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Data collection is exploding across the internet, and for good reason. Whether you’re a Google, Facebook or small online advertising network, the more data you have the better.

You can slice it, dice it, repackage it, and - using predictive analysis - build accurate profiles to serve users with precise interest based adverts.

It drives down costs and the digital advertising industry, with their insatiable thirst for data, is booming. In just the first half of 2013, US revenue from online advertising in the US alone totalled approximately $20bn.

This explosion in digital data practices is due, in large part, to emerging technologies that offer innovative ways to utilise data.

The mobile advertising industry today can track you from app to app by your phone’s identifier and then serve you relevant adverts. Brick and mortar retailers have 'smart stores' that track your phone’s location and deduce what sort of products will interest you, then text a 'just in time discount' coupon.

Innovation knows no bounds, but as innovation drives business, customers are becoming concerned about their privacy, and rightly so.

Government is in on the action as well. The revelations about the NSA’s massive data collection programme in the US have only amplified privacy concerns. Why was there so much outrage over the NSA revelations? A lack of transparency, that’s why.

The strategic lesson is that innovation without transparency can breed suspicion and a lack of trust. Innovation combined with transparency is powerful and builds trust.

When asked to cite companies they considered to be the most trustworthy collector of consumer data in a recent Toluna study, 16% of respondents mentioned Amazon, more than any other company.

It also revealed that 84% of UK consumers (86% of US consumers) trust companies that are transparent about their online data practices and 75% would buy more from those companies.

They like the innovative ways the business uses data in combination with its openness about its data practices. Amazon builds relationships with its customers, and interacts and suggests products that consumers might like. Amazon is open with consumers and, as a result, they trust the brand. 

Any discussion, however, about data collection practices would be incomplete without mentioning a growing trend in privacy laws.

The public unease with new and powerful data collection practices has spawned a flurry of US and EU privacy legislation, much of it transparency-centric.

These laws are an easy sell because they reflect the public mood. In a recent study by The Economist, only 26% of UK residents think businesses are transparent enough in how they use customers’ personal data and 75% think regulation preventing the misuse of such information is too weak.

Here in the US, California recently implemented a transparency law requiring websites to disclose their online data practices. At the national level, FTC Commissioner Julie Brill has long voiced unease over the ‘Big Data’ industry and recently called upon Congress to pass a 'Big Data' transparency law.

And President Obama recently formed a committee to investigate the comprehensive issues of big data and privacy.

In a timely coincidence, the EU is overhauling the aging EU Privacy Directive, its pan-European privacy framework. A central theme of the proposed privacy regulation may be increased transparency obligations on data collectors.

Consumers are demanding transparency. Now is the time to get ahead and develop a transparency strategy that informs the consumer about your online data practices in a meaningful way that is both comprehensive and clear.

You’ll be doing the right thing for your business, while at the same time complying with the fast approaching transparency laws.

Todd Ruback

Published 19 March, 2014 by Todd Ruback

Todd Ruback is Chief Privacy Officer at Ghostery, Inc and a contributor to Econsultancy.

7 more posts from this author

Comments (3)


Aurelie Pols

My apologies Todd but I'm a bit confused about the transparency laws you are referring to. Are we talking about Breach Notification legislation?

As for commissioner Julie Brill from the FTC in the US, http://www.ftc.gov/about-ftc/biographies/julie-brill, I suppose you refer to her "Reclaim your Name" motto related to data brokers right?

Next, the White House and MIT held a one day, streamed workshop which was interesting to follow and food for thought for good discussions. I learnt about Differential Privacy by Microsoft's Cynthia Dwork: http://www.cs.ucdavis.edu/~franklin/ecs289/2010/dwork_2008.pdf. Interesting but not sure it's really practical. I'm really looking forward to the next sessions in order to better understand Common Law approaches to the Privacy or data protection issues our digital industry is facing and building bridges between data science practices, legal obligations and trust frameworks.

I'm happy to read you're mentioning the upcoming EU Personal Data Protection Regulation that just passed the EU Parliament's vote about a fortnight ago. It holds plenty more than just more transparency on behalf of data collectors and even that, I'm not exactly sure what you mean by that. Collectors as in collectors vs. processors and the linked obligations under EU legislation?
The FTC is working on going after data brokers but that's the US....

So you talk of transparency and the fact that companies should start working on that.
I personally think companies should start working on information security measures: as we're collecting more and more data, which is getting more personalized as we increasingly add data points to our customer data trove, these assets are piling up within often loosely secure platforms.

Having been through a variety of digital related Privacy Impact Assessments (PIAs), I remain astonished at the lack of processes surrounding this data collection and how poorly compliant but also risky this data herding is becoming.
The massive increase of data breaches proves this as not one day goes by that yet another one is revealed. Target is a nice example I imagine you've heard about, on top of the pregnancy debacle some months before.

As for transparency, Dutch bank ING recently announced their plans to sell customer data based on financial transactions. Typically the example of buying flowers for your wife on a particular date and sending this date to florists, allowing them to send you offers for a lovely bouquet.
Dutch public TV investigated and found that 72% of clients would switch banks if this was pursued: http://kassa.vara.nl/tv/afspeelpagina/fragment/72-klanten-ing-wil-overstappen-van-bank/speel/1/.
Closer to home, in the UK, Vodafone while trying to figure out how to tackle the entire opt-in/opt-out and consent conundrum reached out to customers during focus groups in order to get their opinion. Once these customers understood what data was collected, they walked out. Vodafone turned to thought leaders in the Privacy space for council.

Transparency is all very nice and well if and when social norms align with the data collection frenzy we've been up to for the last decade or so. For now, if you explain to customers what we've been up to, I'm not so sure they'd be very happy... after all, once citizens found out through Mr Snowden what their governments were up to, the disclosure wasn't exactly received through massive celebrations.

It's security on the side of companies that matters now and data protection: safeguarding people's rights related to privacy that is important: giving them choice and respecting that. At the same time, education is of essence in order to pave the way for the much needed transparency you talk about. But I wouldn't today suggest any company to bluntly be totally transparent about their data collection, that's asking for trouble imho.

I look forward to your thoughts.

over 2 years ago


Mel Clarke

Top class comment @Aurelie, really interesting. (And nice blog too Todd!)

It's interesting to understand the debate on both sides. As a marketer, collecting relevant data can enhance the user journey and make customers happier. But as a consumer, I'm guessing a lot of unnecessary data is also being collected without my permission or with only a vague explanation.

A happy balance is yet to be struck, but at least (hopefully) responsible businesses still realise that honesty and transparency with customers is paramount.

over 2 years ago


Valerie O'Neill (@minabird)

As Aurelie says there is a lot more to this than transparency.
Choice is important and even more fundamental than security. Explaining how you collect and use data, and how you look after it when you have it, is of no value to a user unless they can choose to agree to collection or not.
It is of course important that data usage policies are explained clearly and honestly, and that personal data once collected is secured from use by criminals and others. But commerce in a free society is based on reciprocal exchange between willing partners and not on predatory exploitation.
Companies must, at a minimum, offer citizens the choice on if and how their data is collected.

over 2 years ago

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