The 5th Annual Privacy Study
Paul Donato — Chief Research Officer, The ARF
Paul Donato of the ARF set the stage for the day’s event by providing an overview of consumer attitudes and behaviors related to privacy, as learned through the ARF’s 5th Annual Privacy Study. The ARF conducted an online survey of 1,273 Americans, ages 18+, in May 2022. Although consumers expressed some concern about their data use, specifically for different kinds of data, they also reported willingness to trade personal data use for more relevant advertising and better experiences. The following are key findings from this year’s study.
- Overall, concern about privacy declined slightly compared to 2021.
- Privacy actions (e.g., changing privacy settings, stop using a site because of privacy) were fairly stable compared to 2021.
- The most concerned about privacy were more likely to rate themselves as being fairly or well-informed about the use of online data. This raises the question of whether concern about privacy drives consumers to seek more information or whether being informed creates concern.
- Consumers were most sensitive about location data. They did not want to be targeted with ads using location data or be grouped in location-based cohorts.
- However, most people would prefer (sometimes) relevant advertising based on their data. The response depends on how you ask this question.
- In addition, between 47% to 69% of consumers were willing to give permission to use personal data if it improves the experience.
- The advertising industry may be doing a decent job in providing access to controls over consumer data. While they were still rated low on consumer’s trust to protect their data, they were on parity with other institutions in terms of providing access to data controls.
Context-Dependence in Consumer Privacy Preferences and What to Do With It
Tesary Lin, Ph.D. — Assistant Professor of Marketing, Boston University, Questrom School of Business
Tesary Lin of Boston University shared her framework for understanding consumer privacy preferences, based on her original research on the topic. Privacy preferences are context dependent. Consumers have different degrees of preferences based on the type of data collected and how it will be used. The user interface also influences consent rates. Fundamentally, consumer’s willingness to share their personal data are driven by two types of preferences: instrumental (economic) and intrinsic (psychological). Under the instrumental preference, consumers care about how their data is used and whether they will receive any benefit or harm. Under the intrinsic preference, consumers value privacy in its own right and will object to data use if they feel it’s an invasion of their privacy. Better understanding of these context-dependent preferences will help companies design better strategies that will elicit more consent for data collection and use.
- Incentive alignment matters a lot in influencing consumer privacy preferences in the long-run. For instance, when consumers see a clear benefit from personalization, they will be willing to share their data when their instrumental preference is high.
- Consumer privacy preferences can be significantly impacted by choice architecture (e.g., low or high opt-in/opt-out choices).
- Companies need to consider how the design of their consent interfaces can influence the representativeness of the data collected. Maximizing opt-in may come at the price of sample bias.
Panel Engagement – Privacy Considerations
Lukasz Czynienik — General Counsel & Chief Privacy Officer, Nielsen
Lukasz Czynienik of Nielsen presented key privacy principles that companies should follow in respect to consumer data. He also shared how Nielsen applies these principles in their panel data. Privacy principles supporting business goals include: restricting use of personal data, establishing record attention policies on how long they keep data, communicating how the data is used and offering choices around data collections. Nielsen uses tools and methods designed to prevent panelists from being identifiable as well as take steps to prevent the data collected from being used in ways that have not been communicated to the panelists or could negatively affect them. They also offer meaningful, easy to understand choices around data collection in context, to reflect the sensitivity of the data being collected.
- Privacy needs to go beyond compliance.
- Consumer’s ability and willingness to trust a business is related to how they treat their privacy. They want transparency, control and respect.
- Privacy is a team sport, requiring collaboration among different departments and teams.
The Value of Ads
Neha Bhargava — Advertising Research Director, Meta
Neha Bhargava of Meta discussed how ads can drive value for both consumers and advertisers, and how personalization and privacy can successfully co-exist. Research shows that the majority of consumers expect personalization, and they become frustrated when they don’t find it. In addition, people derive different types of values from personalized ads (e.g., useful savings, discovery of new brands, products or information, tailored entertainment). A large-scale experimental study from Meta in partnership with academics showed the value of personalized ads to businesses: limiting ad delivery to only leveraging onsite data increased cost per incremental conversion by 37%.
- Privacy is inherently about people. It’s important to understand the different perceptions and concerns at a more granular level.
- Privacy is an industry-wide challenge that we need to solve together.
- Give customers more transparency into how their data is used.
- Be good stewards of the data that is collected. Be more proactive instead of reactive, and raise the bar.