Data privacy and compliance for marketers

Caught between a rock and a hard place

How to navigate customer data and privacy

Last week I was asked to participate in a discussion for the University of Chicago GSB Marketing Forum. The panel consisted of a staff attorney from the FTC, and a well known litigator specializing in direct and interactive marketing litigation, and me. You can imagine my fear! As a lowly marketing gal, how am I ever going to hold my own between the regulators and the litigators?

 The discussion went better than I expected, I learned so much from my peers, and I realized that I had nothing to fear. I got thinking that if I felt this way, many of my marketing counterparts have also felt stuck between a rock and a hard place – between the regulators on the front end and the fear of litigation on the back end. Perhaps my key takeaways below my help you as well.

 MARKETING INSIGHTS

As marketers we are sometimes overwhelmed with the dizzy array of rules, both implied and implicit, in using data for our communications. We can feel stuck between a growingly interested regulatory body such as the FTC and the costs and fall out from litigation. This sometimes makes us stick our head in the sand, or defer to the “chief legal counsel” in our companies to help sort through our risks and obligations. While the door to the legal department may be open, you need to be manned with knowledge before you enter, and it is increasingly the role and the obligation of marketers to know what your risks and liabilities are.

Ignorance is not bliss. Knowing what the FTC is watching and monitoring, and knowing what your potential legal risks are will enable you to create sustainable and successful multi channel direct response campaigns that “stay within the lines” and minimize – but do not mitigate – your risks.

There is also the hidden cost of non compliance that must be considered in the equation as it relates to customer value. While fines may be onerous and the legal fees may seem high, the costs associated with customer defection and lost credibility in the marketplace are much, much higher.

Let’s take a look at some of the recent 2010 statistics regarding security breaches. Based on the 2010Symantec/Ponemon study, the average cost per record of a security breach averages $214, and the average total cost/breach tops $7 million dollars. But let’s dig into these numbers further:

1.      For the fifth year in a row, data breach costs have continued to rise: Data breaches continue to cost organizations more every year. The average organizational cost of a data breach this year increased to $7.2 million, up 7 percent from $6.8 million in 2009. Total breach costs have grown every year since 2006. Data breaches in 2010 cost their companies an average of $214 per compromised record, up $10 (5 percent) from last year.

2.      Customer turnover in direct response to breaches remains the main driver of data breach costs: Regulatory compliance contributes to lower churn rates by boosting customer confidence in organizations’ IT security practices. Average abnormal churn rates across all incidents was 4 percent. What is the cost to your organization in terms of lifetime value  of losing 4% of your customers?

3.       The industries with the highest 2010 churn rate remained pharmaceuticals and healthcare (both up a point to 7 percent). The industries with the lowest abnormal churn rates were public sector (less than 1 percent) and retail (1 percent). Sectors with the highest 2010 average per-record costs were communications ($380), financial ($353) and pharmaceutical ($345). Those with the lowest costs were media ($131), education ($112), and public sector ($81).

4.      Training and awareness programs remain the most popular post-breach remedies, but encryption and other technologies are gaining fast: Training and awareness programs barely stayed in first place with nearly two-thirds (63 percent) of respondents using them. Expanded use of encryption stayed the most popular technology solution and, with 61 percent took sole possession of second place this year.

5.      Lastly, the 3^rd most costly breach type was caused by a 3^rd party mistake!

SO WHAT IS A MARKETER TO DO?

The FTC and the litigators actually agreed on these key takeaways that can help us with data breaches, privacy compliance, and potential suits. 

Capturing and maintaining “Personal” data
The proliferation of database systems has made memory and storage cheap. We can collect and store vast amounts of information without regard for how to use it or the risks involved. It is like the basement of your house – you can keep throwing stuff down there, but sooner or later it gets cluttered and you no longer know what you have or where it is. Now all of a sudden you have a flood and you have to face the clean up and damage. Don’t let this happen to your customer data. This includes transaction history (behavioral data) as well as marketing data.

In addition, not all customer data is alike. Your first step is to determine what type of data you have stored and what your goals are with this information. Once you have that figured out, you need to establish guidelines for eliminating sensitive information, for archiving data, and for protecting what is sensitive and critical.

