Consumer Capital

The Future Foundation’s Josh McBain and Patrick Fagan on why Consumer Capital promises better informed, more confident shoppers and a greater commercial transparency all round…

We have witnessed a massive expansion in recent years in the collection and manipulation of data.

Consumers everywhere are learning the life-enhancing power of personal data-gathering, made increasingly simple and engaging by technological advances.

Eragy, for example, is an energy management software company that offers a Watt’s on Now! service – an app that enables users to save money on energy by monitoring their consumption via web and mobile.

As consumers capture and share information like this, businesses are taking the opportunity to target individuals with evolving levels of sophistication. The era of Big Data has been beneficial to the consumer in many ways, but so far the initiative has tended to reside with businesses. Whether through a lack of safeguards or a lack of awareness, consumers have found controlling the online flow of their personal data a difficult and often unrewarding task.

However, for three reasons we expect the coming decade to bear witness to growing levels of consumer empowerment:

• New regulations are emerging to protect personal data
• Recent industry initiatives are handing greater control to the consumer
• And there is evidence of a growing desire among consumers to police their own information.

With more control over the collection, storage and use of their personal information, consumers will use it as a new form of currency to be exchanged in their interests. This is the world of Consumer Capital.

New Regulation

In 2012, the European Union published its new Data Protection legislation. This, if passed by European institutions, will provide consumers with a series of new protections and safeguards in the area of online security and data exchange. The most significant proposals are:

• Explicit consumer consent will be required. Although the proposal will not require consumers to opt-in, it does demand that companies obtain explicit consent by “clear statement or affirmative action” before consumers’ personal data can be used.
• Subject access requests would become free of charge. Currently, consumers can ask to see the information a company has on them – but for a small fee. Under the new proposals, such requests would be free of charge.
• IP addresses would be defined as personal data. The proposed legislation removes any ambiguity over whether IP addresses are classified as personal data. This change will result in web analytics no longer being available to companies, which would have serious implications for most businesses and for digital marketers in particular.
• Consumers would have the right to be forgotten. Under the proposed regulations, consumers throughout the EU would be able to request that companies delete any information they hold on them.

Industry initiatives

Advances in privacy tools are enabling consumers to manage their online profiles and control the information they share with organisations.

Your Online Choices is a website launched under an EU-wide industry initiative to provide consumers with a one-stop-shop for managing their online data preferences. The website allows users to choose companies from which they are happy to receive interest-based advertising (i.e. promotions targeted at specific consumers based on their online behaviour).

Both Yahoo! and Google provide a tool which goes well beyond simply offering individuals the option to opt-out of targeted online marketing. Users can also create and manage a personal profile based on their demographics and interests. Business can then use this information to tailor their commercial messaging.

In 2012, Microsoft announced that its latest version of Internet Explorer will automatically opt-out all users from targeted online advertising.

Such developments could have significant implications for the exchange of data online. Indeed, making opt-in the norm will impel companies to offer the consumer some form of incentive to share their personal information. Under such a system, a consumer’s data-bank becomes an exchange commodity – Consumer Capital.

Consumer attitudes

There are both advantages and disadvantages to data collection for consumers. Though many will find it helpful to be prompted to buy something new on the basis of logged preferences, some will prefer the “right to be forgotten”. Around half of UK consumers are interested in a store which keeps no such records.

It would be an error to assume that consumers are passive agents in the realm of online data exchange. Instead, we find that the vast majority would like to be in control of their online privacy.

In the chart below, we come to the crux of the issue. The fact that over a third (and almost half of high internet users) already sees personal information as a commercial asset we are increasingly viewing personal data as more than something to be simply guarded, but instead as a form of capital to be kept and utilised for gain (such as discounts, club memberships or early bird access to new offers).

Future Focus

If the 00s was the era of brands exploiting Big Data, then the 10s will witness a re-alignment of power from industry to consumers. This will be driven by stricter regulation, industry initiatives that make a virtue of data-sharing, and a growing consumer desire for control over online affairs.

If access to online consumer metrics becomes something that has to be actively permitted then brands will have to incentivise the sharing of data. In this scenario, an individual’s personal data becomes a commodity to be traded at his/her leisure in return for a perceived benefit from the brand.

Yet the potential trajectory of this trend goes beyond online data. Today’s consumer has access to an increasing range of devices allowing him/her to collect and store information in areas ranging from personal health to energy consumption – the trend of The Quantified Self. The growth of such devices suggests that the monetisation of data will become increasingly common.

An interesting subtext in the evolution of Consumer Capital is the potential overlap with social capital. Just as many parade their expertise in Chilean chardonnay, gruelling exercise schedules or latest adventures in Cambodia, so too will many show off how they sweep their personal traces, super-edit their history and “beat the brand” through savvy data exchanges.

Consumer Capital represents a kind of Netizen Spring, in which power shifts to the consumer and the Internet’s giant data collectors are obliged to do deals and be more transparent. Concerns about personal privacy have inhibited the growth of e-commerce for some time. Consumer Capital promises better informed, more confident shoppers and a greater commercial transparency all round.

For more, please contact:
Richard Nicholls – 020 3008 6103 / [email protected]