Beacons Beckon – But Privacy Is Still A Question Mark

beaconsBrands are experimenting with proximity marketing, but consumers aren’t always willing to give up their location data.

As Pew noted in a recent study on privacy and information sharing: “Location data seems especially precious in the age of the smartphone.”

Spam, the risk of data breaches, overdone customer profiling and data being collected for one purpose but used for another are all cited as concerns.

But that isn’t stopping retailers from getting their feet wet – although it’s still early days, said Brian Sobecks, senior digital innovator and evangelist at the The Kraft Heinz Co.

“The analog is the 1920s in the auto industry,” Sobecks said Tuesday at the National Retail Federation’s Big Show. “You’re seeing some really great location-based point experiences, but you obviously need to scale it to make it a part of your shopper marketing arsenal.”

Kraft Heinz recently partnered with beacon technology startup Shelfbucks to place digital sensors within in-store displays to collect shopper data. GameStop and Mondelez are also experimenting with the technology.

Similarly, Dick’s Sporting Goods partnered with the NHL and beacon company Gimbal to run a geofencing campaign ahead of the playoffs to drive hockey fans into stores, while GameStop uses beacons to provide shelf-level information and product reviews. Energizer and The Clorox Co. have both experimented with beacons and push notifications in the past, and Rite Aid announced on Monday that it’s going to deploy beacons in more than 4,500 stores across the US together with beacon provider inMarket.

The potential upside for brands is fairly straightforward. Beyond a respectful use of in-store targeted push, there’s the opportunity for data collection, attribution, connecting online and offline behavior, tracking foot traffic, retargeting, upselling and cross-selling.

But do beacons really benefit consumers?

One could argue there’s an inherent value exchange for users who share their data in return for better in-store experiences or more relevant offers.

And many Americans do seem to support the concept of a tradeoff. Pew found that 47% of consumers are cool with the basic bargain offered by retail loyalty cards, where they allow stores to track their purchases in exchange for discounts.

But it really depends on the deal being proffered and how much risk consumers feel like they’re exposing themselves to by sharing information, whether that’s a potential breach or unwanted communications. Said one Pew respondent, “I continually deny location services on my phone because I don’t want the chance of ads coming up.”

What does that mean for proximity marketing?

“The challenge – or the fine line – for retailers is taking that information and turning it into real value to their customers,” said Michele Dupré, group VP for retail, hospitality and distribution at Verizon Enterprise Solutions. “And that only happens when the engagement is not considered intrusive, when it doesn’t come across as creepy and as long as people opt in and participate willingly.”

However, the concept of willing participation isn’t cut and dried.

Some research suggests that consumers share information not because they’re getting commensurate value in return, but because they feel powerless not to. According to Joseph Turow, a professor of communications at the University of Pennsylvania, what appears to be a willing value exchange is really a collective submissive sigh.

“In the real world, people who exchange data for benefits are more likely to do it when they’re resigned, rather than as the result of a cost-benefit analysis,” Turow said at the Federal Trade Commission’s PrivacyCon event in Washington, DC, last week. “Most Americans don’t have sufficient knowledge to make that cost-benefit analysis.”

But Dupré isn’t so sure.

“You’re always going to have those who may not completely understand what they’re agreeing to, but sometimes I think we underestimate how open and savvy people are,” she said. “Consumers are willing to engage with retailers – but there has to value for them and, even more importantly, they need to know their information is secure.”

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