Behind the Rise of Data Transparency

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Photo by Toa Heftiba.

Brands’ appetite for actionable insights has turned consumer data into a hot commodity. This year alone, marketers will spend $15 billion on data — nearly $50 per American. But with an endless supply of consumer information, companies should remember to use it wisely. In an era of security breaches and growing customer distrust, data transparency is just as important as the data’s purpose.

Brands operating without concern for data transparency act against the best interests of their businesses and their customers. Ninety-three percent of online shoppers say that compared to last year, it is either the same or a higher priority for brands and retailers to respect their anonymity online in 2019. Companies that ignore this warning could miss out on major revenue and customer loyalty benefits.

There’s no question that consumer data informs intelligent, strategic marketing strategies. But to develop strong customer relationships, brands must pair this marketing innovation with clear, transparent information about the data they use.

A Growing Demand

Headline-making problems like YouTube’s 2017 brand safety issue or Facebook’s growing list of privacy scandals have focused the public’s attention on media-buying practices, causing advertisers to improve their defenses against poor ad placements. Now, consumers’ interest in transparency is spreading beyond the well-publicized follies of tech companies to everyday brand interactions.

As marketers expand efforts to more precisely place messages in front of audiences, they must also ensure improved visibility into placements and the audience insights accompanying them. Many agency partners sacrifice quality to boost the scale of ad programs, leading to ads reaching irrelevant consumers. Through in-house programmatic buying, brands can check a site’s relevance and quality before launching their campaign. This practice helps businesses align messages to consumer interests, avoid damaging placements, and improves their ads’ relevance.

The Shift to Second-Party Data

Despite spending billions of dollars on data, many marketers in the US remain unsure about its quality. Due to the scale and often haphazard assumptions within audience models of third-party data, advertisers are beginning to sour on the use of bulk information from large-scale data aggregators.

As data-privacy regulations and unanswered sourcing questions muddy the reputation of third-party data, marketers are turning to second-party data to fill in the gaps. Second-party sources like publishers and marketers have a chance to capitalize on this trend, although they are often cautious about selling data due to the risk of damaging customer relationships or losing their competitive advantage. If implemented correctly, however, all parties can benefit from these transactions.

By sharing segmented information, data providers like publishers or interest-based organizations allow companies (and their agencies) to open up programmatic buys to more niche audiences, supplementing their more traditional buys on Google and Facebook. Second-party data opens a brand’s field of vision to include customers they desire but haven’t yet won over. Because they come from a verified and trustworthy source, these insights also reduce wasted ad spend, helping brands connect their own demographic data to the behaviors of larger segments. Due to its quality and compatibility with companies’ proprietary data, this information allows brands to target consumers who are more likely to buy, as compared to higher-level targeting on platforms like Google.

Because it consists of real, volunteered consumer insights, second-party data lends itself to more precise targeting and improved responses from audiences. This enables brands to more easily connect with their target demographics at the top of the funnel, boosting the likelihood of long-term retention. With regulations like GDPR clamping down on third-party data providers, second-party partnerships become even more crucial for brands looking to drive results from their programmatic targeting.

The Benefits of Quality Data Usage

The demand for data transparency stems from consumers’ desire for security — but improved practices can be mutually beneficial, delivering better outcomes for brands and enjoyable experiences for the end user. Here are three ways data transparency and quality help you ensure consumers receive value in exchange for providing access to their information:

Relevant Offers

Better data allows you to craft more personalized offers, such as specific product suggestions or tailored content based on past behavior. This benefit helps your brand use ads more effectively, while also delivering a more relevant and useful experience for the consumers you’re targeting. A customer-first approach means you collect user data, but you can use the insights from it in responsible ways that serve the needs of both your business and audience.

Empowered Choices

Informing consumers about the privacy practices and strategies in place gives them more of a choice about what personal information they share and when. Increasingly, they know you have information about them, but they want it to be used in ways that improve their experiences. Creating content that better educates consumers on how their personal information is used and stored makes them feel more in control, enabling you to engage with them in the manner they prefer.

Increased Loyalty

The more straightforward and direct you are about what consumer data you are using and how, the more likely you are to gain their trust. People value authenticity, and being transparent about your data practices shows that you respect them, helping you connect and build loyalty. When they know you’re not hiding anything from them and that their behavior data improves their experiences, you build stronger, revenue-boosting connections.

As technological capabilities accelerate and data regulations increase, brands should home in on data privacy. Focusing on data transparency will ensure you stay out of legal trouble while also earning more loyal, trusting customers. Consumers understand that you have data — it’s how you use it and share your practices that can make or break these important relationships.

Brian Hogan serves as president of Fluent’s programmatic division. After successfully launching Audience Now by Fluent in 2018, Brian and his team work to establish Fluent as an industry leader in first-party, deterministic data. Prior to joining Fluent, Brian was co-founder and COO of LifeScript, where he built the company into one of the largest health publications and the largest digital health marketing platform on the Internet.