Altimeter Offers Up Privacy Lessons for IoT

A new report today from Altimeter explores what brands can learn about consumer privacy perceptions in the booming Internet of Things. The group warns of the “massive gulf between consumer awareness and industry practices when it comes to practice,” and suggests that companies could respond to consumer anxiety by pursing more trusted customer relationships. At present, Altimeter found that trust and understanding of new connected technologies trail far behind consumer interest in these products.

Some of the numbers the report cites about consumer understanding are problematic: 40% of consumers still have little understanding of how, when, where, or with whom tracking involving HTTP cookies occurs. With regards to the “Internet of Things,” 87% of surveyed consumers had never even heard of the term. While the IoT is still in early days, the juxtaposition of these two numbers suggests that exposure to these technologies alone will not solve the public’s perceived privacy anxieties.

Altimeter found significant percentages of the public concerned about both company use of their data and their data being sold or shared:

• With regards to consumer wellness initiatives, wearables, and fitness trackers, Altimeter’s survey revealed significant discomfort around industry use of this information.
• Perhaps highlighting some of the public’s concerns around drones and facial recognition, 60% of those surveyed were worried about their data being sold and shared in public spaces.
• However, across the board, the public is far more concerned about having their data sold and shared than they are with individual companies using their information.

Yet consumers are also worried about how companies are using their information. Altimeter reports that consumers are worried about where and how long their data is stored, and even how personally identifiable their information may be. Most important, sensitivity to data use is not exclusive to older populations. Even for the survey’s youngest segment, aged 18-24, well over 40% of those survey indicated high levels of concerns about typical data uses.

The report cautions that industry is facing a trust deficit and has “an existential imperative to foster trust with consumers, for risk of failure, security compromise, customer safety, and ethical responsibility.” It argues that this dynamic calls for a transformation is not just privacy and security and compliance but in the design of consumer experiences. In other words, industry needs to provide a clearer value exchange in the Internet of Things:

Whether in the form of money, time, or energy, consumers are most incentivized to share their data by gains in efficiency. Indeed not all ‘value exchange’ is created equal; this study finds that consumers with higher trust place higher value on information to aid with decision-making, where as those with lower trust are more compelled to share their data for customer support needs. These particular findings address a deeper question: are coupons really enough?

Coupons may indeed not be enough. For the Internet of Things, successful brands will do better at communication, education, and consumer engagement.

-Joseph Jerome, Policy Counsel