Friday, 15 February 2013

What’s the value of your personal data?

Liz Coll, senior policy advocate with CI member Consumer Focus, explains that consumers, despite being the originators of their own digital data, are in the dark about its value.

In the digital economy personal data is a growth business. The volume of personal data gathered by smart devices, searches, site visits, purchases, recommendations, likes, tweets and status updates is on the rise.

Growing too is the value of this data to companies who capture, store, analyse and sell it on.

They use the data to predict consumer behaviour, target advertising and increase profits. While trading personal data may not have been the original core mission of digital giants such as Google and Facebook, they now get significant revenue from the personal data trails left by service users.

The services are free to use but, as the social media phrase goes, ‘if the service is free, then you’re the product.’

The major commodity of the age

Such is the potential for personal data to transform business models and underpin new services that some people now talk about personal data as the ‘new oil’ in the connected digital economy.

Commentators claim it is set to become the major commodity of the age, a critical resource from which new innovations and value will flow.

Markets such as banking are rapidly rethinking how to better mine the data they hold, or obtain additional information in order to increase the value they can derive from customers.

Yet consumer understanding of what happens to this valuable data does not appear to be growing at the same pace, even though the commodity originates with them.

We are far from naïve – our intuition tells us that a lot is being collected but we are somewhat vague about why and what the long term implications of this might be.

Despite our concerns, we still don’t engage with the existing opportunities to take control over our information. We sign our data over by agreeing to (but rarely comprehending) terms and conditions of sometimes epic length.

Open to exploitation

There’s a big contrast here between the importance that external agencies now attach to consumer data, and the significance consumers themselves assign.

The response from consumers is mixed; they are concerned and aware but are not making moves to protect themselves. This suggests a scenario where consumers, by not exerting control over their digital footprint, could be left open to exploitation.

Consumer understanding

Consumer Focus wanted to develop a better appreciation of the extent to which consumers know their data is being collected and controlled, and understand the ways in which it is being exploited.

We also wanted to find out what controls consumers put in place to protect themselves, and what value they put on the data that they impart, knowingly or unknowingly, about themselves.

We commissioned ICM to survey 2,002 adults aged over 18, with results weighted to provide a representative sample. Respondents included online service users and loyalty card holders. Full details of the research findings (PDF 582KB) are available.

Headline research findings

The findings show a conflict and contrast in consumer behaviour and sentiment regarding personal data:

Suprisingly high levels of trust

Some consumers are pretty trusting of online providers’ data collection motives, despite a general impression that they were not to be trusted: one in 10 consumers had not realised any data was collected on them via online services.

And a further fifth thought that the provider only collected the minimum amount required to make the service work better.

That means almost two fifths of respondents (39 per cent) have a benign interpretation of online organisations’ intentions.

This is surprisingly high given that online providers were ranked lower in trust terms than any other type of organisation, including banks (for managing current accounts), the police and supermarkets.

Similarly, four out of five loyalty card holders acknowledge that the card provider gathers data about them, but just under a third recognise that the card provider then packages this up and sells it on as anonymised data, or uses it to segment its customer base and target offers, etc.

Tick, click and hope for the best

Despite concerns about the implications of terms and conditions, people generally tend to tick, click and hope for the best: attitudes and behaviour around terms and conditions and license agreements throw up some interesting insights.

We were surprised to find that almost a third of consumers claim they always read terms and conditions online.

Over half told us they rarely do and one in seven never do so. For this group, the length of terms and conditions are off putting, and the desire to access the product or service would appear to override any concerns about data exchange.

A few also believed that nothing bad could come from not reading them.

Having said that, three out of five consumers who do not read the small print still have concerns about assenting without reading the details.

Unknown financial implications were the top concern for a third of people, with just over half (52 per cent) mentioning personal data concerns as a top issue.

Of the third that do claim to read terms and conditions, only one in five feel they fully understand the implications when they tick the ‘I agree’ box. That makes a mere 16th of the total sample who claim to fully comprehend the implications of terms and conditions.

Declining services

When it comes to using online services, only 18 per cent of those who always read terms and conditions mentioned how information is gathered and used as the main reason for checking on provider’s terms and conditions.

Of those who end up declining online services and products, it is a small number – 13 per cent – who pull out because of privacy concerns, and 7 per cent say that it was because too much personal information was demanded.

Low understanding of value

In an age where our personal data is conceived of as the commodity which will drive the digital economy, we as originators of the data are in the dark about its value.

When asked to guess the value of the personal data collected about them via their most frequently used service, 61 per cent of people did not attempt to volunteer a figure.

Of those who did try to value it, 15 per cent thought it had no value at all – the largest proportion of the respondents who attempted to give an estimate of the value.

For consumers that suggested a value above zero, there was no consensus, with some suggesting it is worth only up to £50 or £100 a year and others opting for many hundreds of pounds. It’s not only consumers who can’t agree – many digital and business experts differ greatly on what the value of data actually is.

Nevertheless, when asked to rate whether their data has a commercial value that organisations should pay a fee to use – three-fifths of consumers agree and only one in six disagree.

Consumers do not yet have a well-developed sense of what a fair exchange between a service provider and consumer looks like: when asked what they would be prepared to pay to use their favourite, free-to-use online service, fewer than one in 10 suggested a figure, and two-thirds said they were not prepared to pay at all.

What does it all mean?

The research results show some conflicting attitudes and behaviours that can be explained in part by differences of opinion between people – with age being a major factor.

The Demos Data Dialogue survey puts the public into five categories, of which 27 per cent recognise the value of sharing data, see key benefits and are comfortable with sharing. That’s just under a third of people who are not overly concerned about the risks of sharing personal info and who see the benefits of the value exchange.

Attitudes towards terms and conditions suggest an acceptance of exchanges weighted heavily towards the provider which consumers feel compelled to go along with in order to access services.

But surely if more consumers knew the value of their personal data they wouldn’t be so happy to stick to the status quo?

No comments:

Post a Comment