A Decline In Privacy Spend: Retailers Cut Their Budgets During Pandemic

Retail privacy compliance has suffered during the pandemic, judging by "The Big Pivot: How Traditional and Digital Retailers Re-prioritized Marketing Investments in the Wake of Covid-19," a study by CommerceNext, sponsored by Exponea. 

It couldn’t come at a worse time, given that the California Privacy Protection Act (CCPA) has just gone into effect and GDPR is in full force throughout Europe.  

In June, slightly more than 30% of  brands said they plan to invest in security/privacy technology, compared with 50% in January. And fewer than 30% in the digital space planned to.

Moreover, almost 50% are investing the minimal amount to be compliant, compared with almost 40% in January, and 35% are spending a moderate sum, down slightly from six months before. 

Worse, roughly 15% are “embracing privacy,” declining  from around 25% in January. 

To put this in context, over 40% of traditional retailers say their total marketing budgets have decreased significantly, versus only 15% of digital marketers. And a mere 18% of digital brands are posting significant increases, along with roughly 12% of traditional firms.



In line with that, spending has declined on customer data platforms, alternative payments, advanced attribution and measurement and programmatic TV.

Yet around 55% plan to spend on messaging/SMS, up from 52% in January. And budgets are going up for augmented/virtual reality for online stores and visual search. 

This is happening as companies switch their focus more to retention and less on acquisition. 

Fewer than 20% expect to focus more on acquisition, down from over 30% in January. And almost 40% foresee they'll concentrate more on retention, up from 32% in January. 

But that should change as we approach the holiday season. 

Over 60% plan to spend on acquisition, a little more than the number for January. At the same, there has been a roughly 5% decline in those investing in retention/loyalty marketing for holiday—to 60%.  

Paid search appears to be the top acquisition tactic among both digital-first and traditional firms, although paid social is tied with search on the digital side. 

At the same time, there will be a cut in the anticipated spend on personalization—down to less than 35%, compared with almost 50% in January. 

The study concludes that “the overwhelming takeaway is, forget what you [think] should happen in 2020. At least for now.” 

The company polled 111 senior executives as U.S. based retail-and DTC brands, and 75 in June. In addition, it polled attendees in a series of live webinars.   

1 comment about "A Decline In Privacy Spend: Retailers Cut Their Budgets During Pandemic".
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  1. Scott Silverman from CommerceNext, July 23, 2020 at 3:04 p.m.

    My organization produced this report. I want to clarify that our study found that privacy as a marketing investment (eg being more transparent than competitors as means of differentiation) was overshadowed by other marketing strategies such as alternative payments. Nothing in our findings should be construed to suggest taht retail marketers are out of compliance with privacy laws. Please let me know if you'd like to discuss this further as I believe the gist of this column and it's headline do not accurately reflect the spirit of the data we published.

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