Providing Choice

Providing customer choice regarding channel preference and data collection is paramount - so is complete transparency into what you plan to do with their data. And this doesn’t mean putting it into the small print at the bottom of your privacy policy, or hiding it in your disclosure statements just to meet regulations. Choice is a fundamental pillar of customer and prospect relationship management and can be a marketing, branding and public relations tool that builds credibility and trust. Instead of thinking of disclosure as a compliance-only issue, think of the marketing benefits you can achieve through enhanced trust and transparency with your audience.

Maintaining choice across channels, divisions, countries

The proliferation of marketing and media channels has created a challenge for obtaining and managing multiple opt out choices by media and by country. As we know, U.S. laws tend to be much more forgiving with regards to opt in/opt out and data capture. Rules and laws change throughout the world and it is our obligation to know them. There are qualified legal firms that spend enormous amounts of time keeping up with the changing landscape and they can help you understand the legal requirements for your marketing campaigns.

In addition, the rules are different for email, mobile, and web. You must figure out ways to ask, capture and respect channel preference and choice for your customers and audience. If you cannot establish the technology or database logic to capture variable opt in information by channel, then I recommend taking a very conservative. Something that marketers hate to hear, but you may have to consider is treating everyone who opts out as a universal opt out until you can capture, control, and manage individual channel, country and/or communication preferences.

Self regulation

The DMA has been trying to beef up the self regulation aspect of compliance among its members in the direct and interactive industry and is using the FTC as the “boogey man” to scare companies into adopting their self regulation standards. They have implied that if you we do not comply and keep our own house in order, the FTC is going to step in and over regulate us, take away our commercial rights, and mandate it. So, does the FTC actually have a bazooka and can they use it? According to the FTC, they want the industry to self regulate and would prefer to focus their efforts on going after the true offenders. The FTC spends a large percentage of their time on awareness and education, and their primary mission is to protect consumers and businesses.

Check out www.business.ftc.gov for some outstanding and helpful information from the FTC on privacy and protecting personal information for businesses. The FTC believes that most people want to do the right thing and are trying hard to comply with the regulations. They feel that their enforcement efforts should be focused on getting “the real bad guys”, so if we self regulate, we are in better shape.

 SOME FINAL TAKE AWAYS

1.      Make legal counsel your friend

2.      Understand the regulatory environment

3.      Be transparent all the time with your audiences  – what do you have to hide?

4.      Work with your teams on capturing choice options across countries, media and products

5.      Audit your databases and work with your IT and database teams to establish parameters on data capture, hygiene, and archiving

6.      Clean out your basement – use it, justify keeping it, or get rid of it securely

While privacy and compliance will continue to be a very important debate in the halls of congress, it should also be part of every company’s strategic plan. This is no longer the purview of only the legal or IT department, but it is now firmly on the agenda of every CEO.

 If you want to have a seat at the strategy table of your company, then becoming the expert in this area could add to your credentials and make you an even more valuable member of the leadership team.

In the end, we as marketers are not between a rock and a hard place, we may actually be in the driver’s seat.

Maximizing Email Effectiveness

Last month I was writing a eulogoy to email and pronouncing it dead in the world of effective marketing. I have since has many reasons to rethink my position, and believe that with effective targeting, timely delivery, and thought integration, email may well coexist and live on as a highly effective tool.

Yesterday,  Experian CheetahMail gave us some interesting stats to help us. Email campaigns sent on Memorial Day are more successful at engaging audiences, driving higher transaction rates than other holiday-related mailings, including those sent on Valentine's Day, Black Friday, and Cyber Monday, according to a study by. Read more: http://www.marketingprofs.com/charts/2011/5038/memorial-day-emails-drive-highest-holiday-transactions#ixzz1MKXzXYef

The chart below compares transaction rates for different holidays, and Memorial Day is the clear winner

• Transactions rates for Memorial Day campaigns are over twice as high as those sent on other springtime holidays such as Mother's Day (0.31% vs. 0.13%) and Father's Day (0.31% vs. 0.15%).
• Transactions rates for Memorial Day campaigns are 35.5% higher than Black Friday emails (0.31% vs. 0.20%) and 16.1% higher than Cyber Monday emails (0.31% vs. 0.26%).

