California Consumer Privacy ActWhat It Means for Modern Marketers

At the onset of this year, marketers were preparing for the California Consumer Privacy Act (CCPA), which would shift the regulatory landscape as we know it in the United States. Soon after CCPA went into effect on January 1, 2020, marketers and consumers were then confronted with another milestone that would shift us into “a new normal” – and take priority - the COVID-19 pandemic.

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July 1, 2020 marked the enforcement date of CCPA, and marked a unique

moment for marketers. While many have been preparing for CCPA enforcement

through the singular lens of compliance, this is too short-sighted. At Dentsu Aegis

Network, while we believe attention to regulatory detail is of vital importance, what matters most is truly embracing

the spirit of CCPA by being a proactive steward of data protection.

Marketers and their partners should view consumer data privacy regulation as a path for brand-building and innovation rather than a checklist to comply with. Here are five key themes to take into consideration based upon proprietary research and more than a dozen interviews with industry experts.

1. Personalization and privacy are not mutually exclusive2. Short-term steps for long-term success3. The new differentiators: Value and trust 4.Datafindsitsidentity5. The rise of data-centric DNA

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Personalization and privacy are not mutually exclusive It is clear: consumers have grown increasingly concerned about how their personal data is being handled. High-profile data mishaps like the Facebook Cambridge Analytica scandal, the Equifax data breach and others have helped fuel a bottom-up rise of consumer concern and agitation for greater privacy standards and practices. However, consumers have also admittedly embraced a desire for more targeted and relevant messages from marketers. While these seem like incompatible trends, these crosscurrents do not result in an impasse. In fact, this new regulatory environment has sparked a greater sense of responsibility that has led to a more transparent and enlightened approach to personalization—one that jettisons the “creepy” factor that has often haunted data-driven marketing in the programmatic age.

Consumers want more insight into how their data is being used. Concern that CCPA will spur consumers to bar brands from using their data is overblown. Consumers do not necessarily want to assume responsibility for managing their data, but instead want greater insight into how the brands that they patronize are using data collected from them. According to Dentsu’s “Taking the Pulse” survey, 49% of consumers said that they were most comfortable with sharing their information with a company or brand that is “transparent about how it will be used.” And, 44% said companies or brands are primarily responsible for protecting people’s

personal information, as opposed to individuals (35%) or the government (22%).

CCPA Means Respect. CCPA is a leading indicator of an important attitudinal sea change. In the way that the #MeToo movement has caused a much-needed course correction in how brands look at gender, brands should view privacy through a similar sociological lens. It’s worth noting that 79% of consumers said that they view privacy as a “fundamental right” rather than “a privilege.” This was especially true of Baby Boomers—90% of whom shared this sentiment.

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It’s All About the Value Exchange. One incorrect assumption that brands often make is that consumers understand the value exchange of offering up personal data for benefits. But in fact, there is ample evidence to indicate that the value exchange message may be trapped inside industry echo chambers. The broader consumer universe may not sufficiently understand this notion to embrace it. Educating consumers about the benefits of sharing data is essential and rewarding them has also proven effective.

Another finding from our “Taking the Pulse” survey suggests that as consumers begin to view their data is an asset, they want compensation. With the realization that data has value, consumers have new ideas about how to benefit from that value. In fact, 37% of respondents who first told us that data sale was not okay (70%) changed their minds after being offered compensation.

“Personalization and privacy can meaningfully coexist. Consumers are happy to share as long as brands are not fast and loose with their data. Consumers realize that asymmetrical information sharing is inherently unfair, and they don’t want to be exploited.” — Brad Alperin, SVP, Integrated Strategy Lead, Dentsu Aegis Network

Our Point of ViewCCPA has been a wake-up call for many marketers not to take consumer privacy and respect for granted. The privacy movement is an opportunity for brands and their partners to dismiss consumer exploitation in favor of true consumer engagement. In the end, brands will get better data and consumers will have more positive experiences. While most data-driven products are marketed as saving time, money and even improving wellbeing – consumers don’t appear to buy the trade-off. New notions of data’s value will up the ante for brands to deliver.

