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Ericsson ConsumerLab: Personal Information Economy

Ericsson ConsumerLab: Personal Information Economy



In today’s society, companies and organizations have unprecedented possibilities to collect and use people’s personal information. Using this information in the right way enables new revenue ...

In today’s society, companies and organizations have unprecedented possibilities to collect and use people’s personal information. Using this information in the right way enables new revenue streams and increased profit.

But do consumers understand and perceive the value of their personal information? What are the sensitivity involved with an increased use of personal information by enterprises, governments and consumers? The purpose of the Personal Information Economy report by ConsumerLab has been to describe consumers’ understanding, needs, behaviors and attitudes with respect to personal information as an asset.

For more research from the Ericsson ConsumerLab visit: http://www.ericsson.com/thinkingahead/consumerlab



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Ericsson ConsumerLab: Personal Information Economy Ericsson ConsumerLab: Personal Information Economy Document Transcript

  • PersonalinformationEconomyConsumers and the evolution of commercial relationshipsFebruary 2013
  • ContentsHISTORICAL OUTLOOK 3 “The alarm on Becky’s smartphone wakesinformation AS AN ASSET 4 her up half an hour earlier than expected.The unaware consumer 5 The reason is that her flight to London hasbenefit vs. risk 6 been canceled. In order for Becky to stillTHE RULES OF ENGAGEMENT 7 make it for her London meeting she needsimportANCE OF ECO-SYSTEMS 8 to take an earlier flight. The phone alsoBALANCE THE CONTROL 9 informs her about the current travel time toBUSINESS OPPORTUNITIES Today 10 the airport, as well as gives her the optionEMERGING business opportunities 11 to directly purchase the train ticket on the phone.” 1011011 001011001 1110100010IntroductionPersonal information has been called the “oil” of the 21st regulations with regards to the collection, control and usecentury. The digital and mobile revolution has brought un- of personal data. There is a corresponding need to broadenprecedented possibilities of collecting and using consumers’ and deepen the perspective to also include individual con-personal information to develop new personalized services sumers.(e.g. Becky’s story above). It has also brought possibilitiesof monetizing this information, finding new revenue streams How do consumers understand and perceive the value ofand increasing profits. Personal information is the key com- their personal information? Which are the sensitivity is-ponent in the still evolving Personal Information Economy. sues and risks involved with an increased use of personal information by enterprises, governments and consumersEfforts have been made by businesses, governments and in- themselves? The purpose of the study has been to describestitutions to understand and define the conditions for such a consumers’ understanding, needs, behaviors and attitudesmarket. These efforts have largely been focused on systemic with respect to personal information as an asset.aspects such as legal rights, technical standards and Ericsson ConsumerLab has more than 15 years experience 1.1 billion people. Both quantitative and qualitative methods of studying people’s behaviors and values, including the are used, and hundreds of hours are spent with consumers way they act and think about ICT products and services. from different cultures. Ericsson ConsumerLab provides unique insights on market and consumer trends. To be close to the market and consumers, Ericsson ConsumerLab has analysts in all regions where Ericsson ConsumerLab gains its knowledge through a Ericsson is present, which gives a thorough global global consumer research program based on interviews with understanding of the ICT market and business models. 100,000 individuals each year, in more than 40 countries and 15 megacities – statistically representing the views of All ConsumerLab reports can be found at www.ericsson.com/consumerlab2 Ericsson consumerLab PERSONAL INFORMATION economy
  • PERSONAL INFORMATION– HISTORICal OUTLOOKIn the history of relationships between consumers and businesses, a vendor’s gathering of information aboutits customers in order to improve services is far from a novel concept. “Face to face” “Engagism” “Consumerism” Pre-Industrialization Post-Industrialization Commercial trade before industrialization was The mass-market still prevails, however digital- predominately conducted face-to-face meaning ization has enabled vendors to gain supreme personal information was shared all the time, par- Industrialization knowledge about the buyers’ individual traits due ticularly in reoccurring and tailored services. Over Industrialization removed the customer from the to their digital footprints and sharing of personal time, the local vendor came to know a customer’s producer, creating mass markets and economies information. In the days of Big Data, the con- preferences. Hence personal information was of scale. The familiar customer became an anony- sumer no longer comprehends what is shared, gathered, but on a scale limited and comprehen- mous consumer. Later in this era, businesses to whom or how it is