News that the Information Commissioner Richard Thomas is considering plans to forbid the sale of an edited version of the Electoral Roll (ER) shocked the direct marketing industry in July.
The recommendation came out of the Data Sharing Review - undertaken for the Government by Thomas and the director of the Wellcome Trust Dr Mark Walport in reaction to a raft of high-profile Data Protection Act breaches.
The report recommends the removal of "the provision allowing the sale of the edited electoral register", adding "the edited version would therefore no longer serve any purpose and so should be abolished". Under these plans, however, the full register would still be available for credit reference agencies and political parties.
A huge concern
While this is not the first time such action has been proposed - this happened in 2000 when opt-out was granted instead - the threat is serious enough to have become the data sector's key conversation piece. Brokers, in particular, have expressed their dismay. "It's a huge concern," said Lynn Stevens, managing director of Lloyd James Group. "We don't rent ER data per se, but the lifestyle firms we buy from do. And we use ER matching for cleaning and underpinning a lot of models we might use."
Others, such as lifestyle data provider Acxiom Europe, are more sanguine. "You need to be prepared for something like this to happen," says Dave Allen, Acxiom Europe's group leader says. "The growing sense of consumer privacy and advocacy is a risk to our business and we're always planning scenarios around that."
Now that the news of Thomas' proposal has sunk in, discussions are focused on what losing the use of the ER would actually mean.
Realists agree that the ER is not the data set it once was. In the 2008 Electoral Roll, the percentage of UK consumers opting out of the edited version rose to 40 per cent - the loss of some 18.3 million people. Opt-out levels also vary greatly from one local authority to another - the highest being Ealing at 77 per cent - and also among certain demographics.
"Opt-out levels in certain areas of London, for example, are very high, so there is a geographical skew as well as a demographic one," says Nigel Magson, managing director at Tangible Data. "The ER has also never been great for certain segments of the population, such as immigrants and students, who classically aren't into registering."
Another weakness of the ER is that data takes some months to become available to marketers following its collection by each local council, so it lacks recency compared with data sources like transactional data.
Flaws
These flaws lead some to believe the ER is no longer as useful a data set as it used to be, certainly not as a raw prospecting file. "If you're basing decisions on the ER, you're not in a great place right now and most people are starting to realise this and are using other data sets to plug the gaps," says Chris Morris, managing director at transactional data specialist Transactis.
That said, the edited ER is still a valuable tool in the direct marketer's arsenal. Its biggest use is as a validation tool - organisations run their data against it to check the names and addresses they have are correct. Take this tool away, and many argue direct mail would become less targeted. And when the Government has placed strict targets on the DM industry to reduce waste, its latest plan seems contradictory to say the least.
"If marketers are less able to verify data, it won't lead to a better consumer experience," says Daniel Cross, strategy director at Lateral Group. "Taking it away would almost be punishing the people that are doing it right."
The ER also lies at the heart of some of the biggest data products around. Experian and EuroDirect use the ER in their profiling products including Experian's Canvasse, and EuroDirect's Cameo. "This is where we would see an impact - in the likes of Experian creating new products and models," says Suzanne Lewis, director of list broking at HLB.
A number of other big data players also rely heavily on ER data in their services. Many other companies use it to clean their data and for modelling purposes.
So how would they solve the problem of a life without the ER? The big data owners and providers have not been sitting on their laurels: the decline of the ER over the past few years has been enough of a concern for these players to start building on other sources of data. Acxiom's Dave Allen says the company has been making plans for the event of a ban on use of the ER. "Our clients' job is to acquire customers and they might not have the same tools as before. It's incumbent on companies such as Acxiom to find a solution that."
EuroDirect's database holds some 22 million non-ER sourced records, which combined with the edited ER, gives the organisation a database of 40 million - roughly equal to that of the unedited version of the ER, which holds about 45 million records. In April of this year, it announced its entry into the lifestyle data collection and real-time lead generation market.
According to managing director John Dobson, the plans had already been set in motion before the ICO's proposal, but were the ER lost, EuroDirect would accelerate these plans, and step up some of its other activity. "We do a lot of targeted door-to-door canvassing work for utilities and we would do a lot more of that. We'd also focus on managing and hosting more of our customers' databases - data that isn't affected," says Dobson.
