which will enhance their digital customer experience as much as possible, while also maximising its marketing efficacy.

Why sharing personal data raises concern among users

The single point of failure for marketing experts may prove to be the fickle nature of a user’s consent to sharing. One-to-one interactions between buyers and sellers are creating dynamics which lie in delicate territories. Customers have a right to view the information a brand collects on them and can opt out at will, making dependence on this value exchange risky for businesses. What if news on data gained without consent leads to consumers becoming more wary of sharing their information? Even if the information shared just includes name, age, location, etc., this can feel invasive and trigger fears about data being shared beyond what they consent. A major survey of 3,000 companies, consumers, and marketers worldwide found that 86% of respondents are “increasingly worried about data privacy, and 78% were wary about simply the amount of data collected alone.” Widespread knowledge of this dynamic has pushed companies to proactively look for solutions that limit their vulnerability.

Finding ways to achieving personalisation while respecting user privacy

Getting personalisation right requires a thoughtful understanding of how to utilise your customers’ data in line with the permissions they have granted, while still being mindful of their privacy expectations. For example, if the data being asked of the customer is not explicit and as a result, they receive emails or notifications that do not concern them, customers can be unsettled.

Many companies understand the growing importance of AI, machine learning, and gaining insights from data at scale, but are finding the upkeep of their data ecosystem challenging.  

The COVID-19 pandemic has accelerated the move to digitisation and has led consumers to expect a high standard of online experiences. Hundreds of millions of consumers moved to digital channels in 2020. These digital transformations means personalisation is increasingly essential to any marketing strategy. As consumers' expectations have changed, it is significant that many businesses have failed to keep up. 

VML Technology has spent the last eight years developing a solution to personalisation and security for the most innovative marketing and communications professionals. The VML player provides a data-driven video personalisation technology that ignites value exchange without ever taking possession of the data. Data always remains in client (host) location, yet can deliver real-time personalisation at scale with zero compliance or security concerns. VML is the first company on the market to thread the needle of creating a meaningful user experience without jeopardising the data needed to personalise.

Grace Farrell
Content Creator & Copywriter