Why is this the case? Marketingprofs believes that the sense of urgency created by these emails increases transaction behavior, but I am not so sure. Don't all emails on Cyber Monday have equal if not more urgency built in?

While I am pondering the reasons for this spike in activity, it has clearly given me a new found respect for generating impressive transaction behavior at this time of the year.

Cyndi

Who Are Marketing “Mass Influencers” in Social Media?

Within the Facebook network of 500 million users is a key audience known as “mass influencers”. Forester Research recently released a study regarding online peer influence and the role of “Mass Influencers”.  Estimated at over 29 million, this elite group has the power to influence the opinions and attitudes of millions more  people. The profile of these thought leaders is important to understand since they are in a position to influence the opinions on companies, brands, and institutions. According to the new Peer Influence Analysis, Forrester says:

"Social media has created a new type of influencer — one defined not merely by number of friends or frequency of dialogue but by both," said Forrester Research Senior Analyst Augie Ray. "Brands can succeed with Mass Influencers by creating programs that energize large numbers of these enthusiasts. The challenge is that marketers do not and cannot know the identity of the vast majority of their Mass Influencers. Thus, they need ways to reach them en masse, not individually."

Forrester divides the Mass Influencers into two groups: Mass Connectors and Mass Mavens (3.7% of the online population falls into both categories). Mass Connectors have a lot of online friends—537 total across all networks, Forrester reports. Mass Mavens are people with a high level of expertise in their field. While Mass Mavens are driven to collect and share facts and opinions, Mass Connectors are driven to know others. Naturally, both frequently post about products and services.

The average age of Mass Influencers is between 32 and 38 years old (younger than the average online American, at 44). Possibly because they can afford to experience (and thus compare) more things, Mass Influencers average household income ranges from $89,000 to $98,000, higher than the U.S. online average of $79,000. The study also found that 62% of influential impressions from Mass Influencers took place on Facebook, with only 10% taking place on Twitter.

This makes Facebook an extremely important place for companies and institutions to engage and monitor if they want to understand and influence the prevailing opinions of others. 

But the power of influencers is based on quality not quantity. Should you judge an individuals “influencer level” based on number of “friends”? Not necessarily so.

According to Facebook:

• There are more than 500 million active users
• Up to 50% of active users log on to Facebook in any given day
• But the average user has only 130 friends
• People spend over 700 billion minutes per month on Facebook

And, 80% of Influencers come from only 16% of users!

Look at some of these stats:

So who would I pick as a Marketing “Mass Influencer” in social media today? My 2 favorite are:

Guy Kawasaki
Guy has 51,000+ friends, and describes himself as "Guy Kawasaki is a founding partner and entrepreneur-in-residence at Garage Technology Ventures. He is also the co-founder of Alltop.com, an “online magazine rack” of popular topics on the web. Previously, he was an Apple Fellow at Apple Computer, Inc. Guy is the author of nine books including Reality Check, The Art of the Start, Rules for Revolutionaries, How to Drive Your Competition Crazy, Selling the Dream, and The Macintosh Way. He has a BA from Stanford University and an MBA from UCLA as well as an honorary doctorate from Babson College

Seth Godin
Seth has over 100,000 "Likes" but his Facebook page is a repost from his blog which has over 2,500 posts!
Seth describes himself as "written thirteen books that have been translated into more than thirty languages. Every one has been a bestseller. He writes about the post-industrial revolution, the way ideas spread, marketing, quitting, leadership and most of all, changing everything. American Way Magazine calls him, "America's Greatest Marketer," and his blog is perhaps the most popular in the world written by a single individual. His latest book, Poke The Box is a call to action about the initiative you're taking - in your job or in your life, and Seth once again breaks the traditional publishing model by releasing it through The Domino Project.

Who would make your list?

Are Smart Phones smart politics for 2012?

Rewind to 2008 and the U.S. Presidential Election campaign. Doesn’t seem like 3 years ago does it? Not only did the election of President Obama break down many barriers, it was a “first” for the use of social media in politics.

