Personalization Versus Privacy: Making Sense of the Privacy Paradox

With so much competition online, personalized content and appealing to the individual consumer is a key way for businesses to break through the noise.

As customers, we want businesses to know what we want and tailor the content we see accordingly, but when companies appear to have too many insights into our personal affairs it sets alarm bells ringing -- and quite frankly freaks us out -- making us less likely to engage with the company again for fear of spilling more proverbial beans on our private information.

Whilst on one hand we’re more informed than ever about how marketers may be controlling our personal data, and are more cautious about protecting it. On the other hand, we are still sharing personal information freely online on a daily basis and liberally ticking boxes to agree with pages and pages of terms and conditions that most of the time we haven’t even read ...

Welcome to the Privacy Paradox, a term coined to describe the way in which consumers today are torn between their desire for personalized content and their natural instinct to protect their personal information.

Are we signing our lives away?

Whilst the media are always quick to name and shame companies for their questionable use of personal data, consumers have to take a certain level of responsibility for how these companies managed to get their hands on this information in the first place.

In a recent experiment run by two communications professors, a fictitious social media platform was created and people were asked to read the terms and conditions before registering. Only 25% looked at the terms and conditions and 98% of respondents (that includes most of the 25% that claimed to have read through the legislation) signed consent without even noticing that paragraph 2.3.1 of the contract required them to surrender their first-born child to the organization as payment for the free service.

I think it’s safe to assume that this is not a hidden clause we have to be on the lookout for any time soon, however, it does demonstrate how many consumers are likely to be somewhat accountable for personal data leakage simply through disregard for terms and conditions and agreeing to contracts before they know what the relationship entails.

Why are we so generous with what we share?

The question of why we are so forthcoming with our personal information could generate enough discussion for an entire thesis, but ultimately it all boils down to three main factors:

1. We now live in a culture focused on documenting our lives rather than just living them.

When something exciting happens to us, before we even stop to truly enjoy it ourselves we’ve posted it on every social platform we can to make sure the world knows how much fun we’re having. The convenience of having instant access to what’s going on in the world, being able to share stories with all of our friends simultaneously and the ego-trip of seeing ‘likes,’ ‘loves’ and ‘tears of laughter’ when we do share distracts consumers from considering what prying corporate eyes may also be taking note of their activity.

2. Our right to privacy is invisible, inaudible and intangible.

Therefore, when we give it away, we don’t feel like we’re really parting with anything, much like putting those expensive shoes on our credit card and being stung by the interest later.

3. It makes for an easy life.

Smartphones and home working policies have made the nine-to-five shift a thing of the past for many corporate workers, and with those that work part-time often juggling childcare, household jobs, family food shops and trying to squeeze the gym in for good measure, time has become an invaluable asset. As a result, any brand or service that promises to save us time or offers efficiency is hard for consumers to refuse.

Personalization

The Business Perspective

For businesses, there is huge financial opportunity in personalizing content -- it’s been suggested that personalization can deliver five to eight times the ROI and boost sales by at least 10% (McKinsey) so it’s understandable why business owners are trying every trick in the book to capitalize on this powerful technique.

Long-term, having access to personal data will enable businesses to elevate their consumers’ experience of their website to a much superior level than their competitors, and therefore the brand will become synonymous with excellent service resulting in more organic traffic.

Mary Meeker’s internet trends report 2018 boldly claims that ‘there’s no need anymore to create generalized content as personalization and local marketing can lead to more successful results.’ However, some marketers are so dazzled by the depth of information that modern technology can unveil, they seem to have over egged the pudding when it comes to personalizing data and need to remember it’s the quality not quantity of customized content that matters.

Data collected by Accenture for their 2016 Personalization Pulse Check report shows that almost two-thirds of consumers who reported a brand experience that was too personal or invasive did so ‘because the brand had information about the consumer that they didn’t share knowingly or directly, such as a recommendation based on a purchase they made with a different business.’

Digital marketers need to apply the same social etiquette as if interacting with their consumer on a real-life, personal level. For instance, a shop assistant will discuss preferences and requirements with a customer in a high-street store in order to better understand their tastes and direct them to the relevant items in the shop to help them make an informed purchase.

However, they will not then follow that customer for the rest of the day recording their shopping activity ready for their next visit, that would be absurd. When we put the concept into a real-life situation, it’s easy to see why many consumers now feel that businesses are crossing the line when it comes to taking advantage of their personal data.

The Consumer Perspective

Consumers and businesses are not always on the same page when it comes to the use of personalized content in advertising, as illustrated by CEB’s research below:

(Source)

The fact that almost half of consumers were ‘creeped out’ by the way in which online ads had used their details suggests that they weren’t aware marketers had access to this information. One reason for this is that many consumers don’t truly appreciate what the term ‘personal data’ encompasses and what scraps of information marketers are pulling together to create customized content.

Bank details, addresses and passport numbers are all clearly data we actively protect, but research has shown that most moves we make online can be manipulated to uncover sensitive information that consumers think is secure.

For example, during his talk at TedxGhent 2014, Bram Bonne describes how information sent out by our devices when connected to free public Wi-Fi networks can easily be picked up by others on the same network. So companies could be picking up personal information you are sharing through messenger conversations, emails and websites simply through your use of their free public hotspot.

This type of invasion can be avoided but it relies on the consumer to actively read the privacy policies displayed to them and to ensure the required security tools are in place. This requires effort and more importantly time but, as we know, this is a highly valuable commodity in the modern age so it comes down to what consumers value more: their time or their privacy.

Making Sense of the Privacy Paradox

As terrifying and futuristic as this all sounds, it isn’t really news.

Companies have been tracking customer buying patterns for decades right back to the first supermarket club card scheme, the strategy has just simply evolved with the times and technology. Consumers are becoming increasingly aware that if a company really wanted to control our data, then they could, whether or not they should is another matter.

To exist harmoniously in the Privacy Paradox, both consumers and businesses need to adjust and take responsibility for their actions. Consumers need to start paying attention to what they are agreeing to and change their thought processes to consider the long-term consequences of sharing their personal information with the world wide web, not just the immediate gains.

Likewise, businesses need to start being transparent and practicing some restraint when collecting personal data and only seek information that will enhance the experience of the service they are offering. Less is more, and if consumers feel like a company knows too much about them, they probably do.