What you need to know: 

• Yahoo DSP and IPG Mediabrands investment unit Magna have published new research on Australian consumer’s response to personalised ads, suggesting widespread confusion around the use of personal data and apparent conflation between objection to personalisation versus fear of being hacked.
• The study found only 14 per cent of Australians believe they have adequate resources to protect their personal data online, but 74 per cent are unaware that they can opt out of (some) data collection on media and shopping platforms.
• Director of data and insights at Yahoo AUSEA, Dan Richardson, says the findings point to a “conflation” of “privacy, security and advertising”, with less than a third of Australians understanding that advertisers do not have direct access to personal data.
• Magna MD Lucy Formosa Morgan says transparency is the core issue, and with privacy reform incoming, brands can no longer rely on "reams and reams of T&Cs", and they'll need to get direct about where the "value exchange" is for the consumer. 
• But the pair suggest the onus isn't all on brands. 

There’s a tonne of consumer data to suggest consumers are deeply unhappy about how their personal information is used for advertising.

Ahead of Australia’s long-running Privacy Act overhaul, the Consumer Policy Research Centre, a think-tank part funded by the Victorian government, found just nine per cent of Australians are comfortable with targeted advertising and how their online habits are tracked without permission; three quarters not happy about their personal data being shared and sold; and almost 80 per cent believing a company should not sell people’s data under any circumstances.

But a fresh survey by Yahoo and IPG’s Magna finds a different set of numbers and views – and execs at the two digital ad supply chain firms suggest that people are conflating digital and data security with targeted advertising.

Their data, based on a survey of 1,200 from last September, found only 1 per cent raised ‘customised ads’ as their primary concern when it comes to data privacy, and same goes for receiving ‘online recommendations based on browsing history’ or ‘websites learning my content preferences’.

Yahoo/Magna findings include:

• Only 14 per cent feel adequately resourced to protect their personal data online.
• 74 per cent are unaware they can opt out of data collection on various media and shopping platforms.
• Only 24 per cent understand that advertisers don’t have direct access to their personal data.

Confusion, conflation

Yahoo AUSEA director of data and insights, Dan Richardson, argued the findings point to “a real conflation” of “privacy, security and advertising”, with fear of “protecting your passwords” and getting hacked bleeding into fears around “allowing businesses to use your data in an equitable way to deliver ads”.

Consumer and privacy advocates will beg to differ, likely pointing out that while advertisers don’t always have direct access to their personal data, the platforms and a sizeable chunk of the adtech supply chain does.

Nevertheless, Richardson suggested consumer confusion is because the industry hasn’t done a “good enough job” in communicating the difference between data security and personalised ads, thereby putting trust at risk.

He thinks more transparency would help, though arguably that is where much of the Privacy Act overhaul is ultimately aiming to land, i.e. informed consent via explaining succinctly in plain English how data is used rather than the average 6,800 word privacy policy, and whether using data is that way is ‘fair and reasonable’ to the average punter.

Meanwhile, the Privacy Commissioner, Carly Kind, has been explicit in stating the industry is already likely to be failing to meet current privacy rules, with the regulator looking hard at pixels and how brands and publishers are passing data to big platforms and other third parties, as well as probing loyalty, data enrichment and geotargeting.

Honesty required

Per the Yahoo/Magna data, while many respondents were aware of the most common sources advertisers use for targeting – search history (61 per cent), purchase history (58 per cent), location (50 per cent), social media habits (49 per cent) and demographics (43 per cent) – a significant number also assumed their more personal data was also being tapped. Almost a quarter (23 per cent) believed their personal emails were used, 16 per cent assumed advertisers were listening to their private conversations, with personal financial data (14 per cent), medical records (9 per cent) and account passwords (six per cent) at the lower end.  

“If we don’t bridge this gap, we risk losing consumer confidence, leading to stricter policies and less effective advertising,” said Richardson.

Managing director of Magna, Lucy Formosa Morgan, suggested the ad industry ensuring consumers trust the processes that enable personalisation, while distancing personalisation and targeting from the issue of data breaches, was key.

Per the Yahoo/Magna survey, only 1 per cent raised ‘customised ads’ and browsing-based recommendations as their top data privacy concern – which for 53 per cent of respondents was the risk of getting hacked.

“As an industry, we need to do better at explaining data usage in a clear, honest and accessible way. If we fail to educate, we fail to build trust – and without trust, digital advertising loses its effectiveness,” per Formosa Morgan.

Information gap

The point about consumer education may have legs.

Per the Magna/Yahoo poll, while 80 per cent believed federal privacy laws to be at least somewhat effective (ranking effectiveness a five or above out of 10), few rated themselves as being particularly familiar with those laws.

The Federal Privacy Act enjoyed highest levels of awareness, with 50 per cent having heard of it but not being “very familiar”, while only 11 per cent rating themselves as “very aware” of it, and 39 per cent having never heard of it.

Lesser known were the General Data Protection Regulation (GDPR) and The Australian Privacy Principles, which scored lower on general awareness (respectively 32 and 35 per cent), with little more than a tenth of respondents identifying as “aware” or “very aware” of either (respectively 12 and 11 per cent).

It’s further complicated by the swathe of changes that are set to come through in the first tranche of privacy reform later this year.

“Some, not all, will have heard about the Privacy Act changes coming through, and we've obviously heard about it far more because we're in in the industry,” said Formosa Morgan.

The reality, she suggested, is that brands and companies will need to take the front foot and be clear about what people are signing up for when they agree to “reams and reams of T&Cs”, and that includes highlighting where the “value exchange” is.

“It’s transparency, in terms of just being clear to consumers about what is being collected, [and] how it will be used. Because you look at some of the results [from the survey], there is just mass confusion as to what is being used against them.”

Per the research, openness to personalised ads was 45 per cent when consumers were informed advertisers did not directly access their personal data – a near doubling of acceptance.

"The good news is that when people understand data use, their attitudes shift. This research makes it clear – transparency and education are key to building trust and keeping personalisation effective for brands and audiences alike," per Richardson. 

Formosa Morgan said brands can’t be expected to shoulder education work alone.

“It's tough one just to expect brands to do the educational piece, because they aren't lawyers – and to be able to advise or give legal advice to consumers they need to have legal representation,” she argued.

While brands must be accountable for providing greater transparency – i.e. “shortening those reams and reams of T&Cs” – she argues there’s also a broader role for the government on education as well as the broader digital ad industry.

“There definitely needs to be a collective approach across the industry to try and educate and upskill consumers,” per Formosa Morgan. Though she admits that’s easier said than done, given data use will vary between companies and categories. “It’s not one size fits all.”

Horse, water

Richardson suggested that while internal compliance is more of a legal issue – and for many a work in progress with privacy reforms yet to land officially – there are opportunities for brands to make gains in the ways they communicate the value of their data use to customers.

“Value could be the personalised content you're delivering or experiences, or maybe deals or offers, but [brands should be] linking that through to how data is being used in an ongoing way,” he said.

“Letting people know about choice, trust and control, and being clear, accessible, transparent, that's not new. We've had a privacy dashboard for years. But you can't lead a horse to water, necessarily. It needs to be as easy as doom scrolling on your couch at 10pm at night – like the lowest common denominator.”

“If we let people just keep going [as they are] then you have uncertainty and fear, which is the biggest risk – and the Government listens to people, as they should, so that could turn into regulation.”

The industry is up to its neck in that already – though fear of tariffs may signal the high watermark, as far as advertising is concerned, may have been reached.