Impact of GDPR on Consumers and Firms

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Impact of GDPR on Consumers and Firms

Presented by Benet Boix, Netquest and Pinar Yildirim, The Wharton School as part of the Quantitative Research in 2021 event with NewMR.org. GDPR – established on May 25th 2018 – imposes a higher cost to firms in and outside of EU in collecting, storing, and utilizing consumer information.

Click here to access the slides

 

Transcript of recording with Ben Boix, Pinar Yildirim – generated automatically by HappyScribe which means it will be about 80% accurate – if you spot confusing errors, please email ray@new-mr.com. The timestamps are included to help you jump directly to a point of interest.

 

[00:00:08.090] – Ben Boix

Hello, everybody. We are ready to start this hopefully exciting webinar, and first of all, we want to say thank you to NewMR to give us this opportunity to share with you this presentation. And also thank you so much to you and everybody that is listening right now. Please, if you have any questions during the presentation, we have a space for a Q&A at the end of the webinar. Well, let’s start with the introduction.

 

[00:00:38.000] – Ben Boix

Pinar Yildirim is on my side, she’s a marketing professor at the Wharton School in Pennsylvania and myself Ben Boix that I’m responsible for netquest US and Canada. OK, let me do a brief introduction about knackwurst Nyquist was funded in Spain in 2001 and initially was born as a software company. We provided Sabeh tools to our clients, but soon we realized that this was not the business that our clients wanted the most and we started creating our own products. We started with our first panel in Spain and quickly move to other countries and we had panels in the main countries of Latin America, Europe and the United States.

 

[00:01:22.480] – Ben Boix

Four years ago, we acquired an online texting tracking software that helped us to became the leading provider of digital, behavioral and opinion data in the market sector. I know that I said the Nexus is a power company, but sincerely, I do not like this definition at all because Neckless is more than just another company. Is it true that we have our panels that provide opinion and we know exactly who is who because we have our police people fire. We have more than fifteen hundred tickets available, but we are able to do more than that.

 

[00:02:04.610] – Ben Boix

We’re able to locate where our police are at any given time thanks to our location data and what they are listening to. Do you think of the emerging technology? But today we really wanted to talk about the last point behavioral data. We’re able to know and to collect what our panelists are doing on their browsers and smartphones and tablets. But the main key here is that we are able to mix everything in order to provide a data combination to help with the best accuracy in your state.

 

[00:02:39.140] – Ben Boix

That is what we call a symphony of data. Well, let’s seem to be a leader or behavioral research is the method of collecting data about people’s online habits and behaviors. We have a committee of parties that share the navigation in exchange for points that they can redeem for gifts. This group of panelists, police, is what we call our premium panel or behavioral panel. Specifically, they install a meter on their devices on the Starshine DaVita via multiple platforms, desktop smartphones and tablets.

 

[00:03:15.990] – Ben Boix

One thing that is really important about our behavior is that these are representative of the online population in each country. OK, say that let’s start with the main topic of this study, the impact of GDP on consumers on first.

 

[00:03:33.010] – Pinar Yildirim

Thanks again to NewMR for giving us the platform to share some of our findings regarding the impacts of GDP out on consumers and firms in this research study, collaborating with NatWest, we looked at the impact of general data protection regulations that passed in EU in 2010 18 on consumer behavior and specific. What we were interested in, in the study was to understand if the extension of privacy protections that were given for consumers actually were good or bad for them. Just to remind some of you, of course, the EU’s general data protection regulation was passed on May twenty fifteen to twenty eighteen.

 

[00:04:10.540] – Pinar Yildirim

And what it did was to extend the existing privacy protections that were offered to consumers and requiring the firms, for instance, to to encrypt and anonymized consumer data to obtain consent before collecting personal data from consumers and to provide timely notifications for data breaches. Of course, this also came with some costs, such as having to appoint an internal officer and making an infrastructure investment to be able to to to anonymize it and store the data. Now, of course, from the consumer’s perspective, the implications of GDP are somewhat straightforward.

