Finger pointing at people icons showing privacy vs personalization

Personalization vs. Privacy – A Double-Edged Sword for Businesses

According to the Interactive Advertising Bureau (IAB), 71% of consumers prefer ads tailored to their interests and shopping habits, yet they’re still concerned about the harsh consequences that could result from sacrificing personal data, as 86% of Americans believe businesses and organizations collect more information than needed.

Consumers want to be targeted with ads tailored to their needs and desires but are also becoming more aware of their own privacy and the misuse of personal data, which has created an interesting dichotomy. The consequences on businesses for violating privacy regulations are becoming steeper. A recent parade of state privacy protection regulations, such as VCDPA  in Virginia and CPRA in California, have entered, and will continue to enter, legislation, changing the way data privacy standards are prioritized for businesses. As evidenced by the Sephora fines, these reparations are no small feat. This begs the question: how do you balance personalization for a competitive edge with adhering to data privacy rules and regulations?

When providing personalization, a top priority for a business is connecting user attributes to advertising opportunities. 59% of consumers, according to the IAB, say ads help them find new products or offers and 50% of consumers say ads help them save money or time. Without personalization, businesses eliminate this faster and cost-efficient way to target and cultivate revenue from their consumers.

When an ad is served, connecting any measurable outcomes such as site visitation, product purchase, or brand metrics, to that impression, businesses gain insights into personalization, to gain revenue and continue personalization for the future. All of that is possible, but not without violating the privacy of consumer data. In order to maintain this business practice and maintain revenue, businesses need to understand how to balance personalization and privacy by implementing strategies into their standard security practices that allow for secure multi-party analytics.

Multi-party analytics has become a powerful way to meet these challenges with both respects to privacy and operational efficiency. Marketers have gone from using mass media for targeting broad demographic segments to launching precise targeting initiatives for activating against a collection of specific, individual identities. These practices have improved business insights and profitability, but could compromise privacy without the right tools and processes in place.

For instance, businesses often run campaigns across two digital publishers with campaign-level frequency management. If publisher A is prevented from serving impressions to a specific consumer because they have been sufficiently reached by publisher B, then publisher A has just learned something potentially private about the relationship between this individual consumer and publisher B. This is a common scenario in business marketing analytics today. With consumers becoming more aware of their own privacy, organizations must adopt privacy-first strategies and technologies in order to maintain personalization.

This brings us to privacy-enhancing technologies (PET). These are designed to ensure that private information is never transferred, stored, or used in an insecure manner while enabling data processing to be carried out. PETs are getting increasingly sophisticated, with the latest ones, like Secure Enclaves and Homomorphic Encryption, gradually going up the far edge of Gartner’s hype cycle.

Marketers have become accustomed to data ubiquity at a very granular and relatively open level. But increasingly, while there may be more relevant data for targeting than ever before, the mandate around data privacy has gotten much more stringent.

PETs can give enterprises the opportunity to ingest, segment, and share data signals and attributes to personalize and enrich first-party data to their customer profiles to develop a wider, more comprehensive view of consumer data, insights that are highly prized.

With a technology like this, marketers can also overcome common blindspots that often go unaccounted for when it comes to an understanding of basic media performance. Data from media activation partners can be surfaced within a PET to measure the delivery of ads to users and manage frequency in a privacy-safe manner. Enterprises are able to use this information to analyze on-target reach and frequency fueling planning and activating optimizations to overall increase personalization, without compromising privacy.

This also allows enterprises to target specific audiences to widen ad personalization. In a PET, user-level data can be ingested, providing an understanding of customer overlap, informing campaign planning, and enabling marketers to reach the right audience, without their consumer data being exposed to other data-sharing partners.

These advanced technologies grow in popularity as existing methods become less useful. For example, anonymization doesn’t guarantee privacy; this renders the most widely used privacy protection method toothless. Gartner predicted that in 2023 80% of advertisers spending more than $1 billion annually on media will use a privacy-enhancing technology such as a data clean room. So, as organizations adopt PETs, including data clean rooms and confidential computing, it’s important to understand what’s needed for safe multi-party analytics.

With businesses’ finding great advantages in multi-party analytics, as it widens the scope of insights, they need to ensure the environment they invest in is a neutral, privacy-safe environment for marketers to work with publishers and media activation partners. To ensure the environment is completely privacy-safe, all data owners should be encrypting their data at the point of origin before they contribute data for collaboration. Encryption in use is new to advertising, but it provides the highest standard for maintaining privacy.

When it comes to balancing personalization with privacy, it’s not about navigating negative sentiment around ad-targeting or data-driven marketing. It’s about understanding the tools and strategies available to ethically maintain these practices.