used. By instead utilizing sible to those involved. started building brands in an effort to re-connect personal information in a fair manner, the quid- and create a sense of personalization that had pro-quo logic of pre-industrialization can been lost due to the emergence of the mass be re-established. market and middle men. key findings > Consumer awareness still low > Permission, transparency and value – big data not an issue sharing – pre-requisites going forward Most consumers are aware that their personal Involving consumers by asking for permission information is collected for commercial purposes increases trust and willingness to share per- – more than 50% believe so. But why, how or ex- sonal information. Transparency improves actly what it is used for is obscure to most. attitudes towards the commercial applications Sensitivity of personal information should be of personal information. Lack of transparency understood principally from the perspective of invariably causes suspicion. Value creation for the individual consumer and not from a vendor one party should correspond to value being or usage perspective; anonymous big data is shared with the other. rarely perceived as a big issue. > The value of personal information > Value creation over risk prevention is in relationships If the consumer can see a clear and desired The primary value of personal information will lie benefit from sharing personal information, in its potential to build strong relationships be- concerns about sensitivity diminish. If the option tween consumers and businesses. Used ac- is between sharing information and gaining cording to consumer praxis, personal informa- something on one hand, and guarding informa- tion can: improve user experience, increase tion to avoid risk on the other, many consumers loyalty and increase sales. will go for sharing. More than 40% are willing to “trade” personal information for personalization. Ericsson consumerLab PERSONAL INFORMATION ECONOMY 3
  • INFORMATIONAS AN ASSETThe world is at an inflection point, poised for a significant create new efficiencies and generate revenue and growth.change in competitive opportunities for nations, busi- Companies such as Google and Facebook have businessness, societies and individuals. This change will lead to models built around collecting, aggregating, analyzing andthe emergence of the Networked Society where everyone monetizing personal information.and everything will be connected in real time, creating aglobally-networked, digitally interconnected environment. For governments and public sector institutions, personalEricsson envisions that by 2020, there will be more than 50 information can and is currently being used to improvebillion connected devices. This means that unprecedented public services such as health care, education and publicamounts of information will be generated by consumers and transportation but is also valuable from the perspectives oftheir household appliances, cars, mobile phones and other law enforcement and national security.connected devices. Far-reaching technological advance-ments have enabled vast new opportunities for economic Individual consumers are inevitably at the center of thisand societal value creation based on this personal informa- potential common market for personal information. Under-tion. standing and adapting to consumers’ needs and behaviors with regards to personal information will be key for anyPersonal information includes a host of different types of stakeholder wanting to benefit from participation in thisfacts and data such as digital identity, relationships, prefer- market.ences, behaviors, health and financial data as well as all theinstitutional data about us kept by public institutions. This A win-win-win situationinformation is sometimes voluntarily shared, other times The current approach to managing personal information isobserved by tracking our behavior or even synthesized by typically fragmented and inefficient as technologies and lawscombining different types of data. fall short of providing a supportive infrastructure. A common market for personal information needs to cater to the needsStakeholders in a personal information market of the private sector, governments and public sector institu-The private sector, governments and public institutions as tions as well as individual consumers. In order to maximizewell as individual consumers are all stakeholders in how benefits for all stakeholders, mutually supportive incentivespersonal information is generated, stored and used today. need to be established, collective inefficiencies reduced and collective risks need to be addressed.Personal information is used today by private enterprises todevelop and improve services and products, Pre-requisites for a framework for a sustainable personal information market are listed below. Figure 1: Pre-requisites for a framework for personal information > Targeted > Transparent > Technology-neutral > Role-specific > Flexible > Efficient > Cross-border tolerant Source: “Privacy in the Networked Society: Data Protection principles for the digital remaking of society,” Ericsson, 20124 Ericsson consumerLab PERSONAL INFORMATION economy
