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Explained: Tech giants’ privacy policies push firms to adopt new ways to collect consumer data

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Till now, advertisers depended on data from business partners like tech giants and ad-technology firms to know their target audience and focus their ads. However, with the US government focusing on protecting consumers from privacy breaches, fraud and anticompetitive behaviour, tech giants are taking measures to check flow of user data.

Explained: Tech giants’ privacy policies push firms to adopt new ways to collect consumer data
With tech giants like Apple and Google rolling out new data protection policies, companies in every sector are scrambling to get information about their consumers and build detailed profiles.
Till now, advertisers depended on data from business partners like tech giants and ad-technology firms to know their target audience and focus their ads. However, with the US government focusing on protecting consumers from privacy breaches, frauds and anticompetitive behaviour, tech giants are taking measures to check flow of user data. As a result, companies relying on traditional tactics are now deploying new ways of gathering information about their customers, The Wall Street Journal reported.
What are the big techs doing?
Earlier this year, Apple Inc introduced changes on its devices that restricted how users are tracked on mobile devices. Apple’s new policy requires permission from users for being tracked. Many users have already opted out of tracking by apps such as Facebook and Snapchat.
Google is also planning to implement a similar policy for its Chrome browser.
Meanwhile, US consumer watchdog Consumer Financial Protection Bureau has sought information from tech giants Amazon, Apple, Facebook, Google, PayPal and Square on their methods of gathering and using consumer payment data.
How is it hurting advertisers?
Apple’s policy is hurting e-commerce players and tech companies like Facebook and Snap as they are getting less data on consumers’ habits and interests. They used the information to target users.
Now, not only are advertisers finding it difficult to reach potential customers, but are also paying higher prices for ads.
Digital agency MuteSix told The Wall Street Journal that its clients have witnessed a 25 percent rise in ad prices on Facebook on an average.
What are companies doing to get data?
Brands are persuading customers to share information through an array of tactics. These include loyalty programs, newsletters, sweepstakes, polls, quizzes and QR codes.
Non-profit organisation Avocados From Mexico is conducting a contest in which consumers can win a truck as a prize. To enter the contest, consumers have to scan QR codes on in-store displays and enter their personal details like name, email, birthday and phone number.
Another company, Miller High Life, organised an online contest in which winners were given a branded patio set. The contest got Miller High Life personal details of almost 40,000 participants.
Molson Coors Beverage Co, Miller’s parent company, has undertaken over 300 such efforts, including sweepstakes and contests at bars, across the country to get information from their customers.
Companies have to shell out huge sums to build detailed profiles of customers as it requires sophisticated software and data science expertise. “We can do a little bit at a time, but it will take years," Ivonne Kinser, vice president of Avocados From Mexico, told The Wall Street Journal.
Building detailed profiles will be more difficult for consumer packaged goods companies as they do not sell directly to their customers.
For now, companies will continue to market their brands on platforms like Facebook, Google and Amazon. However, building their own database will reduce the cost of their online ad campaigns and make it more effective.
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