Why the world’s biggest brands care about privacy
Privacy is often seen as a chore and a negligible item on the C-suite’s agenda. Yet privacy today is mission-critical for the world’s most progressive companies and most successful brands, who see the new Age of Privacy as an opportunity to build groundbreaking products, innovate and earn their customers’ trust.
“We have to change the narrative from talking about privacy as a risk factor to talking about privacy and data ethics as a positive step towards a healthy digital society.”
— Jamie Barnard, General Counsel for Global Marketing & Media at Unilever (March 2021)
THE PRIVACY PIVOT
Privacy isn’t the most thrilling of topics. It’s often associated with dreary regulatory compliance and treated as a negligible item on the C-suite’s agenda.
Yet the world’s most valuable companies and largest brands are pivoting to privacy after years of cajoling, luring and tricking their users and customers into sharing their personal information online and making billions from business models that relied exclusively on profiting from troves of personal data.
In the past two years, Facebook has declared its new privacy-focused vision, Google announced it wants a “privacy-first web” as the digital advertising ecosystem is in the midst of a significant overhaul to deliver a more private web than ever before, and charted a course for ending third party cookies, Apple unveiled a new iPhone privacy feature that would require all apps to ask for explicit permission to track and Amazon announced a slew of privacy updates for existing products, as the company expands further into consumers’ lives.
But big tech players aren’t the only movers to a privacy-first strategy. Some of the world’s biggest brands (including Unilever, AB InBev, Diageo, Ferrero, Ikea, L’Oréal, Mars, Mastercard, P&G, Shell, Unilever and Visa) are focusing on taking an ethical and privacy-centered approach to data, particularly in the digital marketing and advertising context.
“Privacy is to the digital age what product safety was to the Industrial Age”.
- Harvard Business Review, ‘Do You Care About Privacy as Much as Your Customers Do? by Thomas C. Redman & Robert M. Waitman
TRUST IS THE NEW BLACK
You might dismiss “privacy pivoting” as a shrewd PR stunt or a mere lip service to regulatory pressures (primarily driven by the GDPR). Yet global spending on privacy efforts is expected to reach $8 billion by 2022. Considering that undertaking an organisational privacy transformation is difficult, costly and time consuming, why are leading companies suddenly prioritising privacy?
It seems that legal pressures are only part of the story (even if these are indeed mounting with total GDPR fines to date surpassing EUR1.28 billion). The world’s biggest brands seem to be going beyond compliance.
The world’s first guide on data ethics for brands was launched by the World Federation of Advertisers (WFA) in June 2020, acknowledging that the advertising industry is at a crucial point with mounting regulatory pressures around how companies collect and use personal data.
Unilever, for example, treats compliance as a mere baseline, acknowledging its limited value in the court of public opinion — if people think a company’s data practices are unethical, legal compliance will not protect the company’s reputation. This is why Unilever advocates that brands adopt a data ethics approach underpinned by values such as respect, fairness, accountability and transparency.
IKEA Retail’s Chief Digital Officer said that “It is crucial for businesses to think beyond legal compliance and consider ethical aspects when it comes to consumer data. It’s no longer good enough to think only about what we can do with people’s data, the question must be what should we do.”
Mastercard’s Chief Marketing and Communications Officer observed that today, more than ever, people expect full transparency, control and choice over how their data is shared and used by companies, and any brands that ignore this shift will be left behind. He noted it was essential for the advertising and marketing industry to take a proactive approach and demonstrate to consumers that big brands respect them and their data.
L’Oreal’s Chief Digital Officer said that while data enables brands to personalise and customise customers’ experiences, the industry as a whole needs to mobilise to ensure that data collection and use are handled with the highest level of transparency and ethics, given consumers’ trust is the number one currency for brands and the reason why we need to rethink data sharing as true value exchange.
While big global brands today are at pains to declare their commitment to doing the right thing with data by protecting people’s privacy, this fundamentally stems not only from increased regulation but from sheer market forces. It’s widely acknowledged that privacy nowadays is essential to earning consumers’ and employees’ trust and that brands that prioritise user privacy gain a significant competitive edge.
THE AGE OF PRIVACY
“Privacy is no longer an afterthought; it is core to how we work and interact with each other. The Age of Privacy has arrived.”