According to Mobile Marketer, Team Obama set a stellar example for marketers by packaging their candidate as the change agent and then using the most personal and powerful medium of all -- mobile -- to get that message across.
Mr. Obama's campaign managers, agencies and mobile marketing specialists used a combination of SMS text messaging, mobile Web site, interactive voice response, mobile video and mobile banner ads to reach out to the millions of U.S. voters keen to engage with their candidate through the mobile phone.

First to mobile
Underpinning all of those marketing efforts were two simple mobile platforms: the 62262 (spells OBAMA) common short code and the http://obamamobile.mobi or http://m.barackobama.com mobile Web sites.

The Obama campaigns mobile efforts are credited with the grassroots-level, get-out-the-vote support needed by a candidate if they are to make it to the presidency.

And Team Obama executed flawlessly. On November 4, a thank-you SMS message was sent just minutes after Mr. Obama was elected President:

"We just made history. All of this happened because you gave your time, talent and passion to this campaign. All of this happened because of you. Barack."

The campaign was executed brilliantly, and has been quoted in too many case studies to mention, but some of the statistics are really impressive.

The Nielsen Company estimated that Obama’s text message announcing his VP pick reached 2.9 million mobile cell phone users in the United States becoming the largest and most successful mobile marketing campaign of that type so far.

Pew Research also shows adoption and cell phone usage in politics is expanding beyond the 18-29 year olds, so expect more mobile messaging in the campaigns ahead. 

Fast forward now to 2011 and the race is on again as President Obama has announced his candidacy for President in 2012. The campaign was announced using the same tactics that made his first run successful, but the times have changed in 3 years, and mobile is now a much more accepted channel.

So how will the increase in social media adoption change the political landscape in the election season to come?

Here are a few hints at what is to come:

1.     Mitt Romney has announced the formation of an exploratory committee for a 2012 presidential bid via YouTube, and Twitter.

2. Obama announced his campaign online with a video at Official Obama 2012 Site 

3.  Shortly after Obama’s first video for the campaign went up, Tim Pawlenty, the former Minnesota governor and potential GOP candidate for the 2012 presidential race, released a YouTube retort.

4. Since its release, the video has gotten about 53,000 views, compared with 168,000 for Obama’s. Pawlenty also released the video on his Facebook Page, which has 81,000 fans.

5.  President Obama has close to 19 million Facebook fans.

If the Republicans’ response to President Barack Obama’s campaign launch Monday is any indication, social media will play a major role in the 2012 election.

Emerging Media, Fledgling Democracy

Did the emerging media of Facebook and Twitter start the revolution in Egypt?

Wael Ghonim thinks so:

“If you want to liberate a country, give them the internet,”

Those are the words of the young Google executive who has became a symbol of Egypt’s pro-democracy uprising after he launched the original Facebook page credited with 130,000 “likes” and sparking the initial protest. Ghonim has called the Egyptian upheaval, “Revolution 2.0.”

But how much did social media really contribute to the recent political changes we have seen throughout the region? Is it possible that Facebook and Twitter are powerful enough to bring down a government?

Some say yes. Rafat Ali, a social media expert and founder of PaidContent, said Facebook and Twitter played different roles in the uprising.

• Facebook helped to organize the activists inside the country
• Twitter functioned to help get the message out to the broader world.

“Facebook definitely had a role in organizing this revolution,” Ali told Wired.com. “It acts like an accelerant to conditions which already exist in the country. Twitter and YouTube serve as amplification for what’s happening on the ground. And they directly affect Western media coverage.”

So perhaps it is a domino affect. Facebook and Twitter start the conversation, stir up the firmament, and then the traditional media finally catch on and critical mass is achieved.

To see the affect of social media, I went to Google Trends and looked at search traffic for key words since January 2011.

Do you see the significant spike in searches during the height of the social and traditional media activity? 

Former CIA director James Woolsey thinks social media had an impact. In the Wired article, When asked by CNN host Anderson Cooper whether the U.S. intelligence community has fully grasped the power of social media in catalyzing pro-democracy movements worldwide, he said “I think they’re starting to,” … “We should have been doing exactly what has happened in Egypt,” Woolsey added. “We should have been trying to help foster that in Iran, helping them set up servers to protect their Facebooks, protect their Twitters, and we really have not.”

