Will Regulation Kill Personalisation?

Netflix knows what I want.

It is becoming harder to imagine a time when people actually had to watch whatever was scheduled for them. Thanks to the internet, TV – like many other things - has become a personalised experience. The catch? Well, as is the case with every instance of personalisation, it is all about The Trade: I give you my data, you give me an experience tailored to me.

The Trade is at the core of both good and bad personalisation experiences and seems to come down to one key thing: am I engaging in this trade willingly, or is it happening secretly or for nefarious purposes? Here are a couple of examples.

Willing and unwilling trades

Netflix is a good example of what I would call a "willing trade". I know that Netflix knows what I watch, when I watch it and how long I watch it for. But that’s fine with me because a) this data seems kind of harmless and b) it is worth it because I get relevant content delivered to me.

On the other hand, consider the Cambridge Analytica scandal, which is what I would call an unwilling trade. Masquerading under the guise of an app called thisisyourdigitallife, Cambridge Analytica harvested the data of millions of Facebook users to produce high-charged and targeted political ads.

Whether or not these ads were instrumental in swaying the election in Trump’s favour is up for debate. What isn’t up for debate is the fact that this data was collected in a shady way, with an intention to manipulate.

Having said all this, I can’t be the only one who wonders how sustainable the Netflix business model is. At present, Netflix’s revenue comes solely from subscriber fees since, unlike Hulu and Amazon Prime Video, it is completely ad-free.

Despite having the largest share of eyeballs, Netflix is also losing money. While Netflix may be profitable on a cash-flow basis, the money it spends on making original content (a hefty $12bn in 2018) takes the company into negative territory.

This leads me to envisage a scenario in which Netflix “pulls a Facebook” and starts running ads. With ads comes the selling of our data to third-parties, and that’s precisely when the Trade can go sour.

First the GDPR...

To more effectively regulate against such unwilling trades, tightened restrictions on how businesses can collect and store data have been introduced.

In May 2018, the General Data Protection Regulation (GDPR) came into effect. Since the law applies to every company in the world that deals with an EU citizen, we have seen the effects of the GDPR worldwide.

For example, you may have noticed that many websites now notify you before tracking cookies. When you accept this, you are consenting to a willing trade: your browsing behaviour for the site’s content.

While Pre-GPDR this trade was agreed implicitly, you are now required to click “Accept”. Has it made you think twice about visiting a site? Have you read any privacy policies as a result?

Other changes introduced by the GDPR include the banning of blanket opt-ins, the power to know what data is being collected, and the right to be forgotten.

...Now the CCPA

Many Americans are also going to be getting revamped privacy laws soon.

On January 1 2020, the California Consumer Privacy Act will come into effect, and, like the GDPR, it will put greater restrictions around how companies can collect and use data.

The CCPA actually goes a little further than the GDPR, as it will give people a clear chance to opt out of the sale of their data and will force company’s like Google to disclose exactly what they know about them.

With around 40 million people, California is America’s most populous state. But the CCPA could have effects even more far-reaching than that as it will set a new standard for companies nationwide which may not want to have to bother with the creation of a separate website just for California.

One of the marketing techniques under threat from the CCPA is ‘retargeting’, which is the practice of tracking users and following them around the web with the same ads.

The problem is retargeting can sometimes run amok, following you even after you’ve purchased a product and becoming a downright nuisance.

One quick fix would be to have a little check box on the ad, which would allow users to check “I have already bought this, please leave me alone.” Alas, I never seen this in the wild.

The CCPA will hinder retargeting by banning what the industry calls ‘third-party behavioural profiling’, which allows the transfer of browsing data between different websites.

Is personalisation dying?

So are these regulations killing personalisation? On the surface it might seem like a death blow because, after all, data collection is the starting point for all this.

However, these changes may also present the potential to make personalisation stronger in a couple of key ways. 

The first way comes down to the quality of data being collected and used. If I am willing giving you my data, it is far more likely that the data I give you is relevant, up to date, and accurate. Using that higher quality data, companies can create a superior customer experience for me and in return, I’ll spend more and advocate for that brand.

The second way comes down to trust. As we have discussed before, transparency is at the very top of many people’s lists of important attributes companies must have. Regulations such as the GDPR and CCPA gives companies the opportunity to lift the hood on how they are personalising CX, ultimately building a stronger relationship with customers.

And besides, would customers really miss retargeting if it died a swift death? Aside from the fact that it seems to work (it not, why are so many companies doing it?), it can be frustrating.

At the end of the day, personalisation is a CX trend that is here to stay. While new regulations such as the GDPR and CCPA may change the playing field, the goals will remain the same. We live in an era in which CX is becoming the key differentiator, and there will always be ways to tailor experiences without being creepy or annoying.

Perhaps, as the great Homer Simpson says, it is a "crisitunity" for marketers.


Stefan Kostarelis

Written by Stefan Kostarelis

Stefan is the Content Manager at a Sydney-based investor relations firm, and a freelance writer whose work has appeared in Techly, Paste Magazine, Lost at E Minor and Tech Invest.

Topics: Customer experience personalisation CX Articles & Insights

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