- 2021 Cisco Data Privacy Benchmark Study
Just as consumers expect cars, toys and electrical appliances to have safety built-in, they expect privacy to be bundled into their digital products and smart devices and online shopping, and are willing to quickly ditch brands with poor privacy practices and an unethical reputation.
A few interesting facts:
- The Interactive Advertising Bureau found that 79% of UK consumers in all age groups are more likely to buy from companies that they feel acted responsibly during the pandemic. This includes sharing timely, helpful information and prioritising customer privacy.
- 48% of people globally have stopped buying or using a service from a company due to privacy concerns.
- In a recent study by the World Federation of Advertisers, 82% of senior executives said they would consider leaving their employer if they felt its data practices were unethical.
- The 2021 Cisco Data Privacy Benchmark Study that surveyed more than 4700 security professionals from 25 geographies across all major industries, found that privacy budgets apparently doubled in 2020 to an average of $2.4 million and companies that invested in their privacy programs have achieved impressive ROI (35% of respondents reported benefits at least 2 times their investments) and secured a major competitive advantage.
- The COVID-19 pandemic accelerated a rapid shift to remote working, online shopping and an urgent need for personal health information to be shared with governments to support public health initiatives. Yet, 87% of individuals globally expressed concern with the privacy protections involved in the tools they needed to work and interact remotely and 36% of consumers are not willing to sacrifice privacy for safety during the pandemic.
In Australia, where sweeping reforms of outdated privacy laws are looming, consumer attitudes to privacy are changing fast. A recent survey by OAIC (the privacy regulator) found that privacy is a major concern for 70% of Australians, and almost 90% want more choice and control over their personal information.
The survey also reveals that data privacy is now Australian consumers’ top consideration when they are choosing a digital service — ahead of reliability, convenience and price. Australians are also increasingly likely to take certain actions to protect their privacy, such as deleting an app, denying permission to access our information, or switching to another service provider.
There’s no question that privacy today is considered good business and that powerful market forces will continue to mobilise and motivate companies of all sizes to put privacy at the core of their products and services, drive transparency and build trust.
Privacy is fast becoming a key reason for consumers to purchase a product, and “privacy-first” products are in high demand, just as “organic,” “free trade” and “cruelty-free” labels have driven product sales in the past decade.
WHY PRIVACY ISN’T JUST A FAD
Privacy is not a passing fad. More than 60 jurisdictions around the world have enacted or proposed new privacy and data protection laws in the past few years (including Argentina, Australia, Brazil, Egypt, India, Indonesia, Japan, Kenya, Mexico, Nigeria, Panama, the U.S., Singapore and Thailand).
This trend is set to continue as Gartner predicts that by 2023, 65% of the world’s population will have its personal information covered under modern privacy regulations, up from 10% today.
Prior to GDPR’s arrival in May 2018, few companies gave privacy a second thought. There were only a few thousand official privacy officers worldwide pre-GDPR. Yet in 2019, it was estimated that half a million organisations relied on the expertise of a privacy officer.
PRIVACY-AS-INNOVATION
Data is inherently complex and an effective privacy transformation will of course require significant senior-level commitment, serious investment, cross-functional collaboration and a fundamental mindset shift in many organisations.
It’s important, however, to not frame privacy as a chore, but rather see it as an innovation driver. Progressive companies around the world are recognising this opportunity to break new ground and are getting excited about pushing technical boundaries. They’re discovering a new balance between commercial goals and their commitment to protecting people’s privacy, safety and well being.
Last but certainly not least is privacy’s massive untapped potential. Many big questions facing humanity today involve personal data — How can we enable better scientific research? How can we find cures for our worst diseases? How might we optimise our diets, fitness and lifestyles? How can we personalise medicine for better patient outcomes? How can we design better recommendation engines that not only sell products but also improve people’s lives?
The ability to answer these questions and build the ground breaking products that will follow, depends on AI technologies and requires access to personal data, and lots of it. As Andrew Trusk argues in his MIT Deep Learning lecture, we need to make sure that the right people can answer big, important questions while protecting privacy.
The age of privacy is here — and one thing’s certain: those who will reimagine their business models and successfully adapt to this private new world, won’t just survive but thrive.
