Consumers less likely to ‘opt in’ to marketing than to ‘opt out’
Next year’s EU changes to opt-in requirements for data gathering could hit brands hard, finds exclusive research.
When new EU data protection rules come into place next year, consumers are likely to be required to ‘opt in’ to marketing messages from brands or third parties, usually by ticking a box, instead of the current action of opting out. But according to new research, consumers may be more reluctant to ‘opt in’ than they would be to select the opt out box.
The study shows that 29 per cent would opt in to emails and other messages, compared with 51 per cent who say they would not opt out. When asked more specifically for their permission, the rate is even lower. If a brand wants to share information with ‘carefully selected companies’ that will send offers, only 18 per cent say they would tick the box to receive emails; 82 per cent say otherwise.
The report, based on the responses of 1,175 people (see Methodology, below), was compiled by fast.MAP in partnership with agency Tangible and consultancy Opt-4.
The reforms, which began with proposals in January 2012 to shake up the EU’s 1995 data protection rules and strengthen online rights, aim to ensure that people have more effective control of their personal data while making it easier for businesses to operate in a single market.
Due to be passed in 2015, changes will strengthen standards of data protection by establishing a single pan-European law. A supervisory authority will ensure the same rules apply to all companies operating in the European market. However, the Direct Marketing Association (DMA) is pushing for a more ‘business friendly’ version of the regulation, warning that current proposals “should be ringing alarm bells in every business involved in one-to-one communications.”
David Cole, managing director of online research specialist fast.MAP, says: “The majority of marketing and advertising is data-driven and as more digital contact routes become mainstream, access to personal details becomes more vital.
“If indeed the General Data Protection Regulation does become law, the main effect will be to replace the current opt-out requirement, for further contact and sharing of data with third parties, with an opt-in permission.”
He adds: “This will require a massive change in culture for most marketers. At present the aim of some is to make the opt-out statement as low-key and invisible as is possible within the law, so that as few people as possible tick the box.”
In March, the European Commission announced that progress on EU data protection reform is irreversible, regardless of how this month’s elections affect the European Parliament.
Any breach will come at a price. Under the proposed legislation, any fine will depend on the size of the corporation and the extent of the breach. It could be up to €100m or 5 per cent of annual global turnover, whichever is greater.
Cole cites an example from January, when a French data protection watchdog fined Google €150,000 for failing to amend how it tracks and stores user information in line with national law.
Rosemary Smith, director at Opt-4, says: “When the EU legislation becomes law, it will be a game-changer for all data-driven organisations. Permission will be harder to get and will have to be explicit. The wording of opt-in statements will be crucial to encourage data exchange.”
Not only is the wording an issue but so is the time it takes a consumer to consider the options, according to research by language consultancy The Writer. In a study of more than 2,000 adults, in partnership with ICM, it found that Britons spend four-and-a-half minutes reading terms and conditions when signing up for products and services online. However, an analysis of 30 well-known brands finds that on average it takes 28 minutes to read such a document thoroughly.
Neil Taylor, managing partner of The Writer, says: “Businesses are legally required to treat customers fairly, so while asking a customer to read a complicated document for half an hour may well protect you against a lawsuit, it could cost you that customer.”
The study also shows that younger audiences are more relaxed about opting in. Caroline Kimber, vice-chairwoman of the Direct Marketing Association’s Data Council, believes that “young people have grown up with sharing information online via social media and are therefore much more comfortable with it”.
fast.Map reveals that younger people are more likely to say yes to sharing information compared to older demographics. For example, 23 per cent of 18- to 24-year-olds would say ‘yes’ to opt-in, compared with 13 per cent of 55- to 64-year-olds and 18 per cent of 45- to 54-year-olds.
“Far more is involved in achieving high permission rates than a simple change from an opt-out to an opt-in statement,” says Opt-4’s Smith. “A one-size-fits-all approach is not the most effective. Different opt-in statements work best with different age groups and in different parts of the country.” Geographically, people in the Midlands are much more likely to say yes (21 per cent) than those in Ireland (8 per cent), and there are slight gender differences too, with 16 per cent of females and 21 per cent of males claiming they would say yes to sharing data.
Differences between the age groups also occur when analysing the types of companies people are comfortable sharing their data with. Banks top the list at 73 per cent, followed by utilities (46 per cent), online retailers (35 per cent), supermarkets (34 per cent) and telecoms companies (23 per cent). Broken down by age group, only 66 per cent of 18- to 34-year-olds are comfortable sharing information with banks, compared with 82 per cent of 55- to 64-year-olds. A similar trend emerges with utilities, with 37 per cent of the younger bracket saying they are happy to share compared with 50 per cent of 55- to 64-year-olds.
People are least likely to be comfortable sharing information with publishers (8 per cent), software/gaming companies (8 per cent), car manufacturers (9 per cent), quangos (12 per cent) and charities (14 per cent).
The research also looks at why people give permission. It shows that 28 per cent would give access to their data for a specific reason, 29 per cent if it is easy to revoke that access and 40 per cent in return for something of value.
Nick Banbury, data strategy partner at Tangible, says: “Companies need to start thinking differently about customer data and realise that access to it is a privilege, not a right. Brands need to make their offerings more personal and tailored to each individual’s needs.
”They need to provide relevance and they need to make themselves more attractive, more interesting, sexier, cooler and more engaging.”
The changes to data protection laws and increased power of the consumer pose a growing challenge to brands. It is vital that any communications concerning the gathering of data be interesting and of value. If they are not, the customer is unlikely to share.
DMA Data Council
When thinking about opt-in and opt-out options in marketing communications, it’s important to think about the context in which the question is asked. Opt–in requires consumers to actively do something: read terms and conditions and tick an opt-in box. For time-pressed consumers, this is a big issue. We’ve seen the same issue with cookie notices. Consumers dismiss them without actively agreeing to them, because they’re in a hurry to get to the information they want.
Also, it’s crucial that consumers feel they are getting value from sharing their information. If it benefits the consumer to share data, for example, to get more relevant offers or a better level of service, then they will share data. It’s all about the value exchange.
As the results show, the trust customers have in banks on a day-to-day transactional level proves that we can use their most personal information in the right way.
That fundamental trust means we are well placed to help people get the most from information-driven services.
That can only be of benefit to us as a company and to the broader economy, though, if we continue to demonstrate that our first concern is to act in the best interests of our customers.
It’s also important that we make it very transparent how we are using customer data, which is why we pay particular attention to
the way in which our privacy policies are written and presented.
The data protection survey was conducted in February 2014 by fast.MAP in partnership with Tangible and Opt-4.
In all, 1,175 people were interviewed from fast.MAP’s consumer panel, nationally representative of the UK population. Questions were submitted via an online self-completion questionnaire.