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Data vendors and the future of ethical data practices

In the digital age, marketers are grappling with an ever-evolving landscape in which the ways to understand consumer behaviours are constantly changing. While for a long time, there were companies that could provide data segments for audience targeting, these 3rd party insights were often lacking and resulted in data being used ineffectively. There was a gap between what data purported to do, and the information it actually provided.

Amid this environment, data vendors emerged as key players offering impactful data insights that offered results.

What are data vendors?

Data vendors are a company or individual that collects, processes, and sells or trades various types of data. Sometimes called information brokers or data brokers, what sets them apart is that they usually collect information from the public record, like online activity, surveys, social media, and more. They focus their efforts on information publicly available about individuals or organizations to sell that information to others.

Often, the data they are looking at can be vast and can encompass anything from personal information to demographic data and insights into consumer behaviours. What differentiates data vendors from the more anonymous style of 3rd party data businesses previously in existence is that data vendors compile and analyze the data to create in-depth profiles and datasets made readily available to marketers, advertisers, researchers, financial institutions, and insurance companies. Their data provides invaluable context into who the people are within any given data segment, something that previous data sources couldn’t reliably do.

Where did data vendors come from? A short history.

As early as the late 20th century, data vendorage began developing in Canada, though its primary focus was collecting and selling publicly available information. It was in the 2000s that data vendorage expanded to include the selling of digital technology and online data. During this period, data vendors began to use data management platforms that collected online browsing data using 3rd party cookies.

At this point, the history of data vendorage in Canada became marked by evolving privacy and data protection concerns. From the 2000s to the 2010s, as data collection and sharing practices evolved, concerns about individual privacy grew. This period saw the introduction of federal and provincial privacy laws and regulations.

In 2012, the Office of the Privacy Commissioner of Canada emphasized the importance of transparency and consumer choice in data collection and sharing practices in a report on online tracking, profiling, and targeting.

Since then, the focus has been on industry regulations and transparency, with increasing pressure on data vendors to disclose their data collection practices. The growing emphasis on consumer rights and data protection rights has complicated the role of data vendors.

In 2020, the Canadian government introduced the Digital Charter, outlining principles for a modern, privacy-focused approach to data in the digital age. The introduction of the Consumer Privacy Protection Act in 2021 solidified the government’s mandate to modernize and enhance privacy protections in Canada.

What makes them effective?

Marketers faced challenges measuring success as major players like Google, Meta, and Amazon leveraged their customer data to craft compelling stories. Yet, telling a consistent story across multiple environments is often tricky or impossible. There needs to be a means of validating the results or success. This is where data vendors came in.

Data vendors allowed the targeting of groups of people on many websites across different environments with consistency and, in doing so, removed the difficulties of measuring campaign success across major social and e-commerce platforms. Simply put, marketers and advertisers that work with data sets from multiple sources have the ability to tell more targeted and rich stories.

Know more about your customer

The benefits of using a data vendor even extend to marketers with their own customer lists. Data vendors collect data from diverse sources, including census mobile apps collected location data so that they can learn about your customers beyond their interactions with your brand. This is what makes them so effective.

Organizations that monetize their customer data by selling it to potential marketers can also benefit from collaborating with data vendors, as their diverse sourcing will make the data more valuable.

What is at risk for data vendors?

Public awareness around data-related privacy issues has sky-rocketed in recent years. Organizations that track browsing history are seen as invasive, annoying, and unethical.
This sentiment reflects a growing unease among individuals who feel they are constantly under surveillance. Their discomfort increases when meticulously personalized advertisements seem to know too much about them, intensifying the sense of being monitored. This has catalyzed a movement emphasizing “data rights as human rights.”
As data vendors’ role in online browsing proliferates and becomes more widely understood, this is only becoming a more significant concern.

Data vendors can sell data they have purchased to other data vendors who may not be the end destination for that commercial use. The result is a supply chain that moves personal information across organizations, often without proper user consent safeguards. The possibilities for data misuse are massive, and this remains the case whether the data is anonymous or reidentified. In the wrong hands, the data can be used to engage in discriminatory practices. When consumers are forced to provide personal information, it can even threaten democratic principles.

The regulation boom

Distrust in this system has led to significant regulations to limit online tracking. For example, the Personal Information and Electronic Documents Act (PIPEDA) can regulate the collection, use, and disclosure of personal information, but importantly, permission or consent to obtain user information is obtained indirectly from the data owner. Additionally, The Consumer Privacy Protection Act (CPPA) ensures people’s right to privacy and requires data collectors to justify the need for data collection.

While these steps toward regulating the industry are important, more still needs to be done.

What can the public and data owners do?

Current laws offer a starting point for balancing consumer benefits and privacy, but it’s a long way from being a perfect system. In Canada, some have proposed creating a data vendor registry to clearly define data vendors and provide a way for individuals to search for information about them. This registry would also allow people to manage their permissions, so they could opt in, opt out, or be removed from databases altogether. Theoretically, it would also encourage data vendors to disclose how they collect and use data publicly.

Marketers and advertisers have an important role to play in this conversation. They need to understand their existing and targeted customer base, but to do that, they also need data, which can stretch the boundaries of ethical practices. There has to be a push from advertisers and marketers toward their data partners to prioritize the quality of data, be diligent in following industry regulations, and always ensure the end user consented to the data collection.

The Globe and Mail and other Canadian media owners are striving to create new data collection strategies built on trust and transparency by looking at clean room technologies and data collaboration environments. While these initiatives are still in their early conceptions, they aim to allow data owners to safely and privately learn about their matching customer lists. The benefits of these technologies are only as good as the open, transparent, and trusted relationships with the customer base. Initiatives like these will bring in a new age of data collection that puts trusted relationships with customers first.

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