The DMA has blasted plans to beef up existing laws on the use of third-party data, insisting that changing the rules so that personal information can only be shared with named companies will not only stifle growth, and cost the industry millions, but trigger mass redundancies across the sector.
The warning comes in the industry body’s response to the latest GDPR guidance to emerge from the Information Commissioner’s Office. It calls for a major rethink, claiming that “an over strict interpretation of the GDPR will have a negative impact on consumers, have economic consequences for the marketing industry and impact the UK economy more broadly”.
The DMA argues that the requirement to specifically name third-party organisations rather than the sectors in which they operate is simply unworkable.
It also believes that the current proposals – published in March – will result in an increase in untargeted and impersonal marketing, ultimately resulting in less relevance to consumers.
The document states: “The requirement to specifically name third parties in receipt of personal data will hurt all businesses and their ability to grow. It will, however, disproportionately restrict the ability of small to medium size businesses to bring new products or services to market and grow successfully.
“Unlike larger organisations that already have extensive amounts of data on existing customers, SMEs often need to source this data from third parties to introduce their business to prospective customers. With this in mind, the DMA believes the guidance as it stands is anti-competitive; it will only benefit large organisations with substantial lists of existing customers, while making it harder for SMEs to communicate with potential customers and stifle growth in this integral part of the UK economy.
“Organisations will be forced to rely on mass marketing techniques so consumers will receive marketing communications regardless of whether they’re interested in a sector, product or service. This could increase complaints as consumers receive more untargeted marketing and further benefit larger organisations that are able to afford a higher marketing spend than their SME competitors.”
The DMA goes on to cite a Deloitte study which predicts UK businesses using direct marketing will lose €15.1bn (£13bn) in sales, with the implementation of GDPR. “The additional restriction on third party data could have a further impact, with a knock-on effect for consumers being price increases, coming about as businesses seek to recover the increase in marketing costs,” it warns.
It adds: “One DMA member, a marketing services provider, estimates that up to 65% of the company will need to be made redundant under the proposed guidance. Similar marketing services providers could find themselves in the same situation. Of course, this has a knock-on effect down the supply chain where reduced activity will also mean job losses for marketing agencies, mailing houses and with the end clients.”
DMA managing director Rachel Aldighieri said: “The DMA agrees with the ICO that the GDPR sets a high standard for consent and industry will have to adapt to those changes. However, we believe that some aspects of the ICO’s guidance will have a significant effect on both the customer experience and the industry at large.
“The UK can ill-afford to sacrifice jobs during a period of economic uncertainty. It is important to keep in mind the economic contribution marketing and advertising makes to the UK economy. Annual UK exports of advertising services are worth £4.1bn. In 2013 businesses spent £16bn on advertising and marketing, which generated £100bn in contributions to the UK economy.”
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