InScope: Data and Privacy: The shifting landscape of consumer trust

Hope Clutterham is a Senior Insights Manager within OMD Insights and works with market research from a holistic brand and communication perspective.

While consumers regularly express concerns about data security and privacy, their actions often do not reflect these concerns, with users continuing to share personal data online on a routine basis. This phenomenon is known as the Privacy Paradox.

Research suggests that the consumer relationship to data and privacy is a complex one – consumers have a continued willingness to share information with trusted companies, however their trust in companies to handle their information appropriately is low and consumers don’t feel that they have enough control over their personal data.

With media discussion on the topic of data and privacy intensifying in recent months in Australia (demonstrated by a peak in news mentions of data privacy in 2019, shown in the graph below), lets take a look at how the data privacy landscape may shift in the future, the opportunities for brands and try to understand the impact this is having on consumer attitudes toward privacy.

The Deloitte Privacy Index 2018 found that consumers are willing to share their personal information with brands for a clear benefit. Trust in the organisation they are sharing with is the key driver for deciding whether to share information, followed by benefits received, such as discounts, and then personalised service and rewards.

Not surprisingly, this research also found that consumers are likely to lose trust in companies which use their personal information in ways not explicitly agreed to.

Another 2018 study titled The Global State of Online Digital Trust by Frost and Sullivan found that Australian consumers lack confidence in the way organisations collect, store and use digital information. In fact the digital trust index score for Australia is one of the lowest in the world compared to the ten countries included in the study (a digital index score of 54 points out of 100 compared to an average 63 for both the Asia Pacific region and the US).

The research also found that organisations overestimate the level of trust consumers have in organisations when it comes to the handling of personal data. At a global level there is a 14 point perception gap in how organizations perceive customer’s trust in their ability to handle personal data appropriately compared to the consumer’s level of trust in their ability to manage this process. This gap is notably higher for Australia and Europe, (18 point gap, respectively).

In addition, a 2018 privacy study by the Australian Direct Marketing Association (ADMA) revealed that Australians do not feel a great sense of control over their data sharing and data exchanges with companies. 81% of consumers want to have more control.

What does the future look like?

We are in a period of transition both locally and globally with regards to data and privacy –with new Privacy laws in Australia set to be introduced later this year.

Looking to the future of data, most discussion on the topic points to the idea ofa personal data economy, where consumers use their data as a personal asset that can be exchanged for payment.

Companies like Meeco, CitizenMe and Datacoup have been set up to assist consumers with this process, allowing people to access, control, and share personal data on their terms.

While adoption of these services in Australia is low, research suggests that an appetite for this service exists. The ADMA research found that Australians see the idea of data as a personal asset that can be traded as an appealing concept and 77% would prefer to hold their own data and exchange it when they choose.

This represents a power flip between brands and consumers, but it also presents a range of opportunities for brands.

At the recent IIex conference in Amsterdam, Tuomas Syrjänen from Futuris talked about what the personal data economy means for brands. His ideas include:

  • A more tailored approach to marketing e.g. personalised price comparison services such as Billmonitor in the UK which analyses consumers’ actual mobile phone use to recommend the correct price/bundle or smart thermostats like Nest offering personalised pricing for energy use.
  • The potential for more engaging services by utilising data across categories. For example, a consumer could allow their smartwatch or Fitbit to share fitness data with their online supermarket and personal finance apps, to obtain a tailored shopping list that takes fitness goals and budget into consideration.

We can see the beginnings of this shift with the introduction of ‘Open Banking’ in Australia, which means that personal banking data will be easy to access and made portable to move from one institution to another, should consumers wish to.

According to CHOICE, this open data environment is expected to ramp up competition and allow consumers to negotiate better deals and save money. An example of this is personalised offers from financial institutions based on personal banking information e.g. a credit card offer that takes your personal spending and bill payment details into consideration.

Open Banking is set to be introduced in Australia in July 2019, with the energy and telecommunications sectors expected to follow. 

What does this mean for brands?

During this period of transition where regulation is under the spotlight and consumers are becoming more aware of their rights with regards to data, the focus for brands must be on transparency.

Deloitte describes this as transparency of personal information use and disclosure. In the case of data incidences and breaches as an opportunity for building consumer trust.

This is based on 76% of respondents indicating that they would be more likely to trust a brand after a breach if there was timely notification of the breach, a detailed explanation of the breach, detailed plans of how the issue will be fixed, and ongoing notifications on progress.

This organisational focus on transparency to engender trust is much broader than consumer data and privacy, it is something that consumers are demanding across every industry and category – from supply chain transparency to ingredients labelling in consumer-packaged goods and personal care products, to transparency in financial services – the list goes on.

Our social listening results reinforce this focus on transparency with an upward trend in news mentions of this topic over time.

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