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Privacy versus personalization? Consumers seek ‘quid pro quo’

TechnologyTechnology

Consumer privacy advocates have much to cheer this week. The real question is how much the average American really cares about how much data they share.

First, the National Security Agency’s sweeping data collection practices were curtailed: yes, phone companies are still required to keep records, but the government needs special federal warrants to look at them.

Hours later, Apple CEO Tim Cook stoked the debate to an even higher level with his sharp criticism of “prominent and successful companies” that offer free services such as photo archiving or email or social networks—so they can sell the information collected about search habits, demographics, shopping preferences, and much, much more. He’s talking about you, Facebook, Google and Twitter.

“They’re gobbling up everything they can learn about you and trying to monetize it,” Cook said in his prepared remarks. “We think that’s wrong. And it’s not the kind of company that Apple wants to be.”

Cook’s position actually may be short-sighted and could limit its success in cloud services, as Fortune’s Mathew Ingram argues. But right or wrong, the reality is many consumers are pretty ambivalent about the data collected about them. That is, until it gets into the wrong hands.

The latest evidence: Close to half of the 13,000 people recently surveyed on behalf of Microsoft (in 13 different countries) indicated they are aware that brands “benefit” from the information they share about themselves either explicitly or implicitly. A large majority (83%) want to know exactly what they’re giving up, but they also assume that companies collect more data about them than they realize. They’re sort of resigned to this.

That’s not to say that they don’t appreciate attempts by marketers to be more personal. Indeed, 54% of the respondents “expect brands to really know and understand them as people, and for communications to be tailored to their value and preferences.” Mind you, they also want something tangible in exchange for sharing: particularly cash incentives, discounts or loyalty points.

Microsoft’s senior director of consumer insights, Natasha Hritzuk, describes data as the “fundamental currency” of brand-consumer relationships. In a blog post dissecting the results she writes:

“While there are benefits to both parties, up to now the relationship has largely been one-sided. The value that data provides is far less clear to consumers than it is to the brands they exchange it with. Despite increasingly high levels of consumer control online, the perception remains that brands set the terms in the value exchange and brands reap most of the gains.”

Of course, not every consumer will share and share alike. Microsoft lumps the respondents into six different “sharing” segments that may help define how organizations shape their data collection strategies. Here’s a summary:

  1. Satisfied Sharers (8% of respondents), not overly concerned with privacy
  2. Enthused Explorers (18%), allow access when they know they’ll receive some sort of benefit
  3. Savvy Sophisticates (17%), proactive contributors who consciously offer information to improve services
  4. Nervous Neophytes (31%), worry companies don’t have enough protection measures in place
  5. Cautious Contributors (21%), share selectively for specific rewards
  6. Observant Objectors (5%), actively limit involuntarily sharing of data

And, of course, Microsoft created an app to help people rate where they fall.

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