Wired Magazine agrees. “It is a truism in political science that successful revolutions are born in the streets — from the Boston Massacre of March 1770 and the storming of the Bastille in Paris in July 1789, to the streets of Cairo in January and February 2011. What has shocked most observers of the current Egyptian scene is the sheer speed with which the regime fell — 18 days.”

So are we giving too much credit to social media in creating social change? Not according to FastCompany, “Did Twitter, Facebook, and YouTube send people out into the streets? Of course not. Did they speed up the process of protest? Absolutely.”

That's a lot to think about.

Are you working or watching short films?

Short films first entered the marketing and advertising toolbox in 2001 with BMW’s  “The Hire”, a 8-part series of short films directed by such big names as John Frankenheimer, Ang Lee, Wong Kar-Wai, Guy Ritchie, Alejandro Gonzlez Irritu, John Woo, and Joe Carnahan. In total, eight films were created in the series. And, since its debut, The Hire has received more than 100 million film views, Including the outstanding Powder Keg.

Since that time, many companies and even nonprofits have been introducing short films as a way to build product and brand awareness, and marketing buzz. Like traditional long films, short films are dramatic in nature, well scripted, acted and filmed. But the short film format is evolving too and recent trends show that they are growing in length. Currently the average length at Blip.tv 14 minutes where most used to be under 5 minutes and there used to be a two-minute limit.

There are now literally hundreds of short films available on Facebook and UTube, created and presented from corporations as diverse as Dove and Pampers.

A purusal of the Top 10 Short Films of 2010 on YouTube shows the following, all under 10 minutes in length.

cows & cows & cows by cyriak  at 6.55 minutes

IRON BABY by PatrickBoivin  at 6.37 minutes

Pokémon Apokélypse: Live Action Trailer HD by Megasteakman at 5.79 minutes

DAN the MAN by studioJOHO at 5.59 minutes

T-SHIRT WAR!! (stop-motion music video) by RhettandLink at 5.52 minutes

Vuvuzela Symphony by MysteryGuitarMan at 3.40 minutes

A Brief History of Pretty Much Everything by DispleasedEskimo at 2.88 minutes

Modern Warfare: Frozen Crossing Pt. 2 by freddiew at 2.80 minutes

Lego - The Force Unleashed by xxxfancypantsxxx at 2.20 minutes

I found it interesting that while short films were originally launched in 2001 by a commercial enterprise as a branding and marketing effort, only one company short film shows up in the Top 10 in 2010. Should companies abandon the short film for advertising? I don’t think so, but they have a lot of competition now.  According to ReelSEO's study 37% of users who watched video of a professional quality online (including short films) found them as or more enjoyable than watching full length films on TV.

In fact, Eyeblaster Research has found that Online video advertising spending in the US is projected to grow from $1.1 billion in 2009 to $4.1 billion in 2013 – quadrupling in four years. And when are people watching these films?

You guessed it – at work! The Eyeblaster study shos that the maximum full video viewing takes place between 9am - 4pm ET.  

And films viewed during the day are shown to be more memorable. A MillwardBrown and Dynamic Logic survey found that only 21% of the people watching DVR playback and 30% of people watching TV airtime pay attention to commercials, compared to 46% of people watching In- Stream video ads online.

So companies should continue to invest in short film video and consider how the short film format can be added to their emerging media toolbox for branding and customer engagement.

Should the U.S. Have a Privacy Bill of Rights?

Sens. John Kerry, D-Mass., and John McCain, R-Ariz., have introduced the Commercial Privacy Bill of Rights of 2011.


Many in the direct marketing industry have expressed concern that legislative proposals regarding the Internet run the risk of undercutting the leading area of American dominance and job growth. According to the DMA, In 2010 alone, companies spent more than $25.4 billion on digital advertising, which supported more than 3.1 million jobs and generated $503.6 billion in sales.