  • The unawareconsumerThe gathering, storage and use of personal information is Figure 2: Consumer awareness ofstill an area that is relatively obscure to people in general. personal information gatheringThere is a basic awareness that personal information isactively or passively shared and that information is gathered Companies that make apps for smartphones and tabletsby companies, but not to what extent this is happening. 39% 39% 21%Consumers are most clearly aware of the fact that mobile Other IT companies like Yahoo! and Microsoftphone operators and different applications on smartphones 41% 38% 21%are collecting personal information in different ways. On ageneral level, it is clear that people today view the sharing Apple and Googleof personal information as a pre-requisite for participating insociety, both socially and commercially. 43% 35% 23%The average person has difficulty fully understanding Social networking sites like Facebook and LinkedInexactly how their personal information becomes valuable to 52% 30% 19%companies. Consumers’ general understanding of the per-sonal information value exchange is illustrated in figure 3. Mobile phone operators 53% 27% 20% I think they use my personal information I don’t know Source: Ericsson ConsumerLab, I don’t think they use my personal information Analytical Platform 2012 Figure 3: Consumer understanding of personal information exchange Commercial application: Advertisments and offers PERSONAL INFORMATION (obscure when, what and why) Perceived benefit: Personalized services Source: Ericsson ConsumerLab: Personal Information Economy study, 2013 Ericsson consumerLab PERSONAL INFORMATION ECONOMY 5
  • Benefit vs. riskIf the commercial value of personal information is still es- A clear benefit in the form of discounts or clearly improvedsentially an obscure concept to most people, sensitivity is user experience positively affects the willingness to shareperhaps the more relevant way to relate to personal informa- even sensitive information. Consumers are principallytion. Sensitivity of personal information is highly contextual, inclined to choose participation over isolation, sharingbut more than anything it is primarily tied to the individual information for different forms of benefits rather thanconsumer rather than to commercial value. focusing on protecting themselves from risks.High sensitivity applies to information that is close atheart, that has the potential to cause harm and in cases ofambiguous information, such as personal photographs. Sen-sitivity connected with the commercial use of one’s personal Figure 4: If you were asked to share personal informationinformation depends in large part on the relationship with online and you had no control over who could access or seethe vendor at hand. It is also closely connected to trans- your personal information, how would you feel about sharingparency and perceived control, as well as the perceived or the following information?offered benefit. ”With a picture, the interpretation is all Religious beliefsin the eyes of the beholder. That makes it 41% 48% 11% 39% 39%scary and more sensitive” Political views 41% 49% 9% — Female, 21, Student, San Francisco Purchase behavior 47% 46% 8% Usage of online services and apps Consumers and Big Data 48% 45% 8% Consumers clearly show less concern about com- panies using anonymous information, e.g. how many Internet search and browsing behavior consumers that buy a certain service or product, 53% 40% 7% rather than identifiable information such as the iden- tity of the buyer. Current location 56% 38% 7% From a privacy perspective, anonymous Big Data is thus not considered a problem. This does however Medical records highlight a continued lack of consumer understand- 67% 28% 6% ing around the power of data min- Information or files stored on your computer or mobile phone ing. Most consumers give little or no thought to the fact that it is not 73% 23% 4% impossible to reconstruct personally identifiable information from large anonymous data sets. Feel bad about it Indifferent Source: Ericsson ConsumerLab, Feel good about it Analytical Platform 20126 Ericsson consumerLab PERSONAL INFORMATION economy
  • The rules ofengagementConsumers’ view on the issue of ownership of personal “It would be great if my refrigerator couldinformation and consequent rules for vendors to use thatinformation is flexible and based on the relationship with the tell me what I needed to restock. But if itvendor at hand. would tell me what I needed less of, that would be creepy!”Clearly, when it comes to personal information generated through a specific service, e.g. viewing habits on video — Female, 23, Student, San Franciscostreaming services, consumers grant vendors at leastpartial ownership of that information. Partial ownership inthe sense that it is ok for vendors to use that information todevelop and personalize the service and even use it for othercommercial purposes such as targeted advertising. But theimportant requirement is that this is done transparently andwith a degree of control on behalf of the user, granting himor her the opportunity to opt in or out of using the serviceunder these conditions. It is apparent that consumers aremost willing to accept the collection and use of their per-sonal information in those cases where this is perceived tobe done within the confinements of a particular service. More than 40% would allow companies to use their personal information when anTransparency and respect, offering the ability for consumers offer is personalized to them, to improveto opt in or out of a service and returning user value current services and develop new ones.will increase consumer engagement and strengthen therelationship. Figure 5: For what purposes would you allow companies to use your personal information? To personalize offers to you 44%To use the information in order to improve their 41% current services or develop new services None of these purposes 29% To personalize advertisements to you 22% To charge you depending on your 19% level of usage of the service To charge everyone individually 13% according to their ability to pay To sell the information to other companies 5% Source: Ericsson ConsumerLab, Analytical Platform 2012 Ericsson consumerLab PERSONAL INFORMATION ECONOMY 7