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Short-Term Steps for Long-Term SuccessPlanning and operationalization of privacy compliance obligations in the near-term is proving hugely beneficial for informing long-term strategies. Brands are starting to build the institutional muscle memory for regulatory compliance through their experiences with first the General Data Protection Regulation (GDPR) in Europe and now in the United States with CCPA. This is a foundational moment upon which to build the next phase of brand-building and innovation via stronger, more accurate data secured through a transparent exchange with consumers.

A more holistic approach to a seemingly compartmental challenge is contributing to the ongoing broader corporate re-engineering of how and why data is being used. Regardless of how the regulatory framework shapes up in the U.S. and abroad, brands need to be planning for future changes in the data landscape, as well as the myriad technological innovations that will no doubt continue to impact how we engage with consumers.

CCPA: A Privacy Petri Dish for Other StatesOver the past year, privacy legislation has been proposed by state legislatures in over half of the country. There is an expectation that an overarching federal privacy law will be passed in the not-so-distant future. But until that happens, many organizations are treating the most restrictive state regulations as a de facto national standard privacy compliance framework. It may seem daunting to develop practices that comply with a patchwork of laws from different jurisdictions, but best practices being formed as a result of GDPR and CCPA will certainly inform each piece of future regulation. We can expect fewer pain points along the way.

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Prepare for the Opt-Out Onslaught, Even If it Doesn’t Happen

It is too early to adequately assess the number of consumers who will opt-out of tracking. As with other unknowns in the marketplace, it would behoove brands to prepare for the worst-case scenario. Brands should devote the needed resources and talent to inoculate their opt-out procedures and systems from avoidable disruptions. At the core, building and leveraging consumer relationships has never been more important.

The Impending Permanent Organizational Impact

Marketers need to be more vigilant now in terms of gathering, ingesting and leveraging data. Much of our industry still needs to overhaul their systems and put leading-edge tools in place. This process will usually require some customization depending on a given organization’s tech stack. The time and resources devoted to this process will ultimately set businesses up for success in the long-term.

“If a critical mass of consumers do opt out, it could wreak considerable havoc on campaign optimization and multi-touch attribution modeling and algorithms,” said Jeremy Hull, SVP, Innovation at iProspect. “While this is not likely to happen, it does give marketers and their partners a moment to consider why this is happening and what should be done.”

“If a critical mass of consumers do opt out, it could wreak considerable havoc on campaign optimization and multi-touch attribution modeling and algorithms.”

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Our View“Digital transformation” has been an overused catchphrase in our industry, but there is no doubt that all marketing organizations have been forced to re-evaluate every aspect of their organizational structures, technology, talent and go-to-market strategies. As brands move forward with CCPA compliance and plan for compliance with other future regulations, it is important that they approach each hurdle with a holistic perspective whereby compliance can actually jump start opportunity.

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The New Differentiators: Value and TrustBrands should approach CCPA not from a reactive stance of compliance but from a proactive perch of brand elevation. The fact that only 14% of consumers said that they trust companies and brands to regulate themselves when it comes to privacy is telling. It is also an opportunity. By truly embracing the spirit of consumer privacy and not just settling for appeasement, brands can create an active laboratory for building new consumer engagement strategies rooted in deep and lasting attributes.

Privacy to Join Purpose as a Key PillarThere is a reason ‘purpose’ has become such a central theme among businesses. Brands that have a strong history of ‘doing good’ have seen benefits in terms of consumer and employee loyalty. Corporate social responsibility programs have rightfully become a cornerstone of successful organizations and the momentum and power that they provide is unquestioned. What it means to be a good corporate citizen is now evolving to the realm of consumer data privacy. How marketers handle consumer relationships, via their information, will serve as a key differentiator moving forward.

