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Mobile data collection increases, raising new privacy concerns

With everyone from wireless carriers to the latest and greatest smartphone application tracking user behavior and trying to sell the data, mobile is proving to be a treasure trove of customer information. But not all data is created equal, at least on the privacy front.

Companies are finding new and often intriguing ways to link data such as location with other information to identify users and track behaviors. When this information is collected with a user?s permission, it can help marketers close the loop on their marketing activities, but when it is not, marketers run the risk of a backlash from consumers and the scrutiny of regulators.

?There?s no doubt that carriers are evaluating the role of becoming an enabler and a key part of that strategy is selling customer data for the benefit of third parties,? said Lara Albert, vice president of global marketing for Globys, Seattle, WA.

?I suspect that other operators will soon be moving in this direction as more of them evaluate the best strategies for driving new revenue streams,? she said.

?The reality is there?s a lot of low-hanging fruit for a carrier to address within their own customer base related to monetizing the data that they have. There are more operators focused on this at the moment ? using data and analytics to extract more value from their existing customer base ? then on selling data for third party enablement.?

Comprehensive customer view
Verizon Wireless and Sprint both started selling customer data a few months ago and have been the focus of a lot of attention as a result because of how much they know about their mobile customers.

Carriers are under pressure to increase revenues as SMS revenues decline now that users are increasingly using over-the-top messaging apps.

Carriers are investing heavily in customer analytics platforms to better understand and market to their customers and are seeing increased revenues and lower churn as a result, per Ms. Albert.

These carriers are looking beyond single data points, such as location and building rich behavioral profiles that represent a comprehensive view.

The comprehensive view made possible with more sophisticated analytics will be valuable to third party brands, especially to brands that seek to use the mobile device as a primary means of engaging with customers.

Aggregate data
Verizon Wireless? Precision Market Insights offers businesses such as malls, stadiums and billboard owners statistics about the activities and backgrounds of more phone users in particular locations.

AT&T is considering selling customer data to advertise but has not made a move so far.

U.S. wireless carriers are not alone in pursuing data mining strategies. German software giant SAP is introducing a service that will gather user data from wireless carriers that can be sold to marketing firms.

The wireless carriers have been proceeding fairly conservatively to date, limiting their reports to high-level aggregated statistical reports, per Jules Polonetsky, co-chair of the Future of Privacy Forum, Washington.

For example, a mall might be able to buy a report from Verizon Wireless breaking down what percentage of visitors come from a certain area or how many are traveling by public transportation.

This is valuable information for many of these marketers who are increasingly competing with online businesses that know a lot more about their customers.

The information is also typically de-identified and customers have the option to opt-out in the case of Verizon Wireless, or opt-in, in the case of Sprint.

?Because this data has been widely acknowledged to be sensitive, carriers have been cautious at moving forward and have done so with a fair amount of privacy structure around it, aggregation, consumer choice, de-identification,? Mr. Polonetsky said.

What?s your location?
However, location companies, app developers and some marketers are pushing the envelope when in it comes to collecting mobile user data.

Location continues to be a place where there is both innovation and privacy concerns for data use.

Companies are able to track the kinds of places a user visits and infer things about that user as a result. These companies keep a detailed map of every place a user visits to increase the chance of being able to identify that user.

Others are linking an address with latitude and longitude to advertise to users in their homes, thereby using location as a proxy for identity.

Still others are buying location information so they can aggregate it and help marketers tie an in-store purchase back to an online ad.

?There are lots of folks of the cutting edge of the app world that are increasingly pushing the envelope at ways to use location data,? Mr. Polonetsky said.

?Increasingly, people are finding unexpected ways that location is being used to correlate other information about you,? he said.

?Kids and location are the two areas that regulators are looking to understand better and to find enforcement angles.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York