Resetting the Consumer Value Exchange Model

Last month, the IAB published a report on their 2021 outlook for the digital ad ecosystem. I’d recommend everyone to read it, it aptly captures the challenges and risks facing our industry, while also mapping out how to thrive in today’s ever-changing landscape.  

For this article, however, I’d like to focus on a segment that I found particularly interesting: the consumer value exchange. 

Back to basics

Considered one of the fundamentals of modern marketing, the data value exchange between consumers and brands is a familiar concept for marketers. The data value exchange argues that customers willingly share their personal information in exchange for:

• A more convenient shopping experience;
• Rewards such as free content, product samples, or loyalty points;
• Personalised interactions and communication with brands.

As brands and publishers tussle for the limited attention, time, and spend from their audience, they need to take a step back to ask themselves: do the experiences we provide actually meet their expectations? There are two ways of approaching this challenge: stepping up what they can offer, but also ensuring that the value exchange is communicated to consumers. 

Bridging the communication gap

As it turns out, there might be a disconnect between what consumers want and what marketers need to do to fulfill those expectations. Many consumers don’t understand entirely the value being delivered to them in exchange for personal data. A 2020 research conducted by Microsoft shows that only 24 percent of surveyed consumers are aware that personalisation is a result of data sharing while a mere 15 percent feel that they’re getting good value from granting access to their data. 

What this shows is telling: while as many as 80 percent of consumers expect personalisation in their interactions with brands, many don’t know what it takes for marketers to tailor and deliver a customised experience or how their information is being collected, used, and protected. This naturally results in a deficit in consumer trust and the reluctance to share personal data.

One way of making the value exchange clear to consumers is, well, telling them. Recently, some brands and publishers have started to display a pop-up when someone visits their website for the first time:

While some might say this is an oversimplification of what companies do with the visitors’ data or how they are processed, messages like these go a long way in communicating the value exchange to consumers. 

Minimise risks, maximise rewards 

It’s now clear that consumers can no longer be easily satisfied by free, advertisement-supported content. The pandemic-driven boom in digital content consumption has made uninterrupted viewing or listening a given, with “freemium” models being rolled out to consumers who wish to get rid of ads. 

In order to interact with consumers meaningfully, brands need to step up their personalisation game when targeting the audience. Marketers would do well to start thinking of ways to supplement their own reservoir of first-party data with alternative sources of information to build actionable insights, especially with the looming deprecation of third-party cookies and identifiers. 

And to take this one step further, when such insights are deployed for activation, marketers need to understand the responsibilities and the liabilities that come with it. The onus is clearly on the companies to make sure that the data entrusted to them is safeguarded and only used for intended purposes. It is thus imperative that companies audit their data management practices to ensure that they are secure as well as built in a way that allows for provenance and transparency — should consumers want to know exactly what happened to their personal data. This means that for any data point collected, there must be an audit trail that attests to how data is processed, handled, and what users are exactly opting into. 

A necessary evil?

It’s clear that more improvements can be made when it comes to consumer knowledge and confidence in the data value exchange. IAB reported that as much as 76 percent of surveyed consumers around the globe have accepted that they can’t run away from sharing some of their personal information in today’s digital economy. However, instead of accepting this as a “necessary evil”, brands have the potential to reframe the consumer mindset by better communicating their efforts at data protection, while delivering differentiated and value-added experiences. 

As a collective ecosystem, investing in such efforts can set us on the right path to restore eroded consumer trust. Currently the solutions that are being proposed as an alternative to cookies/identifiers, unfortunately fall short of addressing this important requirement. The industry does not need yet another point solution that some part of the value chain can address it for itself and be insulated from what is happening on the other side of the value chain.

Any approach the does not respect consumer consent and provides effective "through the line" management of consent, end to end - from the demand side to the supply side will be bad for both the advertisers and for advertising.

What else do you think brands can do to enhance the consumer value exchange? Leave a comment below!