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Education Equals EngagementCCPA can be a powerful springboard for a successful customer relationship opportunity, one rooted in consumer education. Explaining why data is being collected and how the consumer benefits is key. Brands have an opportunity, and, some may argue, a responsibility, to be a leader in consumer data education and literacy. By being explicit and clear about data collection and usage, brands can be the ones that are viewed as prioritizing consumer respect and welfare.

“Total ethical transparency can make consumers ‘feel’ differently about your brand. This ‘feeling’ can enhance the customer experience overall, and can thereby confer credibility to your brand exponentially,” said Brad Alperin, Dentsu Aegis Network SVP, Integrated Strategy Lead.

The Value of Customer ExperienceThere is a basic unwritten social contract between businesses and consumers related to value exchange. Consumers allow a reasonable and responsible level of data tracking in exchange for a more personalized brand experience. For example, if a consumer opts to block first-party cookies, every time that consumer visits his or her favorite website, the site wouldn’t recognize previously set preferences. “What kind of deal is that for the consumer? Then value is lost. There is a customer experience that needs to happen,” said John Lee, President, Merkury, Merkle’s identity resolution and data platform. “Everything can’t be a pop-up box that confronts the consumer.”

“It’s mandatory that every brand personalizes this trust-building with a voice and tone that is specific to its product vertical and most importantly on-brand. A health insurance company and a youth-oriented fashion brand are clearly going to be having distinct conversations with their customers around their privacy practices.”

— Charlotte Polci, VP-Integrated Solutions, iProspect

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Our ViewAs products and services have increasingly become commodities due to manufacturing and marketing parity, brands are having to dig deeper than ever to retain customer loyalty. Now is a unique moment to build trust and explain the value of providing data. Consumers have made it clear that they want to understand and feel good about how their data is being used. Now is the time to make that happen.

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Data Finds its Identity The data-driven marketing paradigm for the new decade will focus on putting first-party data front and center. First-party data’s star treatment will also contribute to a sharper focus on achieving true identity resolution. In turn, advertisers will be rewarded with a more robust return-on-advertising-spend and better business outcomes while the overall consumer experience will be better by orders of magnitude.

The Future Is First-Party DataAs major online browsers put cookie-based consumer tracking out to pasture, both brands and publishers are fast at work, rearchitecting their data technology infrastructures. First-party data is now the cornerstone of these efforts in this new post-cookie, privacy-first world. This means private marketplaces will become more central to advertiser’s digital media budgets while open exchange allocation will greatly diminish. This winnowing of the herd will also lead to greater identity resolution.

Private Graphs Will Pave the WayConsumer privacy regulations and the death of the third-party cookie are changing the rules for digital and cross-channel marketing. Going forward, both marketers and publishers will leverage their direct-to-consumer relationships to create proprietary, private identity graphs that can be used to communicate dynamic brand messaging and content to their customers. These brands will be able to network their private graphs with partners and publishers in a way that increases addressability for all in a privacy safe way. Everyone will win.

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Walled Gardens Will Be Part of the Solution

Facebook, Google and Amazon have long been in the antitrust cross hairs of the Department of Justice and the Federal Trade Commission because of the way they operate as “walled gardens” with little (if any) third party verification or oversight. While they have received a high share of negative press, there is no denying their continuing popularity with consumers. The big platforms will likely be reined in by some degree of regulation; this intense scrutiny should ultimately have a healthy impact on the marketplace. The current movement by civil rights groups and brands to pressure social media companies, and in particular Facebook, to better regulate hate speech and misinformation online, may offer some clues into how the data privacy conversation will unfold. Ultimately, the walled gardens are critical to the success of our industry and we should expect them to continue to lead and innovate.

“CCPA is a good thing. It’s positive for the ecosystem. It forces more disclosure and puts a premium on the first-party relationship. Consumers get to know who is handling their data and marketers get more valuable data, albeit in shorter supply.”

