Independent financial adviser, mortgage broker, wealth management specialist—most consumers have used professional intermediaries to help manage their money. With the value and volume of personal data set to increase, new digital intermediaries are emerging, offering to manage and monetise consumers’ personal data sets. Ctrlio analyses customers’ online mobile and broadband bills and uses their data to negotiate personal deals and discounts from providers. It claims to save customers an average of £400 a year and to be completely unbiased. U.S. company Datacoup allows customers to monetise their data by creating a data profile using data from sources such as social media/bank accounts, and then charging businesses wanting to use it. Meanwhile, Citizenme allows consumers to collect and store their personal data and uses it to obtain insights about their lives or to share it with charities or with businesses for a reward.
What is driving the rise of the personal data broker? Unusually, legislation is a key accelerator of this emerging trend: The E.U.’s General Data Protection Regulation (GDPR) includes a data portability clause, which requires brands from Spotify to Amazon to make personal data available to consumers in an easily readable format. The law, which comes into force next May and applies to U.K. organisations holding personal data, aims to give consumers more control over their personal data by making it easier to share data such as mobile phone usage or stored shopping lists with competitors or a comparison service, to ensure they are getting the best deal. When combined with the latest data science tools, the move enables consumers to make their personal data work harder, whether it’s getting a better deal on a mobile package, selling their data to brands, or using it to gain valuable insights into how to manage their lives.
So what does this trend mean for marketers?
1. The Emergence Of Vendor Flip
Currently, consumers’ role in what happens to their personal data is both passive and unrewarded, with brands and third-party data brokers collecting, analysing, and trading data about them to grow sales, develop new insights, and drive profitability. As personal data increases in value—the World Economic Forum described it as the “new asset class”—consumers are demanding a proportion of that value. Research from analytics firm SAS revealed that 69% of millennials consider their personal data as “bargaining chips” which can be leveraged to enhance their lives. Brands need to reassess their assumptions about who owns the consumer data they collect or purchase, and whether consumers are getting a good deal. This includes being prepared to welcome consumers into the personal data market place and trade direct with them—or via personal data brokers—as fellow vendors entitled to a fair price for their data. Brands leading the way in this area include Google’s Cross Media Panel, which rewards consumers willing to share their web and mobile app usage with e-gift cards.
2. Increased Commoditisation And Customisation
A key aim of GDPR is to make price comparison and switching between service providers much easier and more seamless. Going forward, consumers who share personal usage data with comparison websites or competitor brands can expect deals tailored to their individual needs rather than being forced to choose from off-the-shelf “packages” or “bundles.” The rise of personal data brokers advocating for consumers rather than businesses will drive price transparency, adding to the pressure on brands to avoid misselling and deliver the best deal for each individual customer.
Short term, the implications for brands include increased commoditisation, more price wars, and squeezed margins as consumers are empowered to easily identify and switch to deals tailored to their needs. Rather than relying on price as a driver, brands should focus on creating value by designing offers that precisely match customers’ individual requirements.
When it comes to retaining customers, brands should focus on developing fun-based data science tools incorporating Facebook-style gamification that allow consumers greater insights into their usage/spending habits—as humans, we enjoy self-discovery. Citizenme is a good example of a personal data broker aiming to make data entertaining.
3. Cross-Referencing Data Will Create New Opportunities
Data portability across sectors raises the option of cross-referring consumers’ personal data from different areas of their lives to provide a more holistic and in-depth picture of their purchasing preferences and overall lifestyles. Expect to see the Quantified Self trend extended beyond health and wellness into finance, mobility, telephony, insurance, and utilities, with consumers “hacking” their personal data to increase self-knowledge and uncover valuable insights. Personal data brokers will compete by offering cutting-edge data science-driven tools to analyse their personal data sets to better manage various aspects of their lives.
Brands that are prepared to pay consumers to share personal data across different areas of their lives are well placed to gain insights that could lead to new products and services outside their core offer. For example, Tesco could merge its data about a customer’s weekly grocery shop with data from MyFitnessPal and Barclays bank apps, to offer a personalised shopping list that meets that customer’s specific calorie and budget targets.
4. Brands As Personal Data Brokers
The rise of the personal data broker creates opportunities for brands with the right credentials to help customers make the most of their personal data. For highly personalised price comparison services, Google, Which?, and Compare The Market are obvious candidates, while newspaper and magazine brands that already review products and services on behalf of consumers are also well placed to enter this sector. When it comes to storing and even monetising data, banks are well placed to carry out this function. As companies like Ctrlio and Citizenme demonstrate, the sector is a good opportunity for startups.
The increase in data portability and the rise of data brokers present opportunities as well as threats for brands. Those that embrace trust and transparency, and that place consumers’ interests at the heart of their offer, are more likely to succeed than those that don’t.