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Marketing Data & Privacy Ecommerce

Why don’t consumers understand the bargain of digital data?

By Mark Penn | CEO

November 15, 2022 | 7 min read

Not all data collection is bad, writes Stagwell’s Mark Penn for The Drum’s Data & Privacy Deep Dive. In fact, sometimes it is engineered for the benefit of the consumer, who could be financially sabotaging themselves by opting out.

cookie on a computer

Penn says consumers must learn the difference between invasive and helpful data collection / Credit: Adobe Stock

Inflation is the biggest concern for consumers right now, not privacy. But they might not realize the two issues are intertwined.

If you lower the cost of marketing, you effectively reduce the cost of goods. Consumers should be told as much and helped to understand they are not helping themselves when they opt out of most marketing data consent. Instead, they are driving up the cost of marketing to them.

One of the promises of the internet was its ability to make advertising and marketing more relevant to consumers and less expensive. The more addressable that marketing can become, the less waste exists in the brand ecosystem. Instead of fielding an army of costly linear TV spots in a mass-market array, brands can use the data at their disposal to get the right message to the right person at the right time and, crucially, for a manageable price.

Regulations, combined with incomplete consumer information, shrink the available data pool. When that happens, brands must spend more on reaching the right people. That’s not a cost they will altruistically eat; it’s one they will have to pass on to consumers with higher prices for goods and services. Just as supply chain disruptions inched up prices in the grocery aisle, continued disruption of the data-to-marketing loop will mean consumers shoulder more of the costs in today’s digital economy. We’ve already seen this in the aftermath of changes to Apple’s consumer privacy controls in 2020, which broadly drove up CPC and CPM costs for advertisers in the iOS ecosystem.

It doesn’t have to be that way. Performance marketing through digital channels is not just a boon for brands, it’s a bargain for consumers who receive more relevant advertising and marketing, and more enduring value from the brands they buy from.

According to a recent Harris Poll survey, just 4% of consumers understand how businesses use their data today. As a result, 74% report being concerned about companies viewing their online behavior and targeting them with advertising and 75% of US and UK consumers say they aren’t comfortable purchasing from a brand with poor personal data ethics.

It’s on businesses to ramp up education about the bargain of digital data and invest in making privacy as seamless as the point of sale, or we’ll keep running into consumers and regulatory bodies that are ready to pounce and drive up the price of marketing.

We know people care about maintaining privacy around information such as mail, text messages and prescription drugs. But they’re usually OK with a company finding out about whether they’ve bought a hamburger or shoes, and marketing to them based on the products they genuinely enjoy. We must differentiate between these two buckets of data and help consumers understand that contextual advertising based on habits can be valuable to them.

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We can do that while establishing clear limits – we’re not going to use your email content, we’re not going to use your prescriptions, we’re not going to go scrape your Instagram direct messages – and by giving consumers the information and confidence they need to be comfortable with more addressable marketing. Nine in 10 say they’re more likely to spend money with a brand that commits to protecting their data online than one that doesn’t.

Next, let’s unpack today’s privacy agreements. 30-page docs in six-point type need to die. Translate in plain language what you’re getting from consumers, what you’ll do with it and the value of that transaction. If you’re an innovative business, you’ll use digital storytelling to create engaging educational content about the bargain of first-party data.

One of our firms, YML, helped Twitter launch its newest privacy policy with an 8-bit video game that brings the Twitterverse to life to help its 330 million users understand what they were getting into as its data policies evolved.

Finally, consumers are deluged with privacy opt-outs. Consumers need to be able to make meaningful consent choices that apply to the full range of their digital experiences. We should implement a ’Master Choices’ approach. Rather than ask for consumers’ approval on every website, app or window they open in a session, they should be able to set a flexible data profile that determines the types of information they consent to share across all commerce and digital platforms.

We can make the goods and services that brands provide more valuable to consumers if communicated more clearly. As marketers, we need to help consumers understand they’re getting a crazy bargain in this digital economy when they share the appropriate information with our businesses.

Mark Penn is the chief executive officer and chairman of Stagwell. For more on how the world of data-driven advertising and marketing is evolving, check out our latest Deep Dive.

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