— John Lee, President, Merkury, Merkle’s identity resolution and data platform

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Our ViewEvolution shouldn’t be scary. First-party data and enhanced identity resolution are strong rays for a brighter landscape. While there is a lot of work to be done to make the transition to using first-party data in a more transparent manner, the end result will simply be better and more effective marketing options. Consumers will receive the messages that they want and feel good about. Marketers will have a sturdier, more effective means to collect, use and benefit from data.

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The Rise of Data-Centric DNA Adversity is often the mother of transformation. The technology revolution that began in earnest 25 years ago with the advent of the commercial Internet has inspired frequent innovation in the marketing and advertising industry at unprecedented scale. The relentless pace of change has made it difficult for marketers to ever truly exhale. On the bright side, all of this sustained ‘sweat equity’ and reflection has unlocked new portals to re-engineering marketing strategies and organizational philosophies and structures. These evolutionary enhancements will make marketers better prepared to meet future challenges. In effect, marketers and their agency partners are in the middle of a genetic reconstitution with companies increasingly coalescing around a data-centric DNA supported by the new technology foundations being put in place.

Data is the Glue to Bind the Entire C-SuiteOne of the most profound, incidental benefits of privacy regulation compliance, first with GDPR and now with CCPA, is the elevation of consumer relationships to the purview of the C-Suite. As brands continue to wake up to the primacy of data security and integrity as a key driver to the overall consumer experience, it will have a unifying impact as CEOs, CMOs, CTOs and CFOs will forge a closer and ultimately more productive dynamic.

Data-Centric DNA Will Color Wall Street ImpressedWall Street will have a new KPI to track, said Josh Herman, SVP, Merkle. This KPI is “how well is the CMO growing first-party data to improve paid media reach, brand equity and sales effectiveness?” The ripple effect will be brand managers with greater confidence in brand equity KPIs. Media teams will benefit from the accuracy and relevance of data for planning, activating, and measuring addressable media. The CRM team will contribute to all marketing channels, not just direct mail and e-mail.

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Kindred Spirits Make The Best Partners

With so much at stake, it has become imperative for brands to find marketing partners who share this data-centric DNA. Those partners must have the proven technical expertise to gather, organize, and make use of data. It’s critical that they also have the capability to leverage that data to drive brand value along with accomplishing more tactical goals including smart targeting, CRM and other data-driven use cases. Look for partners who have an established track record in responsibly ingesting and collating personally identifiable information (PII) and not those who are just now pivoting to be able to do so.

Our ViewThe traditional mass reach approach of network TV was the linchpin around which the entire industry was built and had thrived. Now as we actively, collectively shift towards a personalized marketing paradigm, new talents, expertise and structures are being put in place. Having a trusted data-centric partner to help your brand navigate people-based marketing strategies will be critical to future success

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Closing ThoughtsAt the Dentsu Aegis Network, we know that there are new rules for a consumer-led world. At a time of increasing consumer intolerance towards traditional advertising, brands need to understand that the industry’s mandate has been turned on its head: from changing consumer behavior to changing brand behavior.

With consumers insisting that brands earn their attention and live up to heightened expectations of increasingly meaningful, relevant and personalized interactions, the road to future business growth is no longer predicated on marketing at consumers but mattering to people.

By truly embracing the spirit of CCPA, marketers can burnish their own brands as beacons of sincere commitment to consumer experience and welfare. In this age of commodity offerings, this mindset acts a catalyst for true differentiation.

Dentsu Aegis Network, which was purpose-built in and for the digital economy, is uniquely equipped to help our valued clients elevate their offerings during this transformational moment.

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Dentsu Aegis Network offers deep expertise in privacy, identity management and data-driven marketing. We can help you achieve

personalization at scale while complying with regulation, lean into privacy as a brand builder and create engaging data-driven experiences.

Contact us to speak with an expert