One of the most powerful entities for a marketing department is data. For a business, having data on their customers and their prospective buying habits can impact how the business markets their products and services.
Today, the constant advancements in technology have made it easier for companies to collect large amounts of data ranging from customer demographics to customer satisfaction. Analyzing this data can allow a company’s marketing division to draw possible conclusions, for example, whether a given product was bought more frequently by people via a credit card as opposed to a debit card or whether a given product was bought more frequently by people living in a city as opposed to a rural or suburban area. Knowing this kind of information allows marketing departments to target their various advertisements, promotions, and partnerships to the people that will generate the most business for their company.
However, with the advancement in data collection technology comes increased concerns regarding individuals’ privacy and questions of what level of data collection and targeted marketing is ethical. New laws and policies are continuously being introduced to combat the increased ease in which companies can track and collect data from their consumers. For example, a new Apple policy introduced in 2021 requires all apps to ask permission to track users; this is something that many people have declined to allow1.
While 84% of Americans say that they are at least somewhat concerned over their privacy regarding the personal information that they share online2, within the past year, there has been a rise in popularity of people willingly giving their data to advertisers. In the last year, several third party apps have garnered millions of users, collecting their consumer data in return for rewards points and money3. These third party companies then sell the consumer data to large corporations so that companies can have additional data sets on consumer purchasing habits, both for their products and services and for those of their competitors. Each app functions somewhat differently: some prompt users to scan their receipts for points which can amount to gift cards, others scan a user’s online activity and emails in return for cash payments, and others allow a user to sell their demographic information and purchase histories to specific companies that they choose3. Some industry executives are noting that the notion of privacy is becoming less about the general protection of a user’s data, and more about how that data is used4; these apps are one way for consumers to take control of what data is collected and how it is used.
These apps are proving to be a solution for many companies in the midst of the increased legal pressure and negative feedback surrounding traditional tracking methods in the digital marketing sphere. In the past, companies did not disclose how their users’ data was being used and what was collected; now those users who are willing can choose which data to share and to which companies, in addition to receiving financial compensation, which is seen as more transparent and voluntary, and thus more positive in the eyes of many consumers5. Some of the apps also serve as a way for the consumers to track their spending, seeing on what and where they spend most of their money and receiving suggestions for other products and brands based on their shared information. Looking towards the future, these apps are expected to become increasingly important for digital advertisers as Google plans to stop supporting third party tracking within their Chrome browser after 20236. Right now, companies can collect a large amount of their consumers’ purchasing and demographic information, however, once Google puts this new policy in place, these voluntary apps will be one of the most viable options for marketers to collect that information.
While all of the current apps on the market must comply with current privacy laws and have been credited as being trustworthy and transparent, the conversation remains over where the line should be drawn in how open people should be in sharing their data. For example, the apps can be appealing for younger consumers, who may prioritize earning free rewards to their favorite stores as opposed to taking note of what information they may be inadvertently sharing through their receipts. While the apps and financial rewards are marketed as free, it does still come at the cost of part of a consumer’s privacy. Additionally, while the majority of these apps currently only sell the data to companies to use in their marketing efforts, the financial returns of selling the data elsewhere could become appealing to some third party collectors. This is something for these apps to be cautious of, as many companies have received large negative feedback for sharing their users data in manners that were not disclosed to the user. Facebook is a recent example of this, losing the trust of nearly 72% of its users following a data leak7.
For marketers, these apps could skew data if, for example, one young user was uploading receipt information that they collected from each of their family members. This would give marketers an individual profile with more of a mixed set of consumer habits. The ethicalness of these digital marketing strategies is another question that will continue to evolve with time as technologies continue to develop and these third party apps continue their growth patterns. Currently, the control that the voluntary apps give to the consumers over what data to share and to whom demonstrates the fair nature of the platforms as both the users and the marketing departments benefit.
Questions marketing managers would consider
– What are some potential challenges that marketing departments may face if they grow to rely heavily on collecting data from these third party apps?
– How can companies further utilize these third party apps to generate potential revenue in addition to just using them for data collection?
References
[1] Graham, Megan. (20 December 2022). This New App Wants to Pay You to Share Your Data For Advertising. The Wall Street Journal. https://www.wsj.com/articles/this-new-app-wants-to-pay-you-to-share-your-data-for-advertising-11671490542
[2] Society. (5 May 2022). A majority of Americans are concerned about the safety and privacy of their personal data. Ipsos. https://www.ipsos.com/en-us/news-polls/majority-americans-are-concerned-about-safety-and-privacy-their-personal-data
[3] Forbes. Fetch Rewards. Forbes. https://www.forbes.com/profile/fetch-rewards/?sh=39f02d383cbf
[4] Deloitte. (15 November 2022). Data Privacy, Ethics Gaps an ‘Existential Threat,’ Says OneTrust CSO. The Wall Street Journal. https://deloitte.wsj.com/articles/data-privacy-ethics-gaps-an-existential-threat-says-onetrust-cso-01668542698
[5] Graham, Megan. (20 December 2022). This New App Wants to Pay You to Share Your Data For Advertising. The Wall Street Journal. https://www.wsj.com/articles/this-new-app-wants-to-pay-you-to-share-your-data-for-advertising-11671490542
[6] Graham, Megan. (20 December 2022). This New App Wants to Pay You to Share Your Data For Advertising. The Wall Street Journal. https://www.wsj.com/articles/this-new-app-wants-to-pay-you-to-share-your-data-for-advertising-11671490542
[7] Kelly, Heather and Emily Guskin. (22 December 2021). Americans widely distrust Facebook, TikTok and Instagram with their data, poll finds. The Washington Post. https://www.washingtonpost.com/technology/2021/12/22/tech-trust-survey/
Image 1 Source :https://www.expressanalytics.com/blog/how-to-analyze-and-predict-the-behavior-of-consumers/
Image 2 Source: https://www.edweek.org/technology/district-leaders-are-more-worried-than-ever-about-data-privacy-new-center-aims-to-help/2023/01
Image 3 Source: https://www.npr.org/2021/04/09/986005820/after-data-breach-exposes-530-million-facebook-says-it-will-not-notify-users
Marketing Management 