Privacy is not just a buzzword. It’s a necessary right for consumers and one that the internet bypasses or ignores all too often. The California Consumer Privacy Act (CCPA) goes into effect on January 1, 2020, and is raising questions about privacy online and personalized ads.
We’ve outlined what the CCPA is, what it means for marketers, and how it might impact the future of personalized advertising.
What is the CCPA?
California signed the CCPA into law in June of 2018 and has taken until the beginning of 2020 to kick in. For those who still need more time to prepare, you’re in luck. There will be a “further six months’ grace period before enforcement of the law begins.”
The main goal of the CPPA is to protect consumers’ privacy and data. The act will require that medium to large businesses let consumers know what data they collect and give them the opportunity to opt-out. Plus, under this act, consumers can sue companies “if their personal data is breached.”
As its name suggests, the CCPA covers residents of California. Examples of covered information under the act include internet activity, website interaction, apps or ads, and geolocation data.
How companies can comply
For mid to large-sized businesses in California, they are required to understand the information they collect and how third-parties use the information. They also have to implement solutions like allowing consumers to withdraw their consent or update their preferences.
Why California is opting out
California is a guinea pig of sorts as the state launches the first privacy law in America.
California’s Attorney General, Xavier Becerra, said of the move: “‘Knowledge is power, and in the internet age knowledge is derived from data. Our personal data is what powers today’s data-driven economy and the wealth it generates. It’s time we had control over the use of our personal data. That includes keeping it private…We take a historic step forward today to protect Californians’ inalienable right to privacy. Once again, California leads the way putting people first in the Age of the Internet.’
Still, Silicon Valley fought the proposed act with amendments that would allow some of the more prominent players, like Google, a loophole. One such lobbyist proposal “would let Google and others use data collected from websites for their own analysis, and then share it with other companies that may find it useful.” Despite the negative feedback, the law is still in motion.
Other states following the CCPA?
But it’s not just California that’s impacted. Other states can expect to feel ripples of the CCPA in their marketing practice. Although the law specifies California businesses, it also “covers out-of-state merchants who sell to Californians––or even display a website in the state.” The broader implications of this policy will have a huge impact on brands and marketers. Essentially, the rules will be changing in January.
Still other big players are supporting the law and standing behind the CCPA. For example, Microsoft announced in November that they would “honor the core rights” of the CCPA. The company’s chief privacy officer, Julie Brill, announced that Microsoft would use the main principles of the law across the U.S. and “closely monitor” any changes that occur.
Wondering how this will impact consumers? Well, a poll from AdWeek found that 87% of consumers said they would opt-out of having their personal information sold. This steep statistic should be eye-opening for branders. Especially those of us that rely on personalized ads. The article summarized the takeaway from the trend: “people are distrustful of the internet…and they want three things: information, control, and rewards.”
The risk with personalized ads
As a marketer, you’re probably all too aware that there is a privacy risk with personalized ads. And, as the data shows, consumers are becoming more distrustful of them, and government agencies are cracking down.
Personalized ads are in constant tug-o-war that can harm your marketing strategy. On the one hand, these ads tend to “attract more attention and last longer in the memory.” They help you mico target, track online activity, and target specific interests and demographics. All this to make sure your ads are landing in front of the correct audience. Which is the point, right?
On the other hand, a recent study showed that participants who knew more about personalized ads “were likely to see greater benefits, but also greater risk.” Those with less understanding of these ads were most likely to worry about privacy and avoid these ads altogether. And for something often described as surveillance marketing, you can see why consumers are wary.
In other words, personalization comes with its benefits, but it can also push the consumers you are trying to reach away. A survey revealed that 73% of consumers are not okay with information collected during a personalized search. The paradox here is that consumers still want relevant results that speak directly to them.
The solution? Giving consumers control of their ads and making the process more transparent. If there is a war between privacy and personalization, you want to be on the winning side.
What the CCPA means for marketers
Is there a solution for marketers in the clash between privacy and personalization? Especially as the timeline for CCPA approaches? Maybe we can look to the U.K. for a sense of what comes next.
The U.K.’s General Data Protection Regulation (GDPR) went into effect in May 2018, giving some U.S. businesses a year to adjust to the law. If marketers and companies fail to comply, fines for the GDPR “range from 10 million euros to four percent of the company’s annual global turnover.” The CCPA’s penalties are about $750 per consumer or violation. This can jump to as much as $75,000 “if a business collects data from 1,000 California residents without complying.”
With so much money and consumer protection and trust on the line, complying with ‘opt-out’ laws is in both marketer’s and businesses’ best interest.
With that said, here’s what you can do as a marketer:
Be transparent
The Digital Age’s alias could reasonably be the Age of Transparency. Now is not the time to shy away from full disclosure for your clients and consumers. With the new laws, you should be transparent about what data you are collecting and why. After all, the more you attempt to hide that information, “the more that fear will come true” for consumers.
Give people choices
Consumers should very easily be able to opt-in or opt-out of having their data used or sold. If you want your audience to see the benefits of personalized advertising, you have to communicate this to them appropriately. (A consumer’s lack of response equals an opt-out). Part of increasing choices includes making it easy for consumers to “change their preferences, withdraw consent, and update their contact info.”
Upgrade your targeting
If customers do opt-in, it’s up to you as a marketer to make the ad personalization and targeting experience a better one. Rather than making consumers feel tracked, the process should be more seamless and user-friendly. Ask yourself, with every ad, if you’re crossing a line or coming across as creepy.
Explain your reasoning
The CCPA is a new step in the U.S., which means that consumers will want to understand the reasoning behind your marketing choices. If you are “framing the issue in ways that resonate with [your] customers,” they will have a better understanding of what their options are and will be able to weigh the risks and rewards as they see fit.
Understand the law
If you work for a digital marketing company or advertising firm, it’s on you to understand the new law before continuing business into the new year. This includes making sure your campaigns are compliant and that you can show proof when it comes time to pony up on your contact opt-ins.
As part of CCPA preparation, digital marketers should also “update back-end systems, review privacy statements, update third party contracts, audit contact lists, and confirm subscribers.”
The future of personalized ads and CCPA
As the U.S. moves toward laws that look an awful lot like the GDPR, it’s a reality check for the future of advertising. The CCPA is “playing catch up to the GDPR” and changing the definition of personal data sharing and privacy.
But, for the future, all signs point to interest-based advertising growing and expanding in widespread practice. 67% of Millennials and Gen-Zers expect personalized advertisements. Plus, ad personalization is lucrative and useful for businesses and marketers. Even with the new privacy laws, there will still be a need for micro-targeting.
The difference now is that marketers and the “industry as a whole, are at a crossroads in digital where the ‘creepy factor’ has to give way to something new.” The future of ads seems to be a focus on both privacy and personalization as marketers pursue the trifecta of right place, right time, and the right person. Several new practices, including virtual and augmented reality, could do just that.
Furthermore, according to a Logic Works piece, the “CCPA is just the beginning. By 2025, expect more states to sign similar legislation, giving every U.S. consumer the right to know exactly how their data is being used. Companies would do well to prepare now rather than wait until the deadline.”
Be prepared
In January 2020, personalization and privacy are going to get a bit more complicated. As a marketer, it is your job to understand and comply with the new laws while communicating with your audience. As the U.S. adopts more privacy laws like the CCPA, advertising and consumer interactions will change. Yet, this also presents an opportunity to make targeted user experiences better and easier. Are you ready to opt-in to the change?