Are MarTech and EU Privacy law on a Collision course?

With thanks to Scott Brinker
With thanks to Scott Brinker

The MarTech boom …

The last five years have seen the number of software solutions in the MarTech space increase significantly from some 150 in 2011 to about 3,500 in 2016.

In case you don’t know the term, MarTech refers to “a blending of marketing and technology, especially where it applies to major initiatives, efforts and tools that harness technology to achieve marketing goals and objectives.”

A major focus for Marketers attention is ‘understanding customer needs’, in order to meet those needs profitably. No surprise then, that a lot of MarTech software focusses on monitoring customer behaviour; or storing, analysing, and using customer data. In both cases, the idea is to gain actionable insights to improve customer satisfaction and business performance.

Scott Brinker – long-time observer of this solutions space and editor of the website chiefmartec.com – reports that: “The top 5 largest MarTech categories, by number of solutions included, are:

  1. Sales Automation, Enablement & Intelligence (220)
  2. Social Media Marketing & Monitoring (186)
  3. Display & Programmatic Advertising (180)
  4. Marketing Automation & Campaign/Lead Management (161)
  5. Content Marketing (160)

[ Source:  http://chiefmartec.com/2016/03/marketing-technology-landscape-supergraphic-2016/  ]

 

… and the new EU Privacy law …

The EU General Data Privacy Regulation (known as GDPR) became law on 25th May 2016.

This law will have significant impacts for CMOs and Product Management VPs of MarTech firms that sell to the EU.

Key points to note are:

  1. The definition of Personally Identifiable Information (PII) is so wide, that the safest policy is to treat all EU Customer Data as PII.
  2. The scope of GDPR is global. It protects the PII of EU citizens, no matter where in the world the processing occurs. So cloud-based and SaaS solutions in particular will be affected.
  3. The changes necessary to achieve GDPR Compliance are far-reaching and permanent; they will raise strategic business decisions as well as a raft of minor operational choices.

And it all starts – well, now. A two-year transition period allows organisations time to introduce compliant business processes i.e. until May 2018. So the countdown has already begun.

 

… are on a collision course.

My prediction is that international vendors who sell MarTech solutions into the EU will – by action or inaction – have self-selected into one of four broad categories by Summer 2018:

  1. Solutions do not comply with GDPR but are still offered in the EU:
    these vendors face huge loss of confidence from buyers and shareholders;
    also, administrative fines up to 4% of global revenues may be levied by EU authorities;
    CMOs and Product Management VPs in this situation may be fired.
  2. Voluntary exit from the EU market
    Some vendors will compare potential EU revenues against costs and effort of Compliance and decide it just isn’t worth the hassle; there are other markets that may be easier to sell into.
  3. GDPR Compliant
    These vendors will have adapted their own internal processes for personalised one-to-one marketing, plus tracking & monitoring; they will have also documented data flows and conducted privacy risk assessments. However, they will face stiff competition from …
  4. Vendors offering “Privacy by Design”
    These vendors understand not only how GDPR affects their EU customers, but will have also incorporated these insights into product development plans and go-to-market strategies. By directly addressing and solving GDPR issues for their customers they will gain a significant long-term Competitive Advantage.

 

Where will your MarTech solution be in 2018?

Leave a Reply