Can consumers learn to trust how brands use their data?

To receive the Vogue Business newsletter, sign up here. When Apple launched an iOS 14.5 update in April, it included a new App Tracking Transparency feature, which allowed consumers to opt out of tracking for any apps they use. Since launching, 88 per cent of users globally had already disabled tracking, showing a high appetite for privacy, according to a report by Flurry Analytics. Consumer concerns are rising fast over data privacy. Research from The Luxury Institute suggests that the post-pandemic data landscape for consumer brands — and luxury goods in particular — is “a potential minefield”. According to a McKinsey survey, one in 10 internet users worldwide (and three in 10 US users) deploys ad-blocking software to prevent companies from tracking online activity. Some 87 per cent of consumers say they would not do business with a company if they had concerns about its security practices, while 71 per cent said they would stop doing business with a company if it gave away sensitive data without permission. A slew of high-profile leaks of consumer data has heightened concerns. In April, 533 million Facebook users’ data was leaked from 106 countries that had been obtained in 2020 after a ‘vulnerability’ that Facebook said was since ‘patched’, including phone numbers, Facebook IDs, full names, email addresses and more. Compliance versus reputation In recent years, brands have focused on compliance. But is that enough? Effective management and protection of consumer data protection is about more than compliance: it can also be presented as a business advantage. Companies are certainly prepared to spend: in 2020, 93 per cent of organisations turned to specialist privacy teams during the pandemic. Privacy budgets have risen to an average of $2.4 million among major companies surveyed, according to a Cisco report. Empathy.co, a commerce search and discovery solutions provider that works across Inditex brands such as Zara and Massimo Dutti as well as Adolfo Dominguez and Soho House, has been building ‘Me2B’ solutions for its clients. It helps brands personalise product offerings in-app and on websites with one all-important feature — the data is stored only on consumers’ devices and not on the brands’ servers. “We think it’s possible to still offer very relevant experiences without having them stored in a central database,” says Ángel Maldonado, CEO and founder. “We call these pods. There are consumer data pods of local storage where the customer is the owner of all that data, and the brands can read it but not store it. So what happens in your browser or your device stays in your device.” Me2b has been a buzzword for several years. Essentially, it is about creating models where the consumer has agency with the data provided. It offers consumers the option not to be harassed by ads that might damage the consumer relationship. For example, on Mother’s Day this year, brands such as Etsy and Pandora allowed consumers to opt out of adverts, thinking specifically of those for whom the day serves not as a celebration but as a painful reminder. Maldonado believes the cultural change for brands is harder than the technological one. “Many companies still speak of data as an asset,” he says. “If anything, it’s becoming a liability. Customer data belongs to the customer, not the brands.” Looking beyond Facebook Consumers are also trying simple hacks to avoid being tracked. A survey by Empathy.co of 4,000 consumers found that over 40 per cent were concerned about what happens to their data during and after the e-commerce purchasing journey. Many of them were using guest checkout as a way around this. Digital marketing expert James Swain says that guest checkout might still be tracked. “It might not mean you're tracked to an email address or signed up to a newsletter, but you'll still be on the back end system as someone who has purchased something.” Social data mining, as practised by sites like Facebook, won’t stop anytime soon, but Swain argues that brands will diversify to other channels with clearer forms of data sourcing. “I think we are starting to move away from Facebook being seen as a single source of truth,” he says. Sven Ehmann, head of design strategy at Polypoly, which creates new data ecosystems, thinks luxury brands need to look beyond the major platforms. “Experiencing a luxury brand through Facebook is like experiencing it in a cheap shopping mall,” he says. “Data privacy is a quality issue. What we're getting to is a situation where no player in the market can ignore it.” Ehmann proposes clear privacy policy standards. “The absence of a clear standard shows you how screwed the legal side of it is,” he says. “[At Polypoly], we’ve had to work on making different privacy policies comparable so that we can start giving our customers a sense of what the problem is. In the end, to make it successful, you need to keep it very simple.” Putting the customer first The customer should come before the data. That might sound obvious, but specialists in the data industry argue this basic point has been overlooked. “For the past 10 years, it's been so focused on social media that brands have deprioritised the relationship that they have with their customers and communities,” says Angela Benton, founder and CEO of Streamlytics, a company that develops consumer data tools that put the consumer in control, for collection from online platforms such as Netflix, Amazon, YouTube and Google. “What I think is going to happen is there's going to be a shift to more personal relationships with brands and their customers — and that can look like a lot of different things.” Streamlytics is currently working on better solutions for creative brands, including fashion, to leverage their data without the need for large and highly skilled data science teams. Streamlytics allows consumers themselves to trade and sell their data to companies. “It's basically the sharing of individual personal data to an external entity, brand or company for some type of compensation,” she says. “But what is really great about it for both parties is that the data can be used for so many things, not just running ads on Facebook. Businesses are doing other things that translate data to dollars.” The emphasis is on quality data. “Most people say your personal data is worth like $1 or $2, so little that it doesn't even make sense for someone to try to monetise it,” she says. “What we actually did was build an algorithm to change that.” Diversity is a data quality issue, too. Streamlytics has very significant volumes of data from African American consumers. By allowing them to have control over the data they produce (and compensating them for it), Streamlytics is helping to close the racial wealth gap and repositioning these consumers’ relationships with commerce. In future, a new kind of data-driven relationship between brand and consumer could emerge – a relationship built on mutual trust. “If I was a consumer who cares a lot about the environment and being outdoors, would I donate my data to Patagonia to save the forests? Maybe,” says Ehmann. “And would I donate my data to Patagonia to enable them to save me if I get lost in the forest? Probably.” Comments, questions or feedback? Email us at feedback@voguebusiness.com. More from this author: Paris: The hidden opportunities in luxury retail How retail is faring in round two of the great reopening Post-pandemic playbook: What Gen Z want from physical retail

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