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DMA reveals potential costs of Data Protection Regulation to business
Evidence gathered by the Direct Marketing Association (DMA) has revealed the potential financial impact of the draft EU Data Protection Regulation on UK companies involved with data-driven marketing.
Published by the DMA under condition of anonymity, case studies submitted by eight companies operating in various marketing industry sectors detail how the current formulation of the Regulation would lead to cuts in profitability, increased costs and even to staff losses:
The global marketing services provider
Additional costs generated by administration from the right to be forgotten, explicit consent for data processing and the training of a data protection officer would lead to estimated extra costs of £50,000 - £75,000 per year.
The data services provider to the retail sector
Data portability and right to be forgotten could require a one-off system development at a cost of £100,000. A cost of up to £5 million for data already collected but could not be used if the Regulation is retrospective.
The membership organisation with charitable status
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.
The financial services organisation
Reformulating existing customer databases could cost anywhere between £100,000 - £500,000. The requirement for explicit consent could lead to an inability to market to existing customers thereby losing revenue of approximately £6 million.
The bureau cleaning service
The explicit consent requirement would lead to a 50% drop in business.
The list broking company
The explicit consent requirement could lead to a 50% drop in turnover and a loss of 26 jobs.
The B2B telemarketing and digital marketing company
Additional staff training would cost £7,600 per year; the cost of updating the CRM system would run into the thousands of pounds.
The global data company
Explicit requirements for consent would lead to annual losses in revenue of £1 million. Reviewing and updating legacy data to comply with the Regulation would cost £500,000. A one-off cost of £500,000 for system development to meet right to be forgotten, design by privacy and removal of subject access fees.
The case studies - along with a detailed list of industry concerns about some of the provisions of the draft EU Data Protection Regulation - form the DMA response to the Ministry of Justice’s call for evidence on the Data Protection Regulation in the build up to the British government’s negotiations with EU legislators. The DMA compiled the report based on submissions made to it by its members.
Commenting on the report, Chris Combemale, executive director of the DMA, said:
“Our members are in agreement that if the Data Protection Regulation were to be implemented in its current form, then it would cause significant financial harm to UK businesses connected to the direct marketing industry.
“Many elements of the Regulation would be unduly restrictive for businesses, without meeting the EU’s stated aim of enhancing protection of individuals’
“As the Regulation passes through the European Parliament and Council of Ministers, the DMA will be communicating with lawmakers at every stage to ensure they understand the economic consequences of creating a Regulation that does not strike the right balance between protecting the rights of individuals with the legitimate commercial interests of businesses.”
The DMA is conducting an extensive economic impact analysis report to determine full cost to UK businesses if the current draft of the Regulation were to be passed into law tomorrow. The report will be published in May.
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The DMA was formed in 1992, following the merger of various like-minded trade bodies, forming a single voice to protect the direct marketing industry from legislative threats and promote its development.