Importance of Personal Data: How It Is Used Nowadays

Importance of Personal Data: How It Is Used Nowadays

In today's digital age, personal data has become more than just a collection of ones and zeros- it's a currency that fuels our interconnected world. 

From tailored advertisements to customized recommendations, our personal data shapes the online experiences we encounter daily. 

Understanding the importance of personal data isn't just about safeguarding privacy; it's about recognizing its power to revolutionize industries, drive innovation, and shape the way we interact with technology. 

In this era of data-driven decision-making, acknowledging the significance of personal data is crucial for navigating the complexities of our digital landscape and ensuring a future where privacy and progress coexist harmoniously.

1. What is personal data?

In the vast digital landscape we traverse daily, our every click, tap, and scroll leaves behind a digital trail - a mosaic of information that paints a vivid picture of who we are, what we like, and how we behave. 

But what exactly constitutes personal data? 

It encompasses a broad spectrum of information, ranging from basic identifiers like: 

  • name and address to the more intricate details of our online interactions, 

such as: 

  • browsing history, 
  • social media activity, and even 
  • location data. 

It's the sum total of our digital footprint - the breadcrumbs we leave behind as we navigate the virtual realm.

How brands use your data and behavioral habits

Brands have become adept at mining this treasure trove of information to gain a deeper understanding of their target audience (TA) and deliver tailored experiences that resonate on a personal level

Take, for example, the retail giant Amazon. Thanks to vast troves of user data, Amazon can predict consumer preferences with uncanny accuracy, offering personalized product recommendations and targeted promotions that entice customers to make a purchase.

Similarly, streaming services like Netflix leverage personal data to curate custom playlists and recommendations tailored to individual tastes. By analyzing viewing habits, genre preferences, and even viewing duration, Netflix can anticipate what users want to watch next, keeping them engaged and subscribed for the long haul.

That means you don’t even need to fill in your data like name, age, etc. Brands can spy on and use even your behavioral habits! 

But it's not just consumer-facing brands that are tapping into the power of personal data. B2B companies are also leveraging data analytics to gain insights into market trends, customer preferences, and competitor strategies. 

By analyzing customer data, companies can identify patterns and trends that can inform strategic decision-making and drive business growth.

That is why the proliferation of personal data has also raised concerns about privacy and data security. Recent scandals involving tech giants like Facebook and Google have underscored the need for greater transparency and accountability in the handling of personal data. 

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As consumers become increasingly aware of the value of their data, they are demanding greater control over how it is collected, used, and shared by brands and businesses.

So, the cases of data abuse or its illegal use become more and more prominent. Let’s talk about this burning question in the next section.

2. Cases of illegal personal data use 

Without a doubt, the digital age has brought unprecedented convenience and connectivity. nevertheless, it has also ushered in a new era of data privacy concerns and breaches. 

While businesses often use personal data to enhance user experiences and drive targeted advertising, there have been instances where this data has been exploited illegally, often with far-reaching consequences for consumers.

Examples of huge brands like Netflix, Meta, and Google selling user data to third parties

Meta & Netflix

One of the most high-profile cases of illegal personal data use involves Meta, formerly known as Facebook. 

Recent court documents (2023) reveal startling claims that Meta, purportedly granted Netflix access to read direct messages of Facebook users. The allegations suggest a concerning breach of user privacy, potentially impacting millions of individuals globally.

According to the documents, Meta supposably provided Netflix with special access to user data, including private messages exchanged between users on the social media platform. This arrangement reportedly allowed Netflix to gather insights into user preferences and behavior for targeted content recommendations and marketing purposes.

The revelation has sparked outrage among privacy advocates and users alike, raising serious questions about the extent of data sharing between tech giants and the implications for user privacy. If proven true, such actions could violate numerous privacy regulations and erode trust in both Meta and Netflix.

Privacy concerns have long surrounded tech companies like Meta, which have faced scrutiny over their data handling practices and the protection of user information. This latest development underscores the ongoing challenges in regulating the collection and use of personal data by tech firms.

Both Meta and Netflix have yet to officially comment on the allegations. However, the potential ramifications of such data-sharing agreements extend beyond legal consequences to include broader implications for user trust and the future of online privacy.

As the case unfolds, it highlights the importance of robust privacy regulations and increased transparency regarding data practices to safeguard user rights in an increasingly digital world.

Google

Another notable example of illegal personal data use involves Google, the tech giant behind the world's most popular search engine. 

In 2019, Google was fined €50 million by the French data protection authority for violations of the General Data Protection Regulation (GDPR). The fine was levied in response to Google's alleged failure to obtain valid consent from users for personalized advertising, highlighting the importance of regulatory compliance in the handling of personal data.

