How Start-ups Can Protect Consumer Data

The Cambridge Analytica controversy should serve as a jumping off point for brands to evaluate their data policies

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BY Ezra Ferraz - 18 Apr 2018

How Start-ups Can Protect Consumer Data

PHOTO CREDIT: Getty Images

The recent Cambridge Analytica controversy surrounding Facebook and Mark Zuckerberg’s congressional testimony should be more than just watercooler talk. According to Forbes columnist and Harvard doctorate holder Howard Yu, brands should take these incidents as a jumping off point to re-evaluate their data policies.

In an interview with Inc. Southeast Asia, Yu, professor of strategy and innovation at IMD Business School, says that the biggest asset of a brand is consumer trust so any questionable practices regarding data should be stopped. For example, while it was uncommon for brands in Southeast Asia to use opt-in for their target marketing, they may want to consider doing so now.

“That is, sending customers an explanation why and how they are chosen for a targeted message before giving them the campaign message. Transparency about how marketing is being conducted can only generate positive affiliation among end-users,” he explains.

Yu adds that such caution should extend to Facebook activities as well. He says brands should conduct internal audits, implement regular review processes, and track where the data resides if they are using external vendors to manage their brand’s Facebook marketing.

Make data protection a priority

In addition to taking these steps, brands must communicate that they are making it a priority to protect user data. For instance, a brand can inform consumers that it is reducing their stored data and putting a more restrictive practice around the use of APIs. Brands can also advise customers to change certain settings on their phone to prevent data leakages.

“Strictly speaking, such educational effort goes beyond the responsibility of a brand. But since the level of worries is becoming unprecedented, it is worthwhile for brands to step up efforts and educate consumers, which in turn reinforce the image of a trustable partner,” he says.

While Facebook is at the center of the Cambridge Analytica controversy, Yu says other social media platforms only differ in degree, not kind. They all give advertisers significant choice and latitude in how to position and target their ads.

“So rather than switching platforms in order to feel reassured, brands need to rebalance their marketing mix in its entirety. We have seen some companies cutting back social media spending because of ineffective conversion to sales, despite taking on all the data risk,” he says, emphasizing that brands must take a holistic view of their marketing spend.

Yu says that a positive model for brands in Southeast Asia to adopt may come from the financial industry. “Know your customer” (KYC), for instance, enables financial institutions to know the true identity of each individual in order to prevent nefarious activity like money laundering.

Limits of an open platform 

On an industry level, brands can set up a committee of independent auditors to trace where their data is stored, or even form a data compliance association to share best practices across the region. All of these steps go back toward what Yu feels is the biggest takeaway for founders from the Cambridge Analytica controversy: There are limits to an open platform.

While Facebook has fostered innovation by opening its platform to third-party developers, Yu believes there is substantial risk in this unbridled openness.  

“This understanding is especially critical for Southeast Asia, not only because the sheer size of Facebook’s base in the region but also in certain countries, including the Philippines, Facebook is synonymous to the Internet, as it is the only portal for certain population to get connected online,” he says.

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