General Data Protection Regulation (GDPR) will require more consumer control and creative digital marketing. To clear up some of the confusion, Venky Shankar, Professor & Coleman Chair in Marketing and Director of Research at the Center for Retailing Studies, answers some questions about it.
What is GDPR?
GDPR stands for General Data Protection Regulation and is a sweeping set of new rules developed by the EU to protect consumers in Europe.
Why is it important?
GDPR comes at the right time as we all are still recovering from the Facebook-Cambridge Analytica breach of consumer trust. The new set of rules will go into effect starting May 25. Non-compliant companies can face fines up to 4 percent of company revenues or Euro 20 million, whichever is greater. Although the jurisdiction is limited to EU, it will represent a test case for other countries to develop their own data protection regulations.
Unfortunately, only about one-third of marketers have heard about it and about one-fifth of the companies haven’t made any meaningful changes to their data collection and use to the point of non-compliance.
How will it affect consumers?
It is designed to protect consumers and is aimed at improving transparency, trust and security for them. It provides consumers greater control in the collection and use of their data within EU. Companies will have to explicitly seek consumer permission for data gathering and processing. GDPR requires that customer consent be active rather than passive (as it is many cases now, where it is buried in terms of service at sign-up time). The new rules will also allow individuals to access correct and erase their own data held by companies.
How will it affect marketing practices?
It may significantly alter the face of digital marketing. It will make behavioral data collection more challenging. Importantly, it will prevent unscrupulous marketers from ad targeting without the active consent of the individual. It also bans marketers from using algorithms and automated tools to deliver ads to customers without the individual’s active consent.
To comply with the new rules and still be effective marketers may have to adopt practices such as contextual advertising. This means rather than use a consumer’s profile to target an ad, marketers may have to serve an ad based on the content of the article, blog, or webpage that a consumer is viewing in real time. For example, a consumer reading an article about breakfast or food might see an ad for a Kellogg cereal. Also, a consumer pausing on a social media post about music might be served an ad for Taylor Swift’s upcoming concert.
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