Brands Must Be Transparent on Data Tracking: Study

Explaining Collection, Use of Information To Consumers Could Give Brands Advantage

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Apple - Health and Fitness - 15
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Connected gadgets, appliances, vehicles and physical retail spaces are gathering massive amounts of consumer data. Companies from Diageo to Lord & Taylor are investing in technologies and resources to help them determine how their products and businesses can be enhanced through this Internet of Things.

But many of those companies -- aware of concerns over data privacy -- have been reluctant to explain to consumers why they're using mobile beacons and other sensors to harvest data. New research, however, suggests this is a lost opportunity for brands to present themselves as privacy conscious.

"It's almost impossible to get brands to talk about this, but in actuality there's an opportunity here," said Jessica Groopman, industry analyst at Altimeter Group, which published its "Consumer Perceptions of Privacy in the Internet of Things" report this morning.

In it survey of more than 2,000 people representing a broad demographic range, Altimeter found that 70% of those studied owned a connected device other than a phone, tablet or laptop; 87% own three or fewer of them. Some 28% percent have smart gaming systems and 23% have smart TVs, according to Altimeter. Not many people own much-hyped emerging tech products such as fitness trackers (7% own them), connected washing machines (4%) and cars (4%).

A significant percentage of those surveyed are wary of what will happen to their data collected through connected products. The survey showed 45% of participants have very low trust or no trust that companies will use their device data in a secure way that safeguards their privacy.

"Companies who want long-term relationships with their customers and consumers need to think deeply about whether the way they use data reflects their brand values," said Susan Etlinger, industry analyst at Altimeter. "In the next decade, the organizations that make ethical data use a priority will stand apart from those who prioritize short-term gain over long-term relationships."

They're especially worried about the information being shared and sold. According to Altimeter, 78% of consumers are "highly concerned" about businesses selling their information to third parties.

Data is being generated, collected, analyzed and sometimes shared and sold at great scale at a rapid pace. In the world of commerce, while connected products featuring tracking sensors are still relatively rare, retail shops and eateries are adopting mobile tracking technologies that are far more pervasive.

In two of many recent deals between shopping mall properties and mobile tech firms, mobile beacon firm Mobiquity partnered with Simon Property Group and shopping center owner Macerich in May. The result will be 290 connected malls gathering information at entrances, throughout food courts and inside stores from people who have downloaded a variety of shopping and retail brand apps.

There are no laws about how business owners should notify consumers of the presence of the trackers. Indeed, because in order to operate the technologies, consumers must have already downloaded partnering apps, companies involved say they have consumer consent for tracking when those consumers agreed to the terms and conditions of the individual apps.

Even when consumers have opted in, 60% surveyed by Altimeter said they are uncomfortable with how their data is sold or shared in public spaces. Around 56% said it is important or extremely important that they be notified when data is being gathered in a public marketplace to provide real-time services.

"Brands aren't communicating about these little matchbox pieces of hardware," said Ms. Groopman. "Brands are stepping into what could be a differentiator."

"There are many ways to notify customers about data use -- via email, pop-ups or other notifications," said Ms. Etlinger. "Companies need to use these methods and test their effectiveness the same way they would for any other customer experience. True, disclosure is complex, but it's frankly table-stakes for data-driven organizations."

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