  • IMPORTANCE OFECO-SYSTEMS The importance of owning the first consumer interface in or- der to gather personal information will continue to increase. “It’s morning and Becky is in the These interfaces can be smartphones, refrigerators, TVs, kitchen, making herself that vital PCs, home security systems, dishwashers or different cup of morning coffee. Using the services. last of the coffee, the machine The same branded devices and services can be used by the simultaneously adds coffee to the company to provide customers with recommendations and synchronized shopping list on her information based on the personal information gathered. smartphone. Later that day, she Examples of such recommendations and targeted offers gets a notification on her smart- could include automated suggestions from your refrigerator phone that her local store offers to of which groceries to re-stock, coupled with a discount offer deliver all the items directly to her on the same products from a specific store. A company’s share of this eco-system of consumer interfaces will be one door. With a single click, she crucial factor in building relationships with consumers. accepts and pays.” Relevance through reputation Reputation is a key element of the personal information eco-system - the reputation of companies as well as the reputation of individual consumers. In the coming years, we should expect to see the emergence of new and more 1011011 1011011 practical applications of reputation.8 Ericsson consumerLab PERSONAL INFORMATION economy
  • BALANCE THE CONTROLThe importance of personal information will remain high – for the private sector, governments and public institu-tions as well as the individual consumer. With regards to the issue of where control over personal information willreside, the possibilities range between two extremes: consumers controlling all their information and consumershaving no control whatsoever. A likely future development will lie somewhere in between. No consumer control Personal information is acquired without the consent of consumers and sold be- tween vendors to maximize profit. The uncontrolled usage of personal information aggravates and causes privacy harm. This might trigger new business opportuni- ties to protect consumer information, e.g. increased usage of VPN-tunnels and similar tools. This extreme will provide no or little value for the consumers who probably will shun many online services. Mutual understanding and gain Personal information is gathered and used with consumer consent, providing value in return. Shared responsibility between all stakeholders including consum- ers is encouraged through effective and flexible, yet limited legislation protecting the consumer and his or her rights. Successful service providers caring about their reputation will respect consumers’ integrity and handle their information accordingly. 100% consumer managed The individual consumer is in charge of and responsible for their own personal information and can allow or block companies from accessing certain parts of in- formation about them. Inflexible legislation forcing companies to continuously ask for permission to access or use consumers’ information for every single purpose will hamper the development of new services and personal information opportuni- ties for companies. This will also require more consumer effort and knowledge to administer. Figure 6: A likely future development of control 100% consumer No consumer control managed Mutual understanding Source: Ericsson ConsumerLab: Personal Information Economy study, 2013 Ericsson consumerLab PERSONAL INFORMATION ECONOMY 9
  • businessopportunities todayThere are several business opportunities related to the Improve consumer experiencehandling of consumers’ personal information. The prime op- Whether a one-time only customer or in it for the long run,portunity lies within developing stronger relationships with consumers want a great experience when using a service.existing and potential customers. Personal information can help companies better under- stand needs and preferences, usage patterns and habits. ItAs already mentioned development of personal information enables personalization of products and services in order tobased services and business needs to build on three key make them more relevant, easier and quicker.components: permission, transparency and value sharing. – Companies need to acquire and facilitate consumer Increase loyalty permission. Enabling consumers to give their permis- One reason for staying in a long-term relationship is the sion will be a key factor for companies to build trust. knowledge of the