A subtle shift is taking place within the hyperlocal industry, as consumers have started gradually changing how they feel about location services and personal data collection. While firms that collect location data through mobile apps were once viewed as pariahs, a shift in attitudes has more consumers turning on location services for apps and taking advantage of the benefits that sharing this data can bring.
Behind the changing attitude is a growing interest in wearables. More than 20% of Americans now use wearable devices, with more than 780 million of these devices expected to be on the market by the end of 2018. Fitbits and Apple Watches are becoming ubiquitous for health-conscious millennials. In order to take advantage of all the features that wearable fitness trackers offer, consumers have had to open up their privacy restrictions and enable a higher level of real-time location sharing than they were comfortable with in previous years.
Industry veterans like Eli Portnoy, who co-founded the hyperlocal startup Thinknear and sold it to Telenav before moving on to his latest project as the co-founder and CEO of Sense360, see these changes in consumer attitude as evidence of a maturing industry.
“Consumers are seeing that this data directly leads to better experiences. From tracking runs, to getting directions, to location-based reminders, these experiences clearly need location and consumers are comfortable sharing it if they know it will give them something back,” Portnoy says.
That value exchange is important. Even when consumers were more hesitant to share their location data, they still made exceptions for navigation apps where the benefits were obvious. (According to comScore, three of the fastest growing mobile apps between 2014 and 2016 were Waze, Uber, and Lyft, which all have navigation components.) Now, wearable devices and the apps they connect with have created a completely new value exchange, where consumers can track their runs, measure their heart rates, calorie intakes, and even compete against friends in fitness competitions if they agree to disclose their real-time whereabouts and personal health data to app developers.
Consumers seem aware that privacy could be an issue — in fact, 25% of those surveyed by researchers at U.C. Berkeley mentioned privacy as a risk associated with wearable devices. A study by the Federal Trade Commission found that 12 mobile health apps and devices transmitted data to 76 different third-parties, some of which could be linked back to specific users. But consumers seem to be OK with this shift in privacy norms, judging by how quickly the wearables market continues to grow.
“As long as there is a relevant value-add, consumers are comfortable sharing their data. In turn, companies or brands are using this data to get deeper insight and understanding of their customers’ behaviors. However, the moment consumers feel like companies are abusing that information by using it for tracking, to send irrelevant or too frequent advertising messages or not handling it securely there will be issues,” says Patrick Giusti, chief revenue officer at Point Inside.
Marketers are already seeing the result of this shift in thought, and they’re adapting their spending strategies to take advantage of the new cultural norms. According to a report by eMarketer, 78% of U.S. marketers have upped their spending on location-based mobile advertising in 2016. They’re focusing more heavily on improved ad targeting and increasingly tracking the effectiveness of ads through in-store visits. Local mobile ad spending could reach $29.5 billion by 2020, according to BIA/Kelsey. Major brands like Trident, Nivea, GlaxoSmithKline, and Lufthansa have already started leveraging the data being collected through wearable devices to enhance their digital marketing efforts.
But hyperlocal marketers hoping to change societal norms around the sharing what was once considered “private” data still have work to do.
“The last missing piece is more transparency about who else is getting access to the data. I think consumers are comfortable sharing their data with Uber or Fitbit, because they are well known companies and their business models are understood,” says Portnoy. “I think part of what is still missing is more transparency about who and how the data will be shared with third parties.”
Research backs up Portnoy’s assertion. According to a study by Columbia Business School and AIMIA, 75% of consumers are more likely to share data with brands they trust. In order for startups entering the hyperlocal market to gain that trust, they’ll have to prove that they understand the fears that people have around privacy protection and security, and show that they are taking steps to keep their users’ personal data safe.
“Regardless, I am very excited that the industry is moving in the right direction and that consumers are showing more comfort sharing this data,” Portnoy says. “This will lead to better consumer experiences, more apps because it will be easier to monetize them, and more business opportunities.”
Stephanie Miles is a senior editor at Street Fight.