Personalization-privacy Paradox: Why Solving It Matters Now
- By CDOTrends editors
- July 04, 2022
As customers become more expectant of personalized experiences, many brands struggle to keep up. A new report from Twilio, The State of Personalization 2022, found that 62% of consumers expect personalization from the brands they interact with. But despite this growing demand, only 40% of consumers say they trust brands to use their data responsibly and keep it safe.
This lack of trust increasingly affects consumer buying decisions: 60% of consumers say trustworthiness and transparency are essential traits of a brand, up from 55% in 2021.
According to Twilio, businesses gathering and using data is crucial to winning consumer trust. Personal information, or data collected directly from customers with their consent, is best for privacy. The study also found that 63% of consumers are okay with personalized ads as long as companies use their data rather than third-party data acquired or rented.
However, as privacy regulations tighten, companies find it harder to rely on rented or third-party data. The European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) are two examples of regulations restricting how businesses can collect and use customer data. As a result, many companies are pivoting from renting to owning their customer relationships.
This pivot is not simple, Twilio maintains, and it’s impacting businesses’ ability to personalize experiences. Half of the companies Twilio surveyed said recent changes to data privacy regulations have made personalization more difficult.
For example, companies are anticipating Google’s phase-out of third-party cookies, which is set to be completed by the end of 2023. This change will make it harder for businesses to track people across the web and target them with ads. As a result, 43% of business leaders surveyed by Twilio said they are pivoting to first-party data, which provides better customer privacy.
However, many companies face a similar hurdle: technology. Despite increased personalization investment, most businesses are still struggling to achieve omnichannel personalization, Twilio reports. From a lack of technology to unclear ROI, Twilio stressed that these companies must invest in the right tools and strategies to make personalization a reality.
"A customer data platform is the brain behind a company’s customer engagement strategy. The ability to act on first-party data in real-time empowers businesses to go beyond the surface level to deliver hyper-personalization at scale," said Kathryn Murphy, the general manager of Twilio Engage.