“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Arun Kumar, Chief Data & Marketing Tech Officer at IPG.
The digital revolution that has transformed so much of our lives over the last 25 years is hurtling toward a reckoning that will help define the next quarter century.
We are caught between a rock and a hard place in the data debate. Hardliners on one side call for crippling regulation to protect people, while extremists on the other side demand people, themselves, be solely responsible for controlling use of their data. This sort of zero-sum game leaves little room for a future filled with innovation and technology to serve people.
Companies committed to ethical data use need to enter the debate with a balanced, or “middle ground” approach now, or risk losing trust, sentiment and engagement, very soon.
Before we dismiss the extremes, we should consider their positions and see where they would lead us.
In the first extreme, or the “rock,” many policy makers and regulators take a hardline stance, proposing legislation and enforcing laws to satisfy the most militant privacy absolutists. Data use would be highly restricted. New uses of data or technology, as well as privacy notices, would have to be centrally approved, and the red tape around businesses using data would inhibit innovation, competition and even current practices – concentrating power into the hands of a few companies that already have the data.
The California Privacy Rights Act (CPRA) is an example of law that has the unintended consequence of concentrating power into the hands of a few and creates another challenge. If each state presses ahead with its own approach, we’ll have fifty approaches to follow and implement for companies operating across the United States. This scenario would create nearly impossible circumstances that would suffocate the ability of brands and people to use data to enhance both everyday living and economic growth.
In the other extreme, or the “hard place,” people are being required to take complete responsibility and control of the use of their data, which includes managing all risk. This is a ‘be careful what you wish for’ scenario as more control means more burden. And paying people for their data is impractical, because the burden of constant data management wouldn’t be worth the payout. If Facebook shared all of its $18.5 billion in profits across its 1.2 billion active customers, each user would get about $15. It’s a folly to think that individuals can make a lot of money from their own data. It only works for the digital giants because of their scale.
Requiring people to exercise full control and accountability of their own data represents the real ‘Wild West’ of data with people having to make active choices at each touchpoint with a company about what data can be used, for what purpose, when, via which channel, for how long and so on.
These two extremes fail to serve the interests of people, which is why we must avoid the worst of these excesses and define a middle path that balances peoples’ varied data-dependent interests. Like with all aspects of the data debate, balance is essential. Here are three ways they can help get that balance right:
- Embrace smart data privacy regulation. The United States is long overdue for a national data privacy law that is practical and future-prepared for the realities of the Digital Age. A law should be balanced, requiring collectors and users of data to be accountable while also empowering people to know who has their data, how it is used, and how to opt out. Effective regulation needs to create a level data playing field that governs companies equitably to preserve innovation and competition. An example would be to delineate between higher risk data uses and types, such as financial or health data, or data used to make decisions on credit and employment. Lower risk data includes that used for marketing and advertising. If misuse happens in these two scenarios, there is a huge difference in the levels of potential harm to the individual. This approach would allow people and brands to prioritize and focus their time and resources around data privacy.
- Educate people on the value of data. Widespread confusion about data breeds mistrust, which creates a rift in peoples’ relationships with companies and drives individuals to the extremes. According to Pew Research, 79% of US adults are concerned about what companies do with their data, but 59% admit they don’t understand about how that data is used. Companies and governments alike should prioritize educating people about the data they use, making it a central pillar of their ongoing communications. Data education should start at school. We need people to understand the internet is free because of data-enhanced advertising and that the biggest risks to them are not brands but criminals, trying to defraud them through the likes of identity theft.
- Deliver meaningful customer experiences. In all the abstraction that comes with data, it’s easy to forget that it fundamentally describes people – their expectations, interests and needs. Companies that use data with transparency, to understand people and deliver better experiences, more utility, and less noise, demonstrate something that no amount of education or privacy regulation can achieve: The power of data for good.
People find themselves in the middle of the data debate – between the rock of regulation and the hard place of fending for themselves in an ever more complicated digital landscape. We must find balance, where companies compete by providing innovative utility to people and where people can enjoy those benefits without constant vigilance – all while retaining the right and the ability to take a closer look and exercise control over their data.
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