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The negative impact of providing a poor privacy experience is almost as severe as that of a data breach, according to new research by Google and Ipsos.
The report builds on the key findings from our 2021 privacy research1 that found those who felt in control of which data they shared with a company were:
- 2x more likely to find their advertising relevant;
- 3x more likely to react positively to the adverts.
Our latest research builds on this, and found that privacy experiences offering customers an increased feeling of control also helps drive greater marketing effectiveness. We’ve highlighted the four key takeaways from the research.
What does a positive privacy experience look like? And what does that mean in real terms for customers and brands? In our research, we created positive and negative privacy scenarios and tested the impact of each on participants to understand how they influenced feelings of control — and therefore on brand preference, trust, and marketing effectiveness.
We defined a positive scenario as one which actively gave customers control and choice over their data, including the options to:
- manage cookie preferences;
- choose which elements of personal data a brand can store, and for how long;
- get clarity on how data is being used, such as the reassurance that it would be rigorously protected and not shared with third parties. ‘’
Implementing changes like this can make a significant impact for customers. In fact, 37% of participants in Sweden and 43% of participants in the Netherlands claimed they would choose to switch from their preferred brand to their second-choice brand if their privacy practices were more positive.
The impact of a positive privacy experience on share of brand preference
Research also revealed that bad privacy experiences were just as damaging to brand trust as a serious data breach. This includes failing to provide knowledge and/or autonomy to the customer, as well as a lack of transparency.
To test this, Google and Ipsos created two hypothetical scenarios. In the first, a brand's IT system had been hacked due to poor data management, exposing customers’ personal data. In the second, they were shown a site providing a poor privacy experience.
While the severe data breach decreased brand trust by 45% in the Netherlands, the bad handling of personal data wasn't far behind with 40%.
As brands depend on first party data to ensure a best in class advertising experience, they need to have a good value exchange in place. As such, brands sometimes implement a monetary incentive, such as a discount or gift, to share their data.
But our study showed that, for brands with good privacy practices already in place, this additional monetary incentive didn’t do much to further improve brand preference. And in the case of brand trust, it actually had a noticeably negative impact (-6% points), with some respondents saying they felt uncomfortable with the idea that monetary value was being attached to their personal information.
The impact of a good privacy experience on trusting a brand with personal data and brand preference, with and without an additional monetary incentive.
The final key finding of the research was that customers shouldn’t just be in control, but feel it too. Therefore, brands should deploy a proven combination of practices that we call the ‘Three M’s’: creating Meaningful, Memorable, and Manageable privacy experiences in line with cultural expectations.
For example, asking customers for consent to personalise website content in clear, concise language helps them feel they have agency over their privacy, and can act as the gateway for a respectful data exchange. Clear, easy-to-understand communication will increase the chances of customers agreeing to share data and avoid adding to the weight of “consent fatigue”.
The study suggests that combining Three M practices has a bigger positive impact on privacy experience results – and can cause feelings of control to increase as much as 41% in Sweden and 46% in the Netherlands.