min read

The importance of trust: Online privacy issues and the consumer's relationship with free products and services

by Katherine Savage , 24.05.2012

The importance of trust: Online privacy issues and the consumer’s relationship with free products and services

With the ability to connect with friends and strangers via the internet (through free social networks, forums and blogs, and free mobile applications), the dissemination of personal information online is on the increase. But this online freedom can result in ‘real life’ problems – the spread of personal information beyond the owner’s wishes, or even greater vulnerability to criminal activity. With online privacy hitting the headlines recently[1]and the Mobile Entertainment Forum launching their Privacy in Mobile Applications Initiative[2], issues of privacy and trust have come to the forefront of consumer consciousness.

Website owners and application developers who offer free products and services, such as Google, Facebook, and Twitter, are currently struggling to strike a balance between maximising the utility of the personal data they receive whilst meeting the needs of their consumers for a trusted, non-invasive service. There are two ways businesses can proceed: minimising consumer concerns about trust, or maximising the advantage of using the service, website or application. These approaches can be used simultaneously and are theoretically most effective when combined.

The less familiar costs of sharing personal information online

Generally, a traditional product or service’s ability to dissatisfy, fail or even harm the consumer is obvious and real; for example, a product might be physically broken, or a service incomplete. Whereas with free-to-use websites and free apps, the potential harm is usually non-physical and, currently, generally remote. Almost all consumers will have some expectations of a product before they buy it, but with these emerging technologies of social networks, websites and apps, in-depth knowledge and understanding is limited to a narrow section of the population. Few consumers will be expecting the sharing of personal data to third parties or behavioural tracking that comes with some of these services.

Furthermore, a savvy consumer is likely to be aware of the potential risks of any intended ‘traditional’ purchase, and might conduct appropriate research to guide their decision making. This may range from months of research across a range of channels before purchasing a car, to checking the calorie content of a chocolate bar whilst queuing for a till. However, lack of knowledge about privacy issues can lead consumers to view adding or synching personal information to websites and apps to be low risk. They tend to trust in the wisdom of crowds – ‘loads of people use this app/website, so it must be safe’. Or they rely on the app stores to protect them from downloading a harmful app. Often privacy notices are accepted without being read and understood.[3] Therefore, a lot less research and consideration goes into signing up to a site or downloading an app.

Recently this lack of attention has been bought to the world’s attention through exposés of services like ‘Girls Around Me’ and apps that copy users’ contact books.[4] Website and app developers need to ensure that consumers are not deterred from using their products because of privacy fears.

Maximise the advantage of using the service, website or application

Clearly a consumer is more likely to start or continue using a website, service or app if it meets their needs. After all, people did not stop using MySpace and move to Facebook because the latter had a superior privacy policy to the former. Rather, it was because Facebook offered a more appealing service. Ahead of Google’s Privacy Policy change on the 1st March, we asked those who were aware of the new policy how likely they were to change the way they use Google’s products or services after the update. Only 14% said they would change the way they use Google’s products.[5] But providers and developers cannot rely on offering the best product and ignore privacy issues.

Evidence suggests that not being upfront about privacy policies can reduce consumers’ levels of trust in a company if the policy is disclosed after the company has received personal data from the consumers.[6] With consumer watchdogs’ and the media’s interest being high in this area, providers and developers cannot rely on their policies ‘flying under the radar’.

As consumers inevitably become as savvy with these services, sites and apps as they are with more traditional products and services, being a trustworthy brand will become more important.

Minimising consumer concerns about trust

“The ultimate goal of marketing is to generate an intense bond between the consumer and the brand, and the main ingredient of this bond is trust”[7]

For services like Facebook for which customer data is an important part of their business model, ensuring that they have the trust of their users is vital. Firstly, lack of trust might erode at customer loyalty and increase churn. Secondly, security and privacy fears can lead to consumers deliberately avoiding handing over personal information (e.g. by giving fake personal details, disabling cookies etc.).[8]

Instead, companies should try to minimise trust concerns by being open about their privacy policies and offering consumers choice: “consumers are less likely to view a given information practice as privacy invasive if they are able to maintain, even to a small degree, some measure of control over their personal information”.[9] Research shows that consumers would prefer to be educated about privacy policies and allowed to make informed trade-offs between access to personal data and the functionality of the service. The provision of education helps create trust in the brand.[10]

A possible approach to tackling privacy concerns

It’s my belief that consumers will come to see these privacy policies (such as behavioural tracking or uploading of contact lists) as the ‘price’ for a free service. As awareness of these terms of service increase and consumers become more privacy savvy, brands have the opportunity to become trusted service providers. By enabling their users to use informed consent to customise their service through a series of trade-offs between using personal data and receiving some benefit in return, brands can turn the threat of privacy concerns into an opportunity. Offering a great service will no longer be enough: trust in the provider will be key for its success.

[1]‘Privacy backlash over Girls Around Me mobile app’, www.bbc.co.uk/news/technology-17582975, 2 April 2012, accessed 4 May 2012

[2]‘MEF launches App Privacy Initiative to build Consumer Trust around User Data Collection’, www.mefmobile.org/News/mef-news/197/mef-launches-app-privacy-initiative-to-build-consumer-trust-around-user-data-collection, 25 April 2012, accessed 4 May 2012

[3] Edgar A. Whitely (2009), Informational privacy, consent and the “control” of personal data, pg. 6

[4] ‘Social apps 'harvest smartphone contacts', www.bbc.co.uk/news/technology-17051910, 15 February 2012, accessed 7 May 2012

[5] GfK Online Omnibus survey, representative of UK internet users. 6075 respondents were interviewed between the 10th-13th February. At the dates of interviewing, Google’s notification effort was well under way, although the homepage promotions had yet to begin.

[6] Milne & Boza (1999) in Maximilian Gruber (2012), To Confess or not to Confess: Should consumers be told the truth about targeted online advertising?, pg. 17 The research was about behavioural tracking in return for targeted advertising

[7] J. Hiscock, (2001), “Most trusted brands”, Marketing, March, pp. 32-3.

[8] Robertshaw & Marr (2006) in Julia Kosela (2007), Effectiveness, profitability and future of personalisation in direct marketing communication: the critical approach, pgs. 9-10

[9] KA Stewart & AH Segars (2002), An empirical examination of the concern for information privacy instrument. Information Systems Research, 13 (1), 36-49, pp.39-40

[10] Milne & Bahl (2010) in Maximilian Gruber (2012), To Confess or not to Confess: Should consumers be told the truth about targeted online advertising?, pg. 14

(11) Image: Ahmad Faizal Yahya: http://www.shutterstock.com/gallery-987p1.html?cr=00&pl=edit-00">AHMAD FAIZAL YAHYA</a> / <a href="http://www.shutterstock.com/?cr=00&pl=edit-00">Shutterstock.com</a>