Acxiom says its database has about 90 per cent coverage of the UK and much of this data is its own, according to Acxiom managing director Nick Martin. He says the firm will be increasing its data capture. "We'd obviously look to bring in other types of data, like event data," he says. "We have arranged contingencies, some are obvious - such as in how to undertake gap filling and do validation."
Other plans are likely to include partnerships with different data owners, and this is a likely and practical option for those players heavily reliant on ER data. "The big players would have to come to companies like us - they would have no choice," DLG group communications director Richard Webster says. "We would see a lot more partnerships and organisations that hold a lot of data that would benefit."
It means we can expect to see some winners should the ER be withdrawn from marketing use.
Client-side, while for some brands the ER remains the core data file on which they build databases combined with other data sources, a number have been implementing plans to plug the growing gaps in its coverage. These include building their own prospect and customer databases, data pooling, and using alternative sources including transactional data.
"Clients are shifting more to understanding the importance of collecting data for themselves, and in the current climate, we're seeing a shift towards retention strategies," says Ian Hitt, managing director of Abacus, a provider of transactional data.
Where most direct marketers would miss the ER is as a verification tool, and for this reason alone, its loss would have a grave impact on the DM industry. This is the argument the Direct Marketing Association - as surprised as any by the news the ICO is considering a ban of the ER for marketing purposes - is expected to put forward in its lobbying of Richard Thomas.
"Restricting direct marketers' use of data makes the industry less able to be targeted and relevant with communications," says Marc Michaels, the director of direct and relationship marketing at the COI. "If the industry has access to data, it is more accurate - the more restrictions there are, the less accurate data will become."
And that is something no good direct marketer wants to see.
AND THE WINNERS ARE ...
The withdrawal of the Electoral Roll as a source of mailable data would not be as catastrophic as might first appear - indeed we could expect to see some winners.
Big data proprietors that do not use the ER could benefit from forging partnerships with other data vendors and suppliers that do. Companies such as Experian, Acxiom, DLG and IPT - large data owners that collect their data via surveys conducted through on- and offline channels - would find their data in demand by other players desperate to plug the gaps left by the loss of the ER.
Brokers could see a demand for their skills too. "There would be a move back to using brokers for building bespoke solutions for campaigns," says Chris Morris, managing director at Transactis.
As transactional data vendors, Transactis and its competitor Abacus could also see an increase in demand for their data as brands seek alternative data sources.
Other potential winners would be permission digital data players, such as IPT, as losing the ER could force more spend into this area, especially if data cleaning costs started to rise.
Brands that have already built their own databases could find themselves winners too - should the ER go, they would be ahead of any competitors yet to do this, with the ability to market to a warm and responsive data file, while others scrabble around looking for new data sources.
POWER POINTS
- The ER is not the data set it once was, with many consumers opting out;
- The decline of the Register has seen companies looking to other data sources.
CLIENT QUIZ: Would an ER ban affect your marketing?
- George Ruston, Executive director, Hope UK
"We have never used the ER for marketing or cold mailings. As a medium-size national charity with limited funds, there are better ways to use our money. So any restriction on the use of the ER for marketing purposes would not affect Hope UK.
"Marketing for us means contacting people through our voluntary drug educators as they provide drug awareness sessions and work at exhibitions; encouraging personal recommendations; persuading other firms to carry details of our work in their mailings; and being proactive to get free publicity with news items sent to media outlets."
- Marc Michaels, Director of direct and relationship marketing, COI
"We use companies that have ER data as part of their base somewhere along the line, so we indirectly use it.
"Occasionally, the COI uses it directly, so it would affect us from the point of view that it could potentially make us a little less accurate, and we don't like that.
"We prefer to have the right tools and this is one of them. If we lose it, the good boys who make use of it to audit their data would become less able to do so, and the increased cost of cleaning data would, ultimately, lead to more inaccurate data."
- Ian Cracknell, Marketing director, UIA Insurance
"We're in a fairly unique position at UIA Insurance in that most of our data comes from the affinity groups we service. The ER isn't really used as a source of data by financial services, regardless of the level of activity they do. Forty per cent of the voting population has opted out of the ER and it lacks the relationship links that make data enticing for people wanting to target certain groups.
"The issue for the companies using it to verify data, would be to find other routes. But it's not true to say it's the only tool to rely on. There will be other data sources to replace it."