Data Ethics – It’s Role & Importance for Every Marketer
Data ethics refers to the principles and standards that guide the responsible and ethical collection, use, storage, and sharing of data. With third-party cookies phased out – being ethically on the right side is crucial for any modern-day marketer.
Marketers must balance the need to use data to drive insights and optimize marketing campaigns with the need to respect consumers’ privacy and ensure that their data is used in ethical and legal ways. Marketers today collect first-party data directly from their customers. Ethical data practices are crucial when it comes to first-party data collection – this is because companies have a direct relationship with their customers and are responsible for data privacy. An ethical consideration within first-party data collection is transparency.
Companies must be clear with customers about what data they are collecting and why, as well as how that data will be used. They should also provide customers with easy ways to opt out of data collection or delete their data if they choose to do so.
Another important ethical consideration is security. Companies must take steps to protect customers’ data from breaches or unauthorized access. This includes using secure data storage practices and regularly reviewing and updating security protocols.
In addition to ethical considerations, collecting and using first-party data can also provide significant benefits for businesses, such as insights into customer behavior and preferences. However, to do so in a responsible and ethical manner, companies must prioritize data ethics in all aspects of their operations.
Potential challenges for Business Leaders, Marketers, Brands
While privacy and ethical considerations are essential whenever companies use data (including artificial intelligence and machine-learning applications), they often aren’t top of mind for some executives.
In a 2021 McKinsey Global Survey on the state of AI, for instance, only 27 percent of some 1,000 respondents said that their data professionals actively check for skewed or biased data during data ingestion.
Only 17 percent said that their companies have a dedicated data governance committee that includes risk and legal professionals. In that same survey, only 30 percent of respondents said their companies recognized equity and fairness as relevant AI risks. AI-related data risks are only a subset of broader data ethics concerns, of course, but these numbers are striking.
Thinking in silos
Companies may believe that just by hiring a few data scientists, they’ve fulfilled their data management obligations. The truth is data ethics is everyone’s domain, not just the province of data scientists or of legal and compliance teams. At different times, employees across the organization—from the front line to the C-suite—will need to raise, respond to, and think through various ethical issues surrounding data.
Business unit leaders will need to vet their data strategies with legal and marketing teams, for example, to ensure that their strategic and commercial objectives are in line with customers’ expectations and with regulatory and legal requirements for data usage.
Chasing short-term ROI
Prompted by economic volatility, aggressive innovation in some industries, and other disruptive business trends, executives and other employees may be tempted to make unethical data choices—for instance, inappropriately sharing confidential information because it is useful—to chase short-term profits. Boards increasingly want more standards for the use of consumer and business data, but short-term financial pressures remain.
Looking only at the data, not at the sources
Ethical lapses can occur when executives look only at the fidelity and utility of discrete data sets and don’t consider the entire data pipeline. Where did the data come from? Can this vendor ensure that the subjects of the data gave their informed consent for use by third parties? Do any of the market data contain material nonpublic information? Such due diligence is key: one alternative data provider was charged with securities fraud for misrepresenting to trading firms how its data were derived.
5 Principles for Marketers to Live By
Purpose Limitation: Marketers should collect first-party data only for specific, legitimate, and transparent purposes. They should not use data collected for one purpose for another purpose without obtaining explicit consent from the user.
Data Minimization: Collect the data that is necessary for the specific purpose.
User Control: Provide users with clear and easy-to-use controls for managing their data.
Security: Marketers should use appropriate security measures to protect first-party data from unauthorized access, loss, or theft.
Transparency: Marketers should be transparent with users about what data they are collecting, why they are collecting it, and how they will use it.