The list broking market will be left decimated if the EU data protection reforms create an opt-in only regime, according to a new report which will send shockwaves through an already under pressure industry.
The issue of consent for marketing data has been one of the major concerns for UK direct marketers ever since the EU General Data Protection Regulation was first mooted, nearly three years ago. Any move to bring in an opt-in only regime would render obsolete millions of database marketing records.
The Information Commissioner’s Office has already told businesses that opt-out data could soon be illegal.
But one data company chief recently told DecisionMarketing that his firm would be put out of business within weeks if the law was passed in its current form. Former DMA chair Rosemary Smith shut up shop on her list broking business, RSA, last year as the market is already being squeezed.
Now a new MediaLab report, “The European Union and data protection: the biggest challenge for fundraising in a generation”, claims charities will have the most to lose from the new laws as so many are still reliant on third party lists.
The report states: “Fundraising depends on big numbers and economies of scale; by generating enough new donors, the cost of finding and keeping each one gets small enough to make donor recruitment profitable.
“Regular giving recruitment, lotteries and mass participation events are classic examples. The current direct mail opt-out law is one of the reasons why the amount of data available for mail is so high. But the third-party list rental market, still a huge source of new donors for dozens of charities, could face a loss of up to 50% in numbers.
“Unless consumers have opted in for their name and address to be shared on a third-party list, then they won’t be available for any charity to approach.”
In the report, charity specialist Stephen Pidgeon – a director of Medialab – warned: “If the EU introduces compulsory ‘opt-ins’ for direct mail, then the cold-mailing lists that still drive minor donor fundraising will disappear and, with them, millions of pounds.”
The report backs evidence already submitted by the DMA as part of the UK’s response to the original EU proposals, put forward by then EU justice commissioner Viviane Reding.
It said: “The requirement for explicit consent would make fundraising via marketing impossible. An extra £90,000 would have to be found to cover increased telemarketing staff numbers.”
Meanwhile, a case study submitted by one list broking company said opt-in could lead to a 50% drop in turnover and a loss of 26 jobs.
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