Mobile Consumer Data: Protecting Privacy While Creating Value

Posted on by Chief Marketer Staff

Kevin Outcalt

There is no better medium to understand people’s behavior than mobile. More than half (56%) of American adults now own a smartphone, according to Pew Research Center’s Internet & American Life Project. They depend on their devices for communication, commerce, work and play. For marketers, having insight into a person or group’s mobile activity is the Holy Grail for consumer research. Marketing messages and offers can become even more relevant and targeted to specific audiences.

mobile consumer dataYet, having the ability to collect data based on mobile usage will no doubt have marketers facing increased scrutiny over data collection practices and consumer privacy concerns. Connected consumers are willing to share a wealth of personal information and companies with access to it must be sensitive to how that information is being used. So, how can marketers ensure they are committed to protecting privacy while providing increasingly relevant information and offers to benefit consumers?

We must educate consumers about the realities of mobile data collection including the fact that it doesn’t have to be intrusive or negative and can provide significant benefits. In fact, there are two approaches to consumer data marketing: One is centered on individual-level insights and the other is on the demographic level. But, consumer privacy is at the root of both of these approaches.

Segment of One Mobile User: Trust, Relevance and Value

The more sophisticated technology gets the more precise it gets. That’s especially true when it comes to marketing to the segment of one—or the practice of precision marketing. Today we can analyze massive amounts of data in near real-time giving brands the ability to maximize marketing spend and optimize offers and campaigns to provide a better overall individualized customer experience. In turn, this level of personalization can result in increased sales and customer loyalty. That said, in order to be successful in building consumer relationships, marketers practicing mobile precision marketing must focus on establishing trust by being transparent about how data is collected and used, allowing for opt out, and then delivering relevance and real value to the consumer.

If a company has a data collection or tracking solution in place, its customers need to be made aware of it. They need to know how their personal information is being collected, used and protected. Also, any solution must empower the consumer to opt-in or opt-out as they choose. It’s important to note that some systems don’t offer opt-in or opt-out features, which has led to much of the backlash.

For example, earlier this year a major retailer was under fire over its use of a service that used in-store WiFi connections to track individuals’ in-store movements through their smart phones. Even though the tracking was anonymous, it still resulted in customers feeling violated. Hearing its customers’ ire, the retailer stopped using the service. Consumers must have transparency over how their personal information is collected and used in order for precision marketing to be successful. This two-way agreement, where the consumer provides the information and the retailer in turn will use it to personalize communications to the individual, creates trust and value.

Marketers must also be conscious of, and sensitive to, privacy regulations as they vary by region, but that should not discourage their strategies. For example, Montréal, Canada has very strict consumer privacy regulations so it was interesting when Société de Transport de Montréal (Montreal STM) found that 60% of its customers completed the entire consumer ‘profile’ process that included several screens of personal preference and demographic questions. Why were the completion rates so high? The truth is that it’s all about trust, relevance and value. People are willing to share a lot of personal information as long as they trust the receiving party and feel there is a valuable and relevant return. In the case of Montréal STM, the customers trust the entity and want to engage.

Segment of Many Mobile Users: The Value in Aggregate  

Sometimes marketers are interested in looking at larger mobile populations to uncover trends. In some cases, market intelligence with fewer than 50 people is not even considered relevant. Until recently, marketers have been in the dark about accessing and using group-level mobile user behavior: Where are the mobile consumers? How do we reach them and with what kind of message? This highly valuable information has been locked up in mobile operators’ networks for years.

There are solutions emerging that can extract that data in ways that are private, anonymous and in aggregate so that marketers can understand demographic-level mobile activity data for marketing intelligence.

Demographically-segmented population behavior in a mobile environment gives marketers the ability to tailor relevant advertising and promotions, develop products that are better targeted, and design sales efforts that have a better success rate.  As technology maps a mobile user’s general location, marketers can extrapolate that data on aggregate from mobile operator networks to understand traffic flows at a particular location, gain insights to make better decisions for advertising planning and placements or other promotions so they reach the most appropriate audiences.

Mobile network operators and marketers protect privacy through anonymity. With anonymized demographic-level data, marketers only know as much information as the first two digits of a mobile user’s zip code and matching demographic information (e.g., age and gender). There is no personally identifiable information—no telephone number, name, address, social security number, credit card or financial information—of any kind.  In essence, marketers would know that an 18-25 year old male from Chicago is the user of the device. While it seems vague on the surface, powerful analytics tools can extract and analyze various data sets to turn this big data into valuable knowledge and enhance decision-making.

For example, if a brand like Budweiser were to run an ad campaign for the Super Bowl, it would be very interested to know how mobile users are accessing and responding to its mobile ads. Are they seeing the ads as they’re browsing their phone or going on Facebook. What apps are they using?  What are the most common websites visited before and after they have been on the Budweiser site? By combining those insights with other data collected, the brand can make more informed and strategic decisions about how to best leverage mobile for its media and advertising campaign.

By having a deep understanding of the mobile marketing intelligence solutions they have in place, marketers are better positioned to do this while creating relevant, valuable campaigns.  By leveraging precision and demographic-level marketing, they can better communicate with their customers by providing more relevant messages and offers. Marketers must reinforce privacy messages with consumers in order to gain their trust and subsequently their personal information so that they can transform the data into market insights helping to create loyalty and long-lasting relationships with customers.

Kevin Outcalt is vice president, SAP Mobile Services, Mobile Analytics & Consumer Insight. He can be reached at Kevin.Outcalt@sap.com.

 

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