In this opinion piece, Pureprofile CEO Nick Jones (pictured below) explains how the Personal Information Economy (PIE) will change the way brands harvest data…
For too long, the public hasn’t been informed and consulted about how its personal information is collected and used. The issue is typically highlighted through high-profile security breaches, such as Facebook’s recent data scandal and January’s announcement by car share service GoGet of a data breach eight months prior.
Whilst the security of personal data has dominated the conversation, focus is now shifting to the value of personal data, with consumers becoming increasingly aware of what their information is worth to brands. This is called the Personal Information Economy (PIE), and the advance of this consumer-led economic revolution will ultimately ensure the privacy and integrity of consumers’ data is an automatic right and not a choice.
Customers in the data-driving seat
It’s critical that brands help consumers understand the value and take back control of their personal profiles, which in turn will help brands create valuable content for their customers. The process, backed by Australia’s enviable set of monetisation capabilities across the digital marketing ecosystem, is a way that brands can build trust and improve their customer experience by understanding their choices, needs, habits and preferences. A good example of this is music platform Spotify, which identifies its users’ favourite music to deliver new content that’s relevant and valued by the consumer.
The double-edged sword of access to and accountability of data was brought to the fore at the World Economic Forum in Davos in January this year. IBM noted that 20 per cent of the world’s data is searchable and the remaining 80 per cent is housed on private servers, therefore highlighting the onus on businesses to ensure the safeguarding of their customer’s personal data.
Safeguarding data is already an advanced conversation in Europe, and German chancellor Angela Merkel summed it up by saying: “Data was the raw material of the 21st century,” and the challenge for Europe is “to ensure that data is shared in the correct way”.
Merkel’s vision will become a reality on May 25, 2018 when the European Union’s data protection rules, the General Data Protection Regulation (GDPR), come into effect. The GDPR governs how EU citizens’ data is used and stored, with hefty penalties for breaches. The changes extend beyond EU’s borders and will impact Australian companies offering services in the EU or planning to extend their operations there. For brands in Europe, the changes offer a fresh perspective, spurring them on to take a proactive approach.
Australia is catching up
Australia won’t be far behind, with mandatory data breach notifications now in force. From February 22, the Notifiable Data Breaches scheme requires businesses with a turnover of more than $3 million to advise both the Australian Information Commissioner and all affected customers if personal information has been hacked.
A solution to managing the transparency of data with consumers lies in using platforms that can return value to consumers beyond just managing their data – for example, providing content, sharing back insights and offering rewards and even share of revenue. While protecting data can be costly, the benefit for businesses is using this valuable data to strengthen their relationship with existing customers, effectively creating a sophisticated owned media channel.
Going by the 80/20 rule set by economists, 20 per cent of your existing customers will deliver as much as 80 per cent of your revenue. This relationship is absolutely worth protecting and strengthening.
This principle has stood the test of time, but what economists couldn’t have predicted was the pendulum swinging in favour of consumers, who are now increasingly savvy about their data and its worth to brands and now want to realise its true value.
The winners of the PIE revolution will be the media and brands that leverage their data assets in the right way – to understand consumers, make them a part of the data/profile exchange, and build long-term relationships with them.