Wake-Up Call: Mobile App Consumers Assessing Value of Data vs Privacy

The surprise is not so much that some consumers value their privacy. It is that research suggests many consumers are aware of the trade-offs involved in providing personal data in return for mobile access and are attempting to figure out whether what they are getting in return is really worth it.

That understandably worries online merchants and app designers more than a merely emotional, philosophical or political response.

Their fear is justified because it implies that customers are thinking about financial value more than moral values. The former are likely to be more expensive for providers than the latter. Given the growing cost of launching successful apps, anything that cuts into current margins and potentially reduces future ones is a legitimate cause for worry. The survey results, as explained in the article below, suggest that consumers are open to financial alternatives probably not created or managed by the developers or providers. Which means someone else gets a cut of the pie, reducing what's available to everyone else already involved.

This also means that there may be a useful market for evaluating and facilitating the market in data for dross. And that someone is probably already figuring out how to make some money at the apps developers, phone providers and telcos' expense. JL

Andrew Bud reports in Venture Beat:

User data has fueled the growth of apps in the mobile economy.
Instead of buying digital goods, we are increasingly exchanging them for our personal information, such as our names, email addresses, browsing preferences, location and much more.  There is absolutely nothing wrong with this model but the long term viability of it depends on all parties coming together to ensure transparency across the value-exchange.

That’s why MEF has recently launched its Global Privacy Report to investigate levels of awareness as to what user data is captured and whether or not this affects consumer behavior.
The study was far reaching with over 9,500 respondents across ten countries.  What emerged is a fundamental disconnect between the assumptions we as an industry make about consumers and what they actually think.

Freemium content or ad-funded services are based on a simple value exchange: you get a useful app for free or next to nothing and in return the app provider collects your user data to monetize it in some way.  That’s why when you boot up an app you are often met with some form of request about sharing your location or other data.  

For the consumer the request it can appear totally unrelated to the function of the app – for example, why would a spirit level app need to know where you are?
Moreover, consumers are increasingly aware that if they can purchase mobile versions of console games for free or next to nothing (when its console edition costs a hundred times as much) then its likely that something else is going on.
This is the hallmark of the app economy.

Interestingly, the report found that 70 per cent of consumers say  it’s important to them to know exactly what data an app is collecting and what data is being shared.  Nearly half say that it’s very important.  This says very clearly that consumers understand the impact of apps on their privacy and importantly that they want to have some control.   

Secondly, the wake-up call to app developers should be that that only 37 per cent of consumers are comfortable sharing information.  33 per cent are not at all comfortable. That means either 33 per cent of all consumers are avoiding apps because they don’t trust them, or they are happily downloading and using apps unaware that they are sharing their personal information.
Neither of these scenarios is good, but the second is much worse.
It means that at some stage it is likely that there will be a backlash. Consumer trust is a company’s most valuable asset and not easily regained whether or not app providers clean up their act and become more transparent.
Building consumer trust is critical to growing a sustainable business in a market where thousands of apps jostle for space.  As an industry we have a limited window of opportunity to show consumers that we are capable of protecting their privacy by not taking their understanding of it for granted.  We have work to do to bring consumers with us on this journey into this information value-exchange that is equitable to all parties.
Some of the principles of trust are already established at a legislative level with privacy policies becoming mandatory in many territories. What’s missing is how developers and app stores introduce and build the asset of consumer trust into their day-to-day business, taking the practical steps to establish transparency in a consumer-friendly way.
It’s not uncommon for a privacy policy to be reached via a link that takes the consumer out of an app and on to the mobile web, interrupting the user experience.  Some apps also have privacy policies that run to 65 pages and we have to consider if this disclosure is constructed with the consumer in mind and would a consumer really read a lengthy policy in the immediacy of the mobile environment?
App providers don’t have the time to become privacy experts.
They need a simple, cost effective way of building best practice privacy disclosure into their development workflow in a way which puts the consumer at the centre of this process.  Clearly there is a need for tools which provide short form privacy policies that also execute in-app and explain privacy in plain English.
Consumers have told us that privacy is an issue for them and we can ill-afford not to listen.

Read more at http://venturebeat.com/2013/04/20/a-wakeup-call-for-the-app-economy-mobile-consumers-want-privacy/#Dfz4liGmPIyDUvCo.99