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Could direct marketing be dead?

Louisa Osmond, Teaching Fellow

Faculty Blog

On 25 May 2018 a new EU directive concentrating on consumer data comes into force. The General Data Protection Regulation (GDPR) has the potential to severely disrupt direct marketing throughout the EU. This includes  the UK, because data specialists agree that, if the UK has left the EU by then, the Information Commissioner (ICO) will enforce the directive or something very similar.

Under the GDPR all organisations based in the EU will be required to comply with its legislative framework. This includes more rigorous requirements for obtaining consent for the collection of personal data. Specifically, marketers will need opted-in permission from consumers to use their data, as opposed to the current, more favourable opt-out model. This means that consumers will have to explicitly give their consent to receive marketing communications from companies, irrespective of whether they are a customer of that company.

Furthermore, organisations won’t be allowed to pre-tick opt-in boxes followed by instruction to consumers to untick if they do not wish to receive marketing collateral. As a result, in two years customer acquisition through direct marketing (both online and offline) will become more challenging and expensive owing to reduced volumes and the amount of data processing that compliance will require.

Direct marketing has long been regarded as one of the most cost-efficient and effective forms of marketing communications as a result of its personal nature. But this personal nature brings with it ethical considerations that can blight its reputation – such as the recent fundraising furore in the UK which saw the Daily Mail uncover nefarious fundraising practices from some of the nation’s leading charities that were found to unfairly target vulnerable and elderly consumers.

The directive also requires firms to delete personal information if an individual requests it. In addition all data breaches, such as the high-profile Talk Talk hack last year, must be reported within 72 hours of learning of the breach.

These changes must all be adhered to the day the directive comes into force, and as a result marketers across the EU are now working to ensure that their data practices will be compliant – or they face massive sanctions. Data protection authorities will have the power to impose fines of up to 4 per cent of global turnover, which could dwarf the fines that have been issued over the past decade.

While many might think that significantly restricting the volume of direct marketing campaigns might spell the end of the channel, it is in fact likely that these changes will actually strengthen the medium. Relationships between organisations and the people within their marketing databases will be much stronger because only genuinely engaged consumers will be marketed to, not only reducing marketing wastage and improving the ROI of campaigns but also improving the reputation of an often maligned form of marketing.