Internet marketing can protect privacy without losing its mojo
Personal information fuels digital marketing, but a growing number of consumers want to regain control of how their data is collected and shared. In October, I talked to Melanie Nuce, Senior Vice President of Corporate Development at GS1 US, about ways that marketers can address privacy concerns without sacrificing their ability to deliver the right message to the right customer at the right time.
Gary Drenik: For people who haven’t heard of GS1, can you tell us a little about what you do?
Melanie Nuce: GS1 is a neutral standards organization. We’re most well-known for administering the barcode. 45 years after its debut in retail, the barcode is used more than 6 billion times every day all over the world. But GS1 Standards are more than just barcodes—they are a common language for data that businesses can use to move their industries forward. We help businesses cut costs, manage risk and deliver richer, more satisfying customer experiences. I lead a team that works on standards for new technologies such as artificial intelligence, the internet of things, blockchain, machine learning and the blending of digital and physical identity.
Drenik: It’s interesting you mention identity, which is at the heart of the privacy debate around digital marketing. Our October survey of 7,782 consumers found that more than two thirds of Americans support legislation that would prevent marketers from buying their personal information.
California will be the first US state to test this idea with the California Consumer Privacy Act (CCPA) that takes effect in 2020. The CCPA is narrower than the EU’s General Data Protection Regulation (GDPR) but will still allow consumers to prevent their personal information from being sold. Brands are wondering if this ability to opt out will dramatically weaken the personalized digital marketing they have cultivated for years with the help of their own apps and web sites, as well as data brokers and tech giants like Google and Facebook.
What is your perspective on where this privacy conversation is headed?
Nuce: GDPR and CCPA are just the beginning of the story. The internet of things is coming and it will bring a tidal wave of new data with it. At GS1, we like to say that everything that can be connected will be. We already have billions of smart phones and hundreds of millions of computers connected to the Internet. Now the number of devices and sensors that are connected in addition to smart phones and computers is growing rapidly. It’s creating an internet of things that will eventually connect and detect everything around us, from that box of tomatoes in our fridge to the lamp that knows when we leave the room to sensors we haven’t even thought of yet. By some estimates, the number of smart devices is already in the billions. To connect all these smart devices together, we need standardized identity. We need identities that can be read by humans and scanned by machines and those machines will be made, owned and operated by many different companies. That’s where the need for a consistent, interoperable identity standard comes from.
To get back to your specific question, the internet of things will make cookie-based advertising and re-targeting seem quaint. In many cases marketers won’t have to infer the buyer’s intent, they’ll know we ran out of our favorite coffee that morning! They’ll have clues to our mental and physical states. We are moving toward a one-to-one relationship between the brand and the consumer. It’s exhilarating but also frightening. It could help brands achieve the “addressable” marketing they dream about. It could be an unprecedented violation of consumer trust.
Drenik: That is the risk for brands. It’s not just ethical and legal but reputational. If a brand is fined for violating privacy regulations, it could erode their relationship with the consumer. Both CCPA and GDPR mandate informed consent but marketers need other options. One way to go is to build audiences in a “clean room” using consumer data that is compliant from the start. Do you agree?
Nuce: Yes, absolutely. GS1 worked for years with the retail industry to convince people that our standard for radio frequency identification of products (RFID) wouldn’t contain any personally identifiable information. What you are talking about is a similar approach – removing that type of information at the outset. With artificial intelligence applied to the right data set, you could generate useful predictive consumer insights that are also anonymous.
Drenik: We’re finding that already. Machine learning is drawing unexpected insights from these data sets. Are there other ways to improve privacy and marketing at the same time?
Nuce: Marketing research is up to brands and marketplaces. The consumer also has a bigger role to play. We can empower consumers with the ability to share their information selectively. One way we think about this is:
person + product = relationship
People forge relationships with products, and the internet of things could lead us to a place where this dynamic is similar to a human relationship in terms of information exchange. I’m comfortable sharing different information with my boss versus my spouse versus my children. Startups are already experimenting with this idea – allowing consumers to selectively share or even sell their data. We’ve put a lot of thought into how a system like this would scale. Many of these experiments are based on blockchain, for example, and you won’t be surprised to hear me say they need standards. There won’t be a single blockchain solution to rule them all so different blockchain ecosystems will need to share data. Standards allow companies to do this and make sure the data is accurate.
Drenik: I agree we need to attack the problem from both sides. Marketers need accurate and predictive consumer models that aren’t based on cookies, and consumers need a lot more control over their own data. How can brands connect those strategies to the products they sell?
Nuce: That’s the central question for GS1. Our members are some of the biggest brands and marketplaces in the world, and they want to turn that deep understanding of consumer behavior into a satisfying experience for the consumer. Product recommendations are key part of that equation today. Take eBay for example. They use more than 20 years’ worth of data to power recommendations. Now they’re adding artificial intelligence to help curate products for users out of a billion daily listings. eBay is a strong advocate for using universal product codes. That’s a GS1 standard. The more technical term is the global trade item number or GTIN (gee-tin). The GTIN is a critical anchor for unique and accurate product information that can live in both the physical and digital worlds. Most people see GTINs every day in the physical world without knowing it. It’s the number encoded into the barcode on products all around us. Despite the widespread use of standards like the GTIN, brands still have a lot of progress to make in creating accurate product information and sharing it with all their trading partners. GS1 recently conducted a study of product labels and retailer websites. We found that only 54% of all product attributes were accurate.
Drenik: Wow, that’s surprising, right?
Nuce: I agree. Especially because it’s hard to imagine the marketer’s nirvana we’ve been discussing without accurate product information as a baseline. Brands and marketplaces want to use privacy compliant data and one-to-one relationships in order to match people with authentic products. If I am getting my shampoo automatically replenished by drone, think about the number of trading partners, robots, and AIs that have to work together to make that happen in a global supply chain. It’s the world’s biggest ballet. The only way it works is through the common language of standards.
