The new rules of privacy-led marketing

Brands that invest in privacy are better placed to drive marketing growth. But to do this, marketers must drive trust among consumers in order to secure the most powerful types of data.

Privacy was once just a compliance issue for marketers. But in recent years, it’s become a growth strategy, with investing in privacy proven to drive significant returns across both marketing and sales.

According to research from The Drum, 77% of brand performance has been boosted in the past year by privacy-led marketing practices. And brands with strong privacy practices typically see 12.31% higher purchase intent than brands with weak practices.

This has led to ‘privacy-first’ becoming a performance strategy. Brands that invest in privacy, lead with value exchange and measure trust are better placed to build the type of data ecosystems that drive growth.

But for many brands, embracing ‘privacy-first’ hasn’t been an easy journey. Legislation, such as GDPR; the gradual removal of third-party cookies and the introduction of other data protocols, have made marketing harder and forced brands to make a virtue out of necessity.

The inherent paradox in data privacy

In this era of privacy-led marketing, customers have come to expect high levels of personalization and relevancy: 71% of consumers expect companies to deliver personalized interactions and 80% of consumers prefer brands that offer personalized experiences. Embracing sophisticated customer data platforms (CDPs), customer relationship management (CRM) and other marketing platforms, brands have been able to respond to this with personalization at scale.

However, while 79% of CMOs say they’re confident in how they use consumer data to power AI-driven personalization, 59% of consumers simply disagree. And consumers really don’t like ‘creepy brands’. There’s a growing rejection of surveillance-style targeting, and 75% won’t buy from brands they don’t trust with their data.

The success of privacy-first rests on winning trust

This means that the only way for brands to successfully embrace data privacy as a marketing growth strategy is to drive trust among consumers. Privacy-first is, of course, about the responsible management of personal information, but it’s also about shifting an organization’s mindset from ‘ownership’ of data to a precious asset that’s entrusted to their care. And it’s about being open and transparent about prioritizing the customer’s best interests while actively minimizing their privacy risks.

These principles have become known as ‘privacy stewardship.’ Not only does this practice help customers to feel less anxious about their data being misused, but it gives them the confidence that a brand genuinely cares about their interests and is not about to exploit their data for self-serving reasons.

Done properly, privacy stewardship results in customers feeling more positively about a brand and being more willing to share valuable personal data. Through a combination of privacy-first and privacy stewardship, brands are able to compete in the new data battleground: ‘zero party data.’

A huge shift in the data models

For two decades, digital marketing has been built on ‘inference’: observing behavior and deducing intent. First- and third-party data – browsing history, location data, cookies, purchase patterns – have been used to build predictive profiles. This has all been vital data for driving personalization. But now privacy-led marketing is increasingly moving into declared data, or rather ‘zero-party data.’

Zero-party data is information that customers intentionally and proactively share with brands. This includes preferences, purchase intentions, personal context, and how they wish to be recognized by the brand. Zero-party data can be seen as the ‘why’ that enriches the ‘what’ of first-party data. It can be collected without the need for ‘creepy’ tracking, and it means the customer becomes an active participant in the privacy-led marketing.

Why zero-party data will drive privacy-led marketing

In combination with first-party data, zero-party data enables brands to enhance personalization and drive customer experience. By directly obtaining consumer preferences, brands can tailor product recommendations and create content to fit each customer’s unique needs. Communication can be customized based on the customer’s stated interests, ensuring marketing is relevant. Real-time data input from customers also enables brands to adjust and refine experiences at each touchpoint on the consumer journey.

Zero-party data provides the valuable context that AI programs thrive on to generate insights, predictions and personalized experiences at a scale that was previously out of the reach of many marketers. As a result, the economic value of zero-party data rises dramatically. However, at the same time, AI also increases consumer concerns about how their data will be used to train AI models and automate decisions. This will only increase the need for ever greater privacy stewardship.

Success in the new era of privacy-led marketing

So, faced with the AI-enabled growth opportunities that zero and first-party data present, how should brands embrace a privacy-led approach to marketing?

Firstly, design for declaration, not detection. Future growth from privacy-first will come from creating more opportunities for customers to tell brands what they actually want. These are opportunities that fundamentally work for customers, such as loyalty programs that reward preference sharing and community experiences that encourage customers to reveal interests and goals. It’s also about getting preference centers right so that people really use them and having the right product finders and recommendation tools.

Secondly, make transparency part of the customer experience. Many privacy policies are still written for lawyers. The brands winning trust are increasingly treating transparency as a customer experience discipline. Customers are naturally more comfortable sharing data when they understand the value exchange, see how it will benefit them and preferences and control are really simple.

Thirdly, measure trust as a marketing KPI. Marketers rightly measure the likes of acquisition, conversion and lifetime value. However, few organizations are properly measuring: consent rates, preference completion rates, profile depth, data sharing willingness and trust indicators. If trust is the thing that unlocks richer customer data, it should be treated as a performance metric.

Lastly, build a value exchange, not a data exchange. The goal is not to maximize data collection. The goal is to maximize customer willingness to participate. Brands getting this right ask: what value are we creating that makes customers want to share information? And they respond with faster service, more relevant content, personalized product experiences, exclusive access and tailored rewards.