 

[00:04:47.530] – Pinar Yildirim

This is a positive move in the sense that it reduces the mental burden on the on the side of the consumer or of having to share personal data with GDP. You might feel more comfortable with it being lesser known websites carrying out transactions with less hesitancy. And you might even feel more comfortable searching for information and goods that are of private nature. But looking at it from the perspective of the firms, it’s less clear if GDP actually had positives because clearly it increases the cost of handling personal consumer data.

 

[00:05:22.090] – Pinar Yildirim

And GDP requires firms to make sure that they have proper infrastructure investments and have this on an ongoing basis to be able to collect and store and utilize personal data, which at the end makes it harder for firms to to reach out to consumers using personal data or to be able to personalize their offerings in their email, communications or advertising. So ultimately, the question is whether GDP helps firms or it helps consumers. And if for firms that failed to comply with GDP, there are steep fines.

 

[00:05:57.220] – Pinar Yildirim

In fact, some of the firms of British Airways, Twitter, Facebook, Google, they have all been already fined for one form or another GDP breach. So this is a clear obstacle in this on the side of the firms. Now, what they have done in our study was to ask if GDP actually helped consumers at the end. Given these two effects, those GDP would affect consumers online browsing behaviour and if so, in what way? And on the side of the firms, how those GDP impact firms outreach for consumers.

 

[00:06:33.010] – Pinar Yildirim

Does it add more restrictions on the Internet? And if it does, does it affect firms in the same way our big firms and small firms all affected in a similar way are or are some of them affected more than the others? That was the objective of the research study and the research methodology, putting it in a very simple term. What we are going to do is comparing users, residents of the EU to individuals who are outside of the EU before and after GDP to see if there is any change in their behaviour or how they engage with firms and websites online.

 

[00:07:08.290] – Pinar Yildirim

This is more and more statistical terms, the difference and differences approach. And here Lamby carry out the study. We try to control for any time trends, anything that is happening that is independent of GDP as well as the consumer’s patterns and behaviours of browsing the individual differences across consumers. So we will be taking care of these and looking at the impact of GDP by comparing EU and non-EU panel. Of course, a study like this wouldn’t have been possible without the collaboration from its quest.

 

[00:07:39.100] – Pinar Yildirim

The advantage of using that data here was that they have many different panels all around the world and what they have done was to use four of these panels to use data from the United States, Brazil, Spain, as well as the United Kingdom. We use the online browsing data, the behavioral data that Ben was mentioning, as well as a keyboard search data to be able to make difference. This was a very rich data set. We had over eight million records from close to 6000 panelist’s as a sample and nearly seven hundred thousand domains are in our data.

 

[00:08:13.420] – Pinar Yildirim

And our analysis results come from an analysis of this particularly rich dataset. Just to show you a few results up front, it’s a little hard to be able to observe the differences across consumers, and you just simply create bar charts of this sort here. What I’m showing you is. Point after GDP, by comparison, over the number of unique websites consumers visit, as well as the time that they spend online comparing four different countries, and you can see some differences across these countries.

 

[00:08:46.390] – Pinar Yildirim

But again, if you just look at these barcodes, it’s hard to see whether these differences are coming from additional events that are happening at the same time with GDP or if they’re any personal differences or research study. The econometric sophistication that I’m not giving in detail actually will take into account these differences and will tell us if there is a change. And in fact, what we have seen after we take into account these differences, there does seem to be an effect of GDP on the EU consumers.

 

[00:09:15.580] – Pinar Yildirim

They seem, in particular, more comfortable spending time online and visiting more domains, more websites after GDP has passed compared to their peers. And we put that in number. What we find is actually quite a large increase. It’s about a thirty seven percent increase in the total time EU residents spend online compared to their non Europeans and about 13 percent increase in a number of domains that is now on the surface. They might say that’s great. Consumers are feeling a lot more comfortable.

