The Crossroads of Location Data and Privacy
In this edition of BIA Advisory Service’s Vantage Points, we share insights from Dan Hight, Business Development and Partnership Executive and Industry Advisor for BIA.
The Vantage Point series taps the perspectives of various lookout points from around the local media and tech sectors. The views expressed do not necessarily reflect that of BIA Advisory Services. Please contact Rick Ducey, Managing Director, BIA Advisory Services, if you have insights to share.
The Crossroads of Location Data and Privacy
by Dan Hight, Business Development and Partnership Executive and Industry Advisor
Headlines have ignited public concern and Congressional hearings regarding data privacy for industry giants, Google and Facebook and advice given from Apple’s CEO Tim Cook that industry should have self regulated. There has also been a lot written about location data and what it can tell you about a person. Most recently in an article written by the NY Times, which stipulates that even anonymized data, with enough of it, you can identify who someone is. This should be a wake-up call to the location data industry to regulate itself and ensure that it takes strides to protect consumer privacy as well protect the data that it collects
Consumers are beginning to understand that if they are not buying products or services, they are the product. Many understand that their online activity is being tracked, search for the Gap and you will see ads retargeted on web sites that you view for the next few weeks. This is what the majority of the predicted $58.9 billion local online/digital/interactive advertising in