Targeted Marketing in the Era of Stricter Regulations

Stephen DeAngelis

October 1, 2018

Thanks to stricter regulations, such as those included in the European Union’s General Data Protection Regulation (GDPR), marketers are having to reevaluate the efficacy of targeting marketing tactics. John Hernandez, CEO of Selligent Marketing Cloud, notes, “The General Data Protection Regulation came into effect in the European Union on May 25. The regulation is meant to protect consumer privacy and consumer data, as well as the processes that use that data to make decisions about consumers. Marketers may think that if their data practices are compliant, then they can move forward without worrying too much about GDPR or e-privacy, but that’s not the case. New technologies and techniques that use consumer data must also be put through the privacy lens. That includes the complex, such as AI and machine-learning, but also processes as commonplace as campaign targeting.”[1] Running afoul of privacy regulations comes with big monetary and reputational costs.

 

Permission and Trust

 

The best way to ensure compliance is to obtain a consumer’s permission to use their personal data to customize the offerings they receive. As Hernandez notes, “The GDPR regulation requires consent from consumers to use their data, but it also requires consent for ‘profiling,’ which the regulation specifies as a ‘procedure which may involve a series of statistical deductions … often used to make predictions about people.’ That includes any technical process that uses machine-learning, algorithms, or even simple rules to put people into buckets or make decisions about them. … Even in companies that do obtain permission to profile, marketers must continue to be aware of every campaign and sensitive to ‘the safeguards aimed at ensuring fairness, non-discrimination, and accuracy in the profiling.’ Using profiling to determine whether someone might want an umbrella or a mailbox is one thing, but consumers may see such forms of targeting as discriminatory if targeting is based on unintended factors, such as income or race, which are much more sensitive.” Remaining compliant isn’t easy; but, it’s worth the effort.

 

Susan Rothwell (@SusanRothwell2), Senior Vice President of Sales for Valassis Digital, explains targeted ads make marketing much more effective. “Data is a crucial commodity in today’s marketing ecosystem,” she writes, “helping brands connect to consumers with relevant information at the most opportune moment. With the ability to ingrain data throughout the marketing and advertising funnel, brands can ensure their budget dollars are going toward the most impactful campaigns and help increase the lifetime value of a customer through meaningful interactions.”[2] Hernandez adds, “Targeting is an important element of digital marketing. It increases relevance to consumers while decreasing wasted campaign messaging and media spending.” Although most consumers harbor a healthy skepticism about how their personal data is used, egregious uses of data are guaranteed to lose what little trust consumers do have in how their data is used. Once trust is lost, it’s difficult, if not impossible, to regain. Executive headhunter Amir Rasool (@AmirRasool), observes, “The importance of trustworthiness in terms of data is obvious when considering the problems Facebook has been having.”[3] He adds, “Brands need to be upfront about what data they are going to use and what benefits customers are going to see as a result.”

 

The Importance of Data

 

For the sake of discussion, let’s assume your brand is doing everything correctly and you have access and permission to use your customers’ personal data. How can you use it most effectively? First, you want to ensure your ads address your customers’ products and preferences. Second, you want to anticipate their needs. The latter challenge remains difficult. Karl Greenberg (@KarlPGreenberg) reports, “In a study from the CMO Council, only 5% of marketers said they can predict the consumer journey and adapt to it fast.”[4] Today’s customer journey, often referred to as the digital path to purchase, is hard to predict. The path has numerous on-ramps and off-ramps and abandoning online shopping carts is simple as a click. Of course, not every viewer of an ad is going to be turned into a buying customer. Such expectations are unreal. Targeted marketing is about improving the viewing to buying (i.e., conversion) ratio.

 

Part of the problem, Greenberg reports, is how data is integrated. “Marketers,” he writes, “said they aren’t terribly successful at aggregating, aligning and analyzing data across disparate sources. Forty-eight percent said data is collected and analyzed, but remains separate and is not well aligned. Only 3% say their current customer data sources are fully 360-degree. And almost half of marketers report that they have had to more closely align with sales, service and support to provide connected customer experiences.” One technology that can help is cognitive computing. Cognitive technologies can collect, integrate, and analyze both structured and unstructured data. They can ensure a single version of the truth is used by sales, operations, service and support divisions of an organization. The real pay-off, however, comes from advanced analytics that can provide decision-makers with actionable data. For example, Enterra’s Shopper Marketing and Consumer Insights Intelligence System™, powered by Enterra’s Enterprise Cognitive System™ (AILA®), uses digital peer-to-peer data, ontology of the individual data, cross-channel behavioral data, integrated data services, and market dynamics insights to provide the kind of 360-degree view of a consumer that can improve conversion rates.

 

Summary

 

Targeted marketing is all about data and using it in ethical and effective ways in order to gain the trust of consumers. Rasool concludes, “By cultivating customer trust in this way, while improving the service you offer through a targeted use of available data, customers will feel their favored brands truly understand them and actively want them as customers and advocates. There are undoubtedly, challenges with customer data, but with the selective use of newer technologies, the opportunities are vast and are there to be ceased by savvy brands.” Hernandez adds, “The GDPR push for more accurate profiling provides marketers with the chance to evaluate the source of their data as well as the processes they use to target and profile consumers. … Over time, the new GDPR rules should align the best interest of AI, marketers, and consumers. In the near term, though, marketers will find that some of their marketing goals need to be moved away from short-term goals of scale or sales toward longer-term goals, such as lifetime customer value.” Cognitive technologies can help with compliance and improve insights to make targeted marketing more effective.

 

Footnotes
[1] John Hernandez, “Relationship Marketing and GDPR: Avoiding the Traps of Personalization Data and Targeting Tech,” MarketingProfs, 23 July 2018.
[2] Susan Rothwell, “Using Targeting and Data to Drive Sales,” MarTech Advisor, 11 July 2018.
[3] Amir Rasool, “Achieving Greater Customer Intimacy With Technology,” Datafloq, 30 May 2018.
[4] Karl Greenberg, “Be Predictive And Personal, Says CMO Council Study,” MediaPost, 19 January 2016.