In a statement today, the DMA states: "The collection and use of data for marketing and advertising purposes, which fuels the Internet economy, benefits both businesses and consumers, and is, in fact, the cornerstone of what makes direct marketing "direct." "DMA is wary of any legislation that upsets the information economy without a showing of actual harm to consumers. Information has been a driver of competition in our economy for over 100 years,"

The Federal Government is not the only ones pushing for more legislative privacy. Many States now feel that the direct marketing and online advertising industry is not capable of providing self regulation and have imposed privacy laws of their own.

How many state and federal privacy laws are already out there and is this really anything new? I was quite surprised to see just how many laws have already been enacted to protect all sorts of privacy issues from children online to wiretapping.

You be the judge, does the Internet and consumer privacy need saving?

If you follow me on Twitter, I better know where I am going

I finally did it, I joined the Twitter community.

It was easier than I ever thought possible, and it took a mere 5 minutes. Now I went in search of some good tips on Twitter etiquette to help me get started. First off, I went to Twitip.com that boast 128,000 followers and 29,878 subscribers. I figured that this was a good place to go for some basics. The site has lots of easy and quick tips to help beginners over their twitter jitters including defining your Twitter goals.

Now that really hit me - setting Twitter Goals!

Like everything else, we must know where we are going into order to set a clear path, measure our progress, and achieve results. Aimless wandering is a mind in search of a direction, and that explains why some Twitter traffic is just not worth following. For me to engage people who actually care about following me, I had better set some clear objectives and goals. 

So, after reading a Twitter beginner's guide, I established the following  goals?

·         I want to build my personal brand

·         I want to be seen as an expert in IMC

·         I want to drive traffic to my business

·         I want to find new readers for my blog

What are your Twitter goals?

Forget about the Zone, It’s All about the Flow

You know that feeling when you are running, or swimming or completely “into” something and you completely lose track of time?  Some people call it being in the Zone, but now there is something that is even more important to marketers – and that is being in the flow.

 Everyone knows that the success of your web site depends on the combination of artful design, engaging and interactive engagement, and meaningful content. But did you know how important the theory of flow is to making your web site work?

FLOW was coined by Dr. Mihaly Csikszentmihalyi, and refers to an "optimal experience" that is considered "intrinsically enjoyable." According to Dr. Csikszentmihalyi, when you are in the flow, “time seems to stand still, and we lose our sense of self. We feel playful and are willing to try (and presumably buy) new things. Simply put,

"Flow is a sense that humans have developed in order to recognize patterns of action that are worth preserving and transmitting over time."

Wikipedia describes the charts below as follows: This graph depicts the relationship between the perceived challenges of a task and one's perceived skills. This graph illustrates one further aspect of flow: it can only occur when the activity at hand is a higher-than-average challenge (above the center point) and requires above-average skills (to the right of the center point).The center of this graph (where the sectors meet) represents one's average levels of challenge and skill. The further from the center an experience is, the greater the intensity of that state of being (whether it is flow or anxiety or boredom or relaxation).

Why is Flow so important? Responsive, well-designed web sites can also induce a flow state in their users. Wired Magazine conducted an interview with the good Doctor and asked him for some practical advice on how to implement flow concepts in web site design and functionality. Some top line tips he gave to increase flow on your website include:

·    People enter Web sites hoping to be led somewhere, hoping for a payoff.

·    Goals transform a random walk into a chase. You need clear goals that fit into a hierarchy, with little goals that build toward more meaningful, higher-level goals.

·     A flow experience has got to be challenging. Anything that is not up to par is going to be irritating or ignored.

·     We are still a multimedia organism. If we want to push the envelope of complexity further, we have to use all of our devices for accessing information - not all of which are rational.

But all of this theory has to be mindful of best practices in graphics, images and multimedia too. So how do you create a completely engrossing website experience that is stimulating, content rich and creates stickiness? The US Government has a very useful usability guide to help you. (Yes, the U.S. Government no less). They even give you some examples of the good, bad and the ugly web site designs. For example, the chart below is used as a good example of how a site effectively uses labels to reinforce and memorialize images and icons. 

This concept was so interesting to me, and it made me look at our web site in a whole new way. In addition to navigation and meta tags/meta data, I looked to see how interesting, compelling, and fun our web site experience was.

The sad answer is – not fun at all. Which means you can be sure I am adding a web site redesign and launch to my FY2012 marketing plan.