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The double-edged sword of increased digital data collection

data
(Image credit: Shutterstock / carlos castilla)

The pandemic changed the way society lives, works and functions. Over the last 18 months,  large swathes of data have flooded the digital world, an influx of online interactions readily available for companies to capture. While this seems like the dream scenario for marketers, the challenge they are now facing is how to actually use that data effectively. For, as we shall see, mobile app, website and ecommerce traffic has yielded ample information on consumer habits and behaviors. As a result, as much as 37 percent of brands have improved their capacity to gather custom data significantly over the last 12 months.

However, just as humans struggle with processing the sheer amount of stimuli of our modern environment – so much so that we developed the technology to do it for us – computers also have their limits. According to calculations undertaken since 2016, estimates predict a tenfold increase of data by 2025, bringing us to 175 zettabytes, and despite additional capabilities, even computers eventually falter and slow down, with lengthening loading times and deteriorating productivity.

So what are companies doing with all this extra input? Contrary to popular belief, high levels of data quantity don’t necessarily equate to better data quality: the structures cannot keep up with the mass. This results in unfiltered and unmanaged data, and eventually, data silos.

Data silos: the barriers to good business

Within any organization, different departments require different information. Whether it’s administration, marketing, HR or finance teams, each department works with distinctive datasets that enable its respective tasks. Difficulties arise when these datasets create information barriers: the fragmented and inconsistent nature of large, separate data collections not only lessens data quality, it inhibits a leader’s ability to get a holistic view of the entire organization’s data.

The ways that data silos can harm a business are diverse and wide-ranging. They create a myopic interpretation of digital information that, over time, can impact its integrity. Structural inefficiencies are missed when data is only considered at ground-level, and information that is out of sync risks impinging on accuracy. What’s more, mounds of duplicated data collections wastes storage resources, while multiple, disconnected silos encourage division between groups: in a sense, a firm’s structure mirrors its culture. Separate silos imply a lack of cooperation and communication, a state of affairs that then becomes mutually reinforcing.

Limit, centralize, and integrate

Fortunately, there are actions that companies can take to tackle this silo situation.

The first change can be implemented at the level of data collection. As previously mentioned, simply gathering masses of data for the sake of it will not automatically provide the insights. Moreover, when considering cultural shifts in attitudes regarding privacy, customers are wary around excessive information requests. With access to see the amount and kind of data companies keep, unnecessary records that yield little value for the consumer will not reflect favorably on firms looking to build trust with their audience. Knowing what data you need, and why, is key to limiting the disproportionate collection of digital information. It also means you are more likely to obtain useful insights you can work with, and develop into actionable strategies.

The second step demands a process of unification and integration. One way to do this is a  “common data layer” that connects the entirety of a company’s intel into one location. At present, just over a third (36 percent) of brands have a centralized platform that they are currently optimizing in order to achieve the best results for both the business and their clients. These data management systems, or Customer Data Platforms (CDPs), are a growing market – at a rate of 30 percent from 2019 to 2020 – with 36 percent of marketers currently using CDPs and 56 percent actively looking for one.

CDPs are a multifunctional tool to properly store, access and understand data points. They are a means to integrate insights into one consolidated, and more importantly, comprehensive customer profile. This profile – combining segments, preferences and core data attributes – is constantly updated in real-time, from across various interactions, both on- and offline (such as browsing activity, campaign impressions, media engagement, and anonymized PII). The technology’s integrated platforms assist in the development and execution of omnichannel campaigns, while Return On Ad Spend capabilities allow companies to continuously optimize their external communications through tracking and measuring abilities.

Privacy first

Whether it be on-premises systems or cloud-based, built to focus on identity resolution, execution layers, or personalization, CDPs are both meeting and exceeding marketer’s expectations at a rate of 97 percent. Importantly, CDPs also respond to the current climate with regards to confidentiality: industry-approved identifier systems are coupled with real-time consent management tools that enable clear and transparent privacy reporting.

Evolving privacy regulations are one of the major concerns for brands, businesses, and agencies today. According to a recent KPMG study, a vast majority of 86 percent of the US population consider data privacy to be an area of growing concern for them, while 78 percent worry about the amount of information collected. When it comes to how consumers feel about companies, 40 percent don’t trust them to handle personal data ethically, and 76 percent want more transparency around data processes.

Granular insights may allow for better audience targeting, personalization, and scale, but companies will suffer if they do not adhere to both local and global protocols. While Europe is leading the way in this regard with GDPR, the rest of the world is following suit, with the California Consumer Privacy Act (CCPA) and Virginia’s Consumer Data Protection Act (CDPA) in the US, and Brazil’s Lei Geral de Proteção de Dados (LGPD).

But marketers must remember that quality data does not have to come at the cost of confidentiality. In fact, the demise of the cookie can even promise a better future: composite audiences based on consumer traits and data points, anonymous ID matching, encrypted Unified ID initiatives, as well as cohorts (group-based IDs), are solutions that fuel efficiency without compromising on privacy.

The digital landscape has found itself laden with an epidemic of “infobesity”. Submerged in swells of data, companies are learning to deal with challenges on multiple fronts: effective data storage and use, adhering to privacy and GDPR regulations, and avoiding the fragmentary and wasteful data silos. Many have turned to CDPs as an answer to the challenges of today. Not only do CDPs bypass the dangers of disconnected company cultures and structures, they translate information into workable strategies and campaigns in a way that respect user autonomy, and privacy. CDPs can help avoid data gluttony and promote healthy consumption, leading us into a world where customers can benefit from personalized services without fearing for their personal information.

Filippo Gramigna, CEO, Audiencerate

Filippo Gramigna, CEO of Audiencerate, brings more than 20 years of experience from roles at major media houses, technology companies and brands.