How GDPR Impacts Marketers, Advertisers and Small Businesses

The implementation of GDPR regulations has had a huge impact on organisations of all sizes. It has slashed ad revenues of companies dependent on data-based marketing, it has increased cost of securing and storing data per the GDPR regulations, and it has affected small businesses that are unable to afford the cost of regulatory implementations.  

In this blog, we take a deeper look into how GDPR has impacted businesses and the silver lining that marketers and advertisers can capitalise on.  

GDPR was introduced in 2018 to protect the privacy of consumers, and give them more control over what data they want to share with the online ecosystem. Its principles restrained companies from collecting more data than was necessary and laid down several mandates around ensuring transparency (in telling the consumer what data is being collected and for what purpose), and protection of consumer data against accidental loss or theft.  

When the law went into effect, it came as a great source of relief for consumers, many of whom felt that their privacy was being infringed. However, it became a sore point for businesses because it forced them to completely re-align their marketing and customer experience strategies.  

Here, we look at the different ways in which large and small businesses were affected by GDPR compliance, and how they’re trying to work around it.  

GDPR Impact on Publishers and Advertisers 

Publishers heavily rely on data from cookies for analytics and advertising. When the GDPR laws came into force, they impacted several fronts. Firstly, unlike pre-GDPR times when marketers could collect all the data they needed and ‘wanted’, marketers must now obtain explicit consent from users before collecting any cookie data. This is commonly known as the cookie banner.   

Many publishers and advertisers rely on location-based targeting and geofencing to engage with their customers more effectively. Post GDPR, businesses cannot use location-based targeting without explicit consent from their users.  

Starbucks, for example, openly seeks user consent with two options; in the checkbox, users can generally opt-in for offers and events whenever they take place, or they can opt-in for offers and events based on their account and purchase history. What Starbucks is doing here is seeking consent and telling its users how their data will be used.  

The second way publishers will be impacted is that users may find it exhausting to give consent every time they visit a site, so they may turn off cookies completely in their search, which means publishers are unable to collect their user data.  

Also, when data collection becomes a challenge, ad revenue tends to plummet due to a lack of awareness of alternative strategies. Lastly, because the cost of violation and data loss is steep (20 million euros or 4% of global revenue), businesses need to hire data protection officers, which can be expensive.  

GDPR is about seeking consent and marketers will have to oblige

Typically, the collection of customer data can include anything from their name, email address, age, location, account history and more. Companies use this data to build brand awareness and push targeted ads. Such data-based marketing has produced a higher ROI for companies, and customers have also indicated that they prefer personalised ads.  

In 2021, eMarketer held a survey which revealed that 50% of customers found targeted ads to be helpful because it helped them discover products and services of interest to them. In addition, 52% of social media users said that they are pro personalised ads especially if they know that their data is protected.  

But, with GDPR compliances in place, companies have to go the roundabout way in seeking consent for every data point from customer’s name to account history.  

Smaller Organisations Take a Hit 

According to data by PWC, the cost of implementing GDPR compliance depends on how big an organisation is, how much data it is collecting and how it intends to use the data. In effect, it can cost anywhere from US $1 million to US $10 million. Now, that’s an expense that many small businesses may not be able to afford, as a result of post GDPR-implementation, small businesses have taken a hit.

The Silver Lining in GDPR Regulations 

While seeking consent and spending on data protection can seem like a complicated and arduous task, turning to companies that are genuinely investing in data security and protection has become the new norm for customers.  

Research by CISCO revealed that 71% of brands that invested in data security saw higher loyalty and trust from customers, and 69% companies said that it made their brand more attractive.  

A marketing data expert at Merit says, “Giving power and control to the customers over how their data is used can seem like a temporary setback for the marketing department. But, in the long-term it can potentially change how marketing and advertising works. Companies will have the opportunity to engage with their customers based on trust, relevance, and loyalty, which are ultimate goals for marketers after all.”  

Merit Group’s expertise in Marketing Data   

At Merit Group, we partner with some of the world’s leading B2B companies. Our data teams work closely with our clients to build comprehensive B2B marketing contact lists that provide a direct line to their target audience.  

If you’d like to learn more about our service offerings or speak to a marketing data consultant, please contact us here: https://www.meritdata-tech.com/contact-us