These cases serve as stark reminders of the risks associated with the unchecked exploitation of personal data by businesses and the urgent need for stronger data protection laws and regulations. 

And these cases are only the tip of the iceberg. The whole market of targeted advertisements is based on your personal data.

So, that’s not surprising that the global data brokerage market is predicted to reach $462.4 billion by 2031. Brands ARE WILLING TO BUY USER DATA to ensure better targeting and sell you more.

It’s time to see how companies actually use your data to set targeting and how much they are ready to pay (or are already paying for your data).

3. How companies use personal data for targeted ads and sell you more

Companies employ personal data for targeted ads to enhance the effectiveness of their marketing efforts and increase sales. 

Through data-driven strategies, businesses can tailor advertisements to specific demographics, interests, and behaviors, thereby maximizing their impact on potential customers. 

Here's how companies leverage personal data for targeted advertising:

  • User Profiling: Companies collect data from various sources, including online activities, social media interactions, and purchase histories, to create detailed profiles of individual consumers. 
  • Behavioral Targeting: Behavioral targeting involves analyzing user behavior, such as browsing history and engagement patterns, to predict future actions and preferences. US programmatic digital display ad spend will total $157.35 billion in 2024, which often relies on behavioral targeting techniques. 
  • Retargeting Campaigns: Retargeting involves serving ads to users who have previously interacted with a brand's website or mobile app. According to a study by AdRoll, retargeted ads are 76% more likely to be clicked on than regular display ads.
  • Lookalike Audiences: Companies can also use personal data to identify "lookalike" audiences - groups of users who share similar characteristics to their existing customer base. Advertisers using lookalike audiences typically see a 3-10x increase in conversion rates compared to traditional targeting methods.

How much companies spend on buying user data

User data, targeting, and data purchase go now hand in hand. The main directions where companies put the main effort and spending are:

  • Global Data Broker Revenue: The global revenue generated by the data broker industry provides a glimpse into the scale of investments in user data acquisition. 

In 2023 the total data broker revenue grew at 4.5% from 2024 to 2030, reaching nearly $382.16 billion. This figure reflects the significant demand for consumer data among businesses seeking to enhance their marketing efforts and gain insights into consumer behavior.

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  • Digital Advertising Spending: A substantial portion of digital advertising budgets is allocated to data-driven targeting initiatives that rely on user data. In the United States, the digital advertising industry demonstrated $225 billion in ad revenue (2023), according to the Interactive Advertising Bureau (IAB)

This expenditure encompasses various digital channels, including social media, display ads, search engine marketing, and video advertising, all of which leverage user data to optimize targeting and personalization efforts.

  • Programmatic Advertising Expenditure: Programmatic advertising, which automates the buying and selling of digital ad inventory based on real-time bidding and targeting parameters, heavily relies on user data. In the United States, programmatic advertising accounted for a significant portion of digital display ad spending. 

IAB reported that programmatic advertising revenue has increased by $4.8 billion since 2022, with revenues now totaling $114.2 billion in 2023.

  • Data-Driven Marketing Initiatives: Companies invest substantial resources in data-driven marketing initiatives aimed at maximizing the effectiveness of their advertising campaigns. 

According to a survey by Invoca, 40% of brands plan to increase their data-driven marketing budgets. This includes expenditures on data acquisition, analytics tools, and ad tech platforms designed to enhance targeting precision and campaign performance.

Also, don’t forget that GenAI is revolutionizing the advertising industry by optimizing various elements of advertising, including insight-driven idea generation, personalized content creation, and real-time optimization. 

Conclusion

As you can see, companies spend billions of dollars to buy, track, and get access to your personal data.

This market continues to grow, and so does its revenue. That only confirms that personal data is highly valuable and keeps bringing companies and brands trillions of income.

Users, in turn, usually receive no profit. Moreover, their data is being used and shared in some unethical and illegal forms.

But this can change if you understand the real value and importance of personal data. Hopefully, these statistics and examples helped you to understand this matter better.

I am here to answer any questions regarding data importance and usage. Moreover, my team at BLCKMGC is cooking a great app to help you protect your data and ensure others use it ethically.


I'm guilty of not giving much thought to data privacy before, but this seems like a good starting point!

Sophie Bekkering

Love, Sex & Relationship Coach at Mastering Intimacy. Specialist: Integrative Sexuality, Relationships and Tantra. MA Psychology.

7mo

Kudos for highlighting such an undervalued subject matter.

Bryan L.

Helping leaders attract opportunity | Sharing thoughts about purpose, cultural influence, and IRL experiences | Trusted by leaders @ Google, YouTube and more | Join the Green Room 👇🏾

7mo

I've always wondered about how much of my personal information companies have. Looking forward to reading more about it.

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