The business model that underpins the internet is facing crunch time. The digital economy has grown through free services, funded by ads that target consumers based on the personal data they provide.
But following a slew of scandals and privacy legislation, the personal data that powers this economy – and other parts of the online space – has been dragged under the spotlight.
The theory says this will cause a reckoning. This online economy, so we’re told, will rebalance in favor of consumers who realize the monetary value of their data, and become beneficiaries of a new data economy.
Interrogating this idea forms the backbone of our latest report, Decoding the Data Economy, which uses insights from a bespoke study we conducted in the U.S. and UK in August 2019.
We took the opportunity to supplement this with a session we ran at Mindshare’s Huddle event in November of 2019.
We used our time to run through talking points about the data economy in a focus group setting, comprised of around 20 marketing professionals.
Here’s what we learned.
1. Data monetization isn’t front of mind just yet.
If a consumer-led data economy is to ever take off, more work needs to be done in bringing consumers on-side and addressing their concerns.
Our global research signals growing privacy concerns and a general sense of unease with data collection among internet users. This weariness is primarily driven by concerns around consumers’ general online footprint, rather than the likelihood of companies mishandling data.
In fact, since 2013, the percentage of consumers concerned about the internet eroding their personal privacy has risen by five points.
Meanwhile, the percentage of those that worry about how their data is being used by companies is still high, but somewhat stable at around 63%.
These findings suggest two broader issues:
- Even with GDPR in place, and other countries following suit with their own regulations, consumer confidence is still lacking and privacy concerns are still very much front of mind.
- Monetization of personal data might not reach the scale many envisage until fears of exposure are fully addressed, and transparency, simplicity, and education around data become the building blocks of businesses and governments alike.
We put these two hypotheses to the test by asking consumers in the U.S. and UK how their relationship with online data sharing has changed compared to two years ago.
3 in 10 U.S. and UK internet users said they’re now aware that their data has an actual monetary value.
So, while there had been some uptick in this area, it’s safe to say consumers haven’t become as knowledgeable about the economics behind their personal data as much as they have felt a growing sense of unease.
Similarly, we asked our focus group at the Huddle event to think about where industry/consumers/brands will be in 10 years’ time and describe to us a typical transaction they think will take place.
Participants kept bringing the conversation back to some of the negative aspects of data exchange like the possibility of social control, whereby consumers would share their data in exchange for a favorable score.
This demonstrates that people might not yet be ready to embrace the potential rewards of attaching a price tag on their personal data; or at least not until more pressing issues around transparency and simplicity are addressed.
2. Biometrics – a step too far.
A recurring theme throughout our Mindshare session was the distinct unease with biometric personal data, whether through fingerprints, facial recognition, or even voice.
This kind of data has, of course, been in the news a lot in recent months, typically in a very negative light. And the implications of it were raised in our focus group too.
Participants expressed concerns about using voice data to track one’s emotions, and therefore mental health. They went as far as to suggest that chips/implants could play a role in biometric identification in the future, with one participant saying: “Pets are microchipped, after all”.
Most felt this would be a step too far, though others thought it would be a logical next step for data collection.
It might sound far-fetched, but it’s already happening in Sweden, with some citizens implanted with chips to help track their health, grant entry to buildings, and pay for goods.
In our August survey, we presented consumers with a thought experiment whereby they could choose what personal information they would disclose for a 25% discount on a t-shirt.
We didn’t ask about biometric identifiers in this, though we did find the type of data consumers would be least willing to share in return for a discounted product was health data or medical records.
This kind of data is very closely linked to the physical body, much more than name, address, location, or browsing habits, all of which consumers were more comfortable disclosing for a discount.
The word “data” covers many parts of a consumer’s life, and it doesn’t always feel sufficient to cover this kind of biometric information. This type of data fits in with the broader fear of exposure, with consumers reluctant to be tagged according to their bodily features.
3. Personalization has to be balanced with discoverability.
By far the biggest positive identified in our session was personalization, and it’s something supported by our global research.
Since 2015, personalization has become more and more of a priority for consumers. The logic is understandable; collecting a user’s data means providing them with more tailored services, which is likely to make an impact with them.
But personalization isn’t everything.
Consumers also want variety and the chance to escape their filter bubbles. This was flagged as a downside to personalization in our focus group, and it can be contextualized in our data as well.
The most desired role for brands that consumers have overall is for them to improve their knowledge and skills, which goes against the grain of bespoke personalization somewhat.
Alongside this, consumers have expressed more of an interest in pursuing “a life of challenge, novelty, and change” over the last few years in our ongoing global research.
Concerns about data privacy can sometimes be sensationalized, but consumers also feel some pragmatic issues about it. Personalization, and its limits, is one.
4. Businesses must lead the way.
Industry innovation is outpacing public understanding, and it’s created unease among consumers.
Data empowerment, and data monetization, is very much in its infancy and big changes in consumer sentiment are needed.
In addition, more education for consumers is required before it can become reality. During our session at Huddle, we asked participants to jot down words or phrases as positives and negatives of data collection.
Our group participants almost universally thought personalization was the best outcome of giving personal data
Virtually everyone identified personalization, convenience, and relevance as the “best” outcomes of disclosing personal data.
The negatives were felt more broadly, but could be summarised as a mix of fear over breaches, and a feeling of creepiness.
It’s worth stressing just how much personal data is seen as just that – personal.
This is in spite of some of the business realities around data. Collected data might not be entirely accurate or correctly interpreted. Using web tracker tools, for example, has its shortcomings, which if not accounted for might result in misinterpretation.
So, the extent to which our personal data online is actually reliable remains uncertain. The bottom line is businesses need to be at the forefront of change.
Legislation can only go so far in creating a mutual benefit in the data economy.
Even after GDPR, the online experience hasn’t provided an easy understanding of how and why consumer data generates revenue and improves services.