Are You Using Consumer Data Ethically?

A best friend might know when you celebrate a birthday, or landed a new job or even lost weight. So, too, does your favourite fashion brand.

Whether they’re venture-backed Instagram labels or storied European luxury houses, the fashion industry wants to know as much about its customers as possible. The information they collect, whether it’s through custom apps, e-mail signups or purchased from data brokers, determines what items get made and how they’re sold.

But the golden age of consumer data may be ending. Globally, consumer groups and lawmakers are pushing for restrictions on what brands and tech platforms can collect, and how that information is used.

In Europe and the US, most websites now prompt users to allow tracking cookies to harvest their data. By 2022, Google says it will phase out third-party cookies — which follow consumers around the internet — from its Chrome browser altogether. Apple’s latest mobile operating system update, released in September, prompts users to opt-in before sharing data with app developers (previously, users had to request not to disclose their information, which created less friction for data collectors). The Federal Trade Commission recently fined the women’s health app Flo for allegedly misleading users about how their health data would be used.

Big tech companies and brands used to swimming in a seemingly limitless ocean of consumer data are scrambling to adapt. Facebook publicly lobbied against Apple’s new app policy, arguing it would hurt brands’ ability to advertise on its platform. Fashion brands built on targeting products at the exact right slice of consumers may need to tweak their business models.

Some experts see a new way of doing business emerging, one where companies can connect with their customers without secretly surveilling them. They link stricter data privacy standards with other efforts to make fashion more transparent and accountable, from reducing emissions to treating workers better.

“Transparency and consent really [are] the foundation of what ethical data collection actually is,” said Ben Dick, senior director of product at the Interactive Advertising Bureau Tech Lab, an industry-backed nonprofit that is developing global technology standards for the advertising industry.

Who Knows What

A consumer who downloads a brand’s app — whether it’s a Nike shopping app or Depop’s resale platform — are encouraged to enter information like their phone number, email address, height, weight and clothing and shoe sizes. This information helps tailor the app’s offerings to the consumer, but brands can use this information however they want, such as targeting specific advertisements elsewhere across the internet and on social media.

Fashion brands also hire brokers, which cull consumer data from shopping sites and publishers, then categorise it by segments. Brands can’t view individuals’ information, but they can target highly specific demographics. City-dwelling, 20-something women who regularly browse fashion websites would be ripe targets for an ad featuring faux croc-embossed knee-high boots, for example.

Being data-informed or data-driven is not an excuse for irresponsible or unethical outcomes.

This strategy works, but is it ethical? It’s not always clear where brokers find their data. A consumer who fills out a profile on a shopping app might not realise they are agreeing to their information being circulated among multiple brands in perpetuity.

“A lot of problems that come up with data misuse kind of come down to the fact that consumers don’t know what they’re accepting,” said Chris Wylie, director of research at H&M Group. Wylie, who previously worked as a fashion trend forecaster, is best known for exposing how Cambridge Analytica harvested and exploited data from Facebook users during the 2016 US presidential election.

Consumers won’t reflexively say no to sharing their data if asked. In a 2019 survey by Edelman, 49 percent of consumers in eight countries said they would be “happy to share” data with a brand they trust.

A Push for Change

Wylie said that while changes from within the industry are good, governments need to set boundaries for consumer data use. The European Union passed data privacy regulations in 2018 — hence those ubiquitous requests to grant access to cookies — and California has a similar rule on the books. The US has no federal digital privacy law, except to protect children.

In the meantime, it’s left to brands to address their own marketing practices. Crown Affair, a direct-to-consumer hair care brand, hired brand and marketing consultant Grace Clarke to conduct a consumer insights session where people shared their lifestyles and preferences, as well as concerns about products. Sessions like these are expensive and their insights may be difficult to scale, Clarke said, but they often spark new ideas for how brands can reach customers without relying on big data.

The IAB Tech Lab created a “data transparency label,” analogous to a nutrition label stamped on food and beverages. The label analyses where brokers buy their data, how old it is and how it’s been sliced and diced to create consumer profiles. It is intended to help marketers understand the quality of the data they use to target customers, Dick said.

“Under a normal nutrition label, like on a box of cereal, you’ll be able to see the carbs, the fats and the protein that go into that cereal,” he said. “It doesn’t tell if it’s good for you, but it presents to you all the information that you need to know to make an informed decision.”

Homegrown Data

Fashion brands will have more control over whether data is ethical if they collect it themselves.

Many brands offer discounts to consumers who share their email address. Relatively few tell customers why they want this information. Typically, it’s to create a list of existing customers to target with promotions later on.

Explicitly telling a consumer why they should share personal information with a brand is a marketing opportunity in itself, said Travis Clinger, senior vice president of addressability and ecosystem at LiveRamp.

“As more brands invest in producing their own content … like blogs or newsletters for consumers, there’s value for the marketer, but also value for the consumer, and they’re happy to share their identity,” Clinger said.

LiveRamp connects data brokers to marketers looking for consumer data through the company’s Data Marketplace. The company said it has “guardrails” in place to ensure that its sourcing is ethical and that data is used as intended. It also says its data is “reviewed for consumer-privacy compliance so buyers’ interests are protected as privacy regulations evolve.”

Clinger said that on average, the company sees double the return on ad spend when brands apply “people-based inventory” (tracking using email and other information a consumer provides) rather than cookie-based inventory (tracking around the internet based on passive opt-in coding). Clinger also said the company has seen improved click-through rates, another metric meant to assess the success of an online advertisement.

Although the regulatory environment hasn’t yet caught up to the technology, it’s good for brands to get ahead of whatever future pro-privacy policy the US may adopt, following the industry’s lead as well as their regulatory counterparts in Europe — if not to foster trust with consumers, at the very least to hedge against any legal snags.

“I think it’s very healthy for a company to have people going over to the marketing department, the advertising department and saying, just because you’re chasing data doesn’t mean that you don’t have a responsibility to think about what it is that you’ve just set up,” Wylie said. “Being data-informed or data-driven is not an excuse for irresponsible or unethical outcomes.”

Editor’s Note: This article was corrected on January 28, 2020. A previous version misstated how the firm LiveRamp handles consumer data. LiveRamp does not purchase data from platforms such as Instagram, Amazon and Google to sell to clients. The firm connects data brokers to marketers through its Data Marketplace.

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