Business Profitability May Soon Hinge on Privacy
By Daniel L. Farris
There is growing evidence that privacy and data security are becoming business imperatives – not only because of increased regulation and enforcement, or the growing threat of cyber attack – but because consumers are focused on the issue. A recent TechCrunch article by Ron Miller collects research from Pew, the Annenberg School for Communication, and the Altimeter Group demonstrating the trend of privacy considerations influencing consumer purchasing decisions. For companies fueled by big data, the results should be eye-opening
The Annenberg report, for example, found that 91% of adults surveyed disagree with the statement that, “If companies give me a discount, it is a fair exchange for them to collect information about me without my knowing.” 77% strongly disagreed. Over half of all consumers surveyed – 55% - objected to marketers creating individual profiles, disagreeing with the premise that retailers should use “information it has about me to create a picture of me that improves the services they provide for me.” The results undermine the traditional “trade-off” view, namely that informed consumers gladly provide their data in return for special discounts, targeted offers, and improved service offerings. Instead, consumers are either uninformed or resigned to accept big data and data harvesting as inevitable in today’s age.
The Annenberg Report is buttressed by the Altimeter Group’s report, which found that 80% of survey respondents purchased products from companies they trusted within the last 12 months. More than that, Miller notes, “68 percent recommended the company to a friend and 54 percent paid more for a trusted company’s products.”
These reports are the latest amongst growing evidence of the impact privacy plays on purchasing decisions. In June, AdWeek reported on an Edelman study, which found that 66% of consumers reported that privacy was their biggest concern when it comes to product/business innovation. 87% said that these concerns – about privacy, individual security, and the like – will stop them from purchasing specific products.
Successful companies will heed these warnings and adopt Privacy by Design concepts at the enterprise level. Some of the most innovative leaders in the space, like Apple CEO, Tim Cook, have already begun to champion privacy as a business strategy. Others should take note.
For assistance in launching or refining your own Privacy Policies, or implementing privacy by design, please contact the author or a Polsinelli Privacy and Data Security team member.