 

[00:09:48.760] – Pinar Yildirim

They feel the benefits of enhanced privacy regulations and now they are spending more time online. They’re a lot more engaged on the surface. This is a positive result. But at the same time, we ask the question, is it possibly because just because they are, they’re much feeling much more comfortable with possibly. Could it be because they are also facing higher frictions on the side of consumers were getting lost because firms have a harder time targeting them or giving information to them off their GDP.

 

[00:10:18.080] – Pinar Yildirim

So that could also result in higher, higher time spent online or more domain visits. Again, because you’re looking for information or products or services that you need and somehow you cannot reach them. So we decided to put that into test. In the second part of our study, we are using some machine learning tools. We created some latent topics, the topics that people might be in general searching for in UK and US in other countries. And we also try to understand when they were looking for products, the search episodes that they carry out, the type of products that they are looking at, the number of websites and domains they visit, how much time they spent and how many keywords they exert to be able to get to the same product.

 

[00:11:04.360] – Pinar Yildirim

And they made a comparison before and after GPG, again, comparing the EU. And in many accounts, let me show you, just as an example, what the information search results might look like. Then I’ll carry out this latent topic analysis, for instance, time to look at what kind of keywords might be related to what type of topics. You can see that these topics are these keywords can easily be clustered. In one case, people might be looking for log in eight or nine billion TV Direct TV channel.

 

[00:11:37.780] – Pinar Yildirim

These might be searches, for instance, regarding an AT&T or phone regarding sort of the seconds. Another example, crochet pattern dress woman. This could be a search regarding people’s interest in including in fashion items or making them. We have identified about 80 such topics over which people carry out search. And we wanted to see if people are spending more or less time on these searches of their GDP. This is for us just for fun. Of course, you can see what they’re looking for.

 

[00:12:07.960] – Pinar Yildirim

Just an example of some of the searches for, OK, looks like this. Now, as a researcher, I have less control over this, but it seems like there’s a group of people looking for Daily Mail, Hello magazine and some others who are looking for information on Brexit or the latest news now or comparison. And this is just an example of a similar analysis that they’ve carried out for for consumer research regarding products. You can see a search episode where people are looking for jewelry, pendants, necklaces, looking at a bunch of different options.

 

[00:12:41.590] – Pinar Yildirim

They can see how much time they’re spending on this and how many websites and how many different product shops and auctions there are. They are considering now. All research has shown how they compared both on general information and on product search. If EU consumers are exerting higher search effort off their GDP compared to their non peers, we found that in fact, indeed, they are carrying out a higher exerting higher efforts of search. Consumers, on average are submitting about four to five percent more search terms.

 

[00:13:16.630] – Pinar Yildirim

When they look at different alternatives, they are visiting about four percent more pages and within close to 10 percent more domain just within a single product category, just as they carry out a single search just. Even though these numbers, some of these numbers might seem small, if you put this in perspective, the number of products that people are searching for, how many different searches are carried out just within a day or within a week, that these small frictions could easily amount to days or sometimes weeks of additional search for some different product categories.

 

[00:13:55.040] – Pinar Yildirim

And then they make a comparison between small and large websites about how much additional friction they see. We see that smaller firms are particularly facing a difficulty, about five times more difficulty in reaching out to consumers and converting their search to a sale. So GDP has been particularly difficult on the smaller firms compared to the larger firms. Now, a couple of takeaways. GDP has given consumers a higher protection in terms of their privacy, but at the same time, it’s clearly created more barriers for firms to reach out to consumers when they compare the pluses and minuses of GDP.

 

[00:14:38.630] – Pinar Yildirim

We found that users had a harder time reaching out to the same information or the type of products that they try to before GDP compared to their non non EU peers, not new users. So altogether, given this given this environment, it might be very, very important for firms to enhance their marketing efforts to reach out to consumers, given the challenges that GDP creates for. This is a takeaway from our study. Thank you all for listening. If you have further questions, you could reach out to me.

 

[00:15:11.840] – Pinar Yildirim

My children at Prialt advocates and upend that edu or to bend it B, B or X ethnic quest that come now will be very happy to take your questions.