benefits it brings. For operators and other – Transparency with regards to the collection, storage and vendors, long-term relationships mean a steady revenue use of personal information increases consumers’ will- stream and lessened risk of churn. With the use of personal ingness to approve of commercial applications. A lack of information a service can be more flexible and communi- transparency almost invariably leads to consumers cation can be more relevant and better support consumer adopting a more hostile attitude towards a vendor. needs. – Commercial value creation based on personal informa- tion needs to be coupled with value creation for the Increase sales customer in the form of personalization of service, Knowing the individual consumer and his or her situation at discounts etc. any given time brings about unprecedented opportunities for product and service development. A customer movingPotential commercial benefits to a new address, lacking the high speed fixed broadbandToday, companies craft an understanding of markets he or she had at their previous residence, is likely to want tothrough consumer segmentation. Going forward, under- upgrade to a better mobile broadband.standing the individual consumer through personal informa-tion will be vital to success. With access to consumers’ personal information the pro- vider can offer the right products, at the right price, throughUtilizing personal information to build a stronger relationship the right channel at the right time.with the consumer can improve consumer experience andincrease loyalty as well as sales. In short, this recreates theclose relationship between seller and buyer from the pre-industrial era as described in page 3.10 Ericsson consumerLab PERSONAL INFORMATION economy
  • EMERGING businessopportunities Information Digital Protection and Personal gateway identification insurance cloudThere are several areas of handling the consumer’s personal information where vendors havebusiness opportunities.Information gateway Protection and insuranceAn information gateway could allow consumers to easily Who do consumers turn to when exposed to fraud, iden-manage what personal information is shared and ensure tity theft, lost information or not being able to opt outthat only selected companies can access and utilize it, pre- of a service? There is an opportunity for offering protec-venting irrelevant information and offers. It could also sup- tion to consumers, including cleanup services, overviewport consumers in opting in and out from different services. of shared information, legal counseling and backupCompanies could utilize an information gateway to reach services.their target audience without intruding.Digital identification Personal cloudDigital identification is needed in several situations; for A personal cloud service is a virtual computer taking onpublic services, for payment services and for personal ser- different capabilities as the consumer chooses. It couldvices like email, social networks, etc. enable consumers to view, control and manage their personal information, rather than access their informa-With an existing physical presence, banks and operators are tion through limited import and export capabilities as inideally positioned to offer identification services in the today’s cloud services. Reputation will be a key elementphysical world as well as online. Some banks and operators in future personal cloud systems. Hence, service provid-in certain markets are already today offering identification ers within this area will be ideally positioned to also offerboth online and IRL. services within reputation. Methodology Personal Information Economy study 2013 6 consumer interviews, 15 student diaries US, UK, Germany, Sweden, Italy, Brazil, and a workshop in San Francisco China, Hong Kong, Japan, South Korea, Australia, India, Indonesia, Russia, 7 experts from the US and Europe Ukraine October 2012 - January 2013 >23 000 online interviews, age 15-69 ~1500 per market May 2012 Qualitative research Ericsson ConsumerLab, Analytical Platform 2012 Quantitative online interviews Ericsson consumerLab PERSONAL INFORMATION ECONOMY 11
  • Ericsson is the world’s leading provider of communicationstechnology and services. We are enabling the Networked Societywith efficient real-time solutions that allow us all to study, work andlive our lives more freely, in sustainable societies around the world.Our offering comprises services, software and infrastructure withinInformation and Communications Technology for telecom operatorsand other industries. Today more than 40 percent of the world’smobile traffic goes through Ericsson networks and we supportcustomers’ networks servicing more than 2.5 billion subscribers.We operate in 180 countries and employ more than 100,000 people.Founded in 1876, Ericsson is headquartered in Stockholm, Sweden.In 2011 the company had revenues of SEK 226.9 billion (USD35.0 billion). Ericsson is listed on NASDAQ OMX, Stockholm andNASDAQ, New York stock exchanges.The content of this document is subject to revision withoutnotice due to continued progress in methodology, design andmanufacturing. Ericsson shall have no liability for any error ordamage of any kind resulting from the use of this document.EricssonSE-126 25 Stockholm, SwedenTelephone +46 10 719 00 00Fax +46 8 18 40 85 EAB-13:000691 Uenwww.ericsson.com © Ericsson AB 2013