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Negligent Data Handling: Facebook Survived. Would you?

We’re pretty sure Mark Zuckerberg rues the day his company got entangled with the now-defunct data analytics firm, Cambridge Analytica.  The debate that’s arisen since it, and other scandals surrounding how companies share (or fail to protect) the personal data of their customers has pointed to the complexities and potential hazards involved in online data collection.  

As more enterprises rely more heavily on social media and digital engagement, the pressures to exercise caution in managing that data keep growing.  The Cambridge Analytica episode has brought home some very hard truths about the need for digital data security and best practices, and the costs that can come from being less than careful or prudent.

Customers are willing to trust you – until they aren’t

According to Accenture, 83% of consumers are willing to share their data if they receive a personalized experience in return. That quid pro quo largely depends on whether the experience feels safe and is free of any issues with data security, however. The very same study found that of the 27% of consumers who reported a brand experience that was too personal or invasive, nearly two-thirds said it was because the brand had information about them that they didn’t share knowingly or willingly.

Customer perceptions can be extraordinarily volatile when it comes to something as sensitive as their private data. Reputational damage to your brand can happen almost overnight if you’re not policing or transparently communicating how you obtain or share personal data.

Beyond the black eye this can create for brand perception, it can also cripple customer retention.  In an environment as ultra-competitive as digital marketing, there are plenty of competitors willing to step up and provide a more secure alternative if you make a mistake. Equally or more damning, there are also plenty of news organizations who will widely report on the mistake and instill fear and suspicion into customers who may not even have been affected.

Third-party sins can tarnish your halo

It’s fairly well-known that purchasing customer data from third parties can lead to significant risks for marketers. That’s because if the data handler you’re relying on suffers a breach, your brand can be held liable.

As some pundits have noted, there’s the possibility of another chilling effect on online business owing to the actions of firms like Cambridge Analytica. Third-party data gatherers may all get painted with the same black brush by many members of the public – and some of the spatter from that distrust may land on the brand that’s allowed those third parties to utilize personal data.

Even if you’re relentlessly scrupulous in how you internally manage people’s personal data, you may find yourself at the mercy of a third party who’s not quite as ethical or even simply careful about how they handle that information. If you’re operating websites where numerous tags are firing, handling off user data not just to vendors but to any other parties they may be involved with, you’re running risks.

If misuse happens, your prospects and customers probably won’t accept the argument that your hands were clean when it came to handling their data.  It’s why monitoring who’s accessing user data on your site or portal is so vital.

Noncompliance can injure your image

The advent of the GDPR and other regulatory measures may seem like a hindrance or a headache for digital marketers, but there’s no steering around them.  Furthermore, compliance provides a host of benefits for marketers, such as forcing them to update outmoded policies, remove redundant, obsolete and trivial (ROT) files, and develop opt-in communications and transparency.

Marketers who are visibly compliant with these new regulations are more likely to capture public goodwill, too. Their sensitivity to consumer demands for data security helps drive a higher level of trust and engagement. Just take note of the amount of trust Amazon has developed with its audience, who trust it more than they do banks and financial services providers when it comes to their personal data.

If you’re not compliant, or you simply fail to make it clear you’re following stringent best practices for protecting personal data, you’re putting yourself at a competitive disadvantage versus other brands that make their compliance clear. Worse yet, any subsequent data sharing snafu or breach can inflate the situation: a marketer who’s made a point of trumpeting compliance has a “proven past compliance” argument to fall back upon in case of trouble.

Facebook survived; would you?

Negative buzz isn’t necessarily a death knell for a brand. Sometimes, it even can be turned into an advantage. But in most cases, it’s to be avoided, particularly since it’s so difficult to control public conversations nowadays.

Facebook seemed under real threat when the Cambridge Analytica scandal broke and swelled into a matter of national debate and Congressional bloviating. But since then, the Facebook brand has moved forward, even thriving since the events of earlier this year.

That’s no reason for any other marketer to think they’re immune to long-term effects from a data handling scandal, though. Facebook has the advantage of being deeply embedded in people’s lives and the digital commerce landscape in the U.S. and worldwide. Plus, it has damage control resources to draw on that most companies can’t touch.  Ask its leadership, and they’d undoubtedly say they wish the affair had never happened.

It’s also important to recognize that Facebook’s recovery didn’t come without a material expense that included deploying crisis resources, legal counsel, and the media placement costs of running apology ads in The New York Times, Washington Post and Wall Street Journal, as well as the UK's The Observer, The Sunday Times, Mail on Sunday, Sunday Mirror, Sunday Express and Sunday Telegraph.

Facebook may seemingly shrug off the costs of being careless with customer data. That may not hold true for other companies though. Lapses that bruise the brand image of a Facebook or Google could very easily be fatal for anyone else.


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