Above and beyond: the importance of earning data in a connected economy

  • Data
  • May 1, 2014
  • Christopher Dawson
Above and beyond: the importance of earning data in a connected economy

"We know everyone who breaks the law; we know when you’re doing it. We have GPS in your car, so we know what you’re doing.” This wasn’t the NSA, the CIA or even the GCSB. It was Jim Farley, Ford’s global VP of marketing and sales earlier this year talking about connected cars.

There are now more connected things on Earth than there are people. That milestone was reached back in 2008. By 2020 the number will be around 40 billion and less than 20 percent of those will be smartphones, tablets or PCs. We are connecting new things to the internet all the time in an effort to make our lives more convenient. This convenience comes at a price, however, and that price, we are told, is data.

As our economy becomes more connected, the value exchange that underpins the use of personal data will evolve. The idea that convenience is a fair exchange for data is not an idea that consumers will continue to support. Brands have to get better at justifying the use of someone’s personal data and in many cases they will need to offer a lot more than convenience in exchange for using it.

Many people want to use in car navigation because it is convenient but most would not want their GPS locations to be recorded by carmakers and sold as anonymous metadata to advertisers. With the right proposition, however, customers might actually volunteer that data and even welcome targeted advertisements. If, for example, their annual fuel costs or insurance premiums were reduced in exchange for their data. This is the thing that many consumers want brands to understand; use my data by all means, as long as it is used to make my life better.

As people begin to understand the value of their data they will become more and more interested in how that data is used to benefit them. 

Take the recent example of LG. They make televisions, which in November 2013 were revealed by a blogger called DoctorBeet to transfer data packets of his viewing habits back to LG’s servers, even when privacy settings were activated. They even transferred file names from USB sticks that were plugged into them. DoctorBeet was alerted to this practice by ads on his home page which he had not opted in to and, which actually compromised his viewing experience. LG has never confirmed why they wanted this data or how it was being used, but the company was forced to apologise and has now taken steps to halt the practice.

Compare this situation with Netflix, which is really quite open about its data collection. It captures and uses incredible amounts of data but instead of just serving up ads, it also recommends shows you might like to watch based on ratings and recommendations. People love this and Netflix reports that 75 percent of viewer activity is driven by recommendations. In addition to this they now create hugely popular original content in exchange for customer data. Their remake of House of Cards by David Fincher starring Kevin Spacey was born when data analysts at Netflix noticed an overlap between viewers who watched movies starring Kevin Spacey, viewers who watched movies directed by David Fincher and viewers who loved the original 1990 BBC mini-series.

These opposing examples from LG and Netflix help to define the notion of earned data:

  • Earned data is used to create a superior experience that customers find really useful.
  • Earned data is used for a purpose that customers understand and agree with.
  • Earned data can be withheld by consumers if they no longer see the value in providing it.

If brands want to succeed and grow then they need to develop a proposition that earns data from their customers. And then use it to drive strategic initiatives that positively influence consumer behaviour. 

  • Christopher Dawson is business strategy director at VMob and wrote this article when he was head of planning at Affinity ID. 
  • To read more about the importance of earned data, check out the full article in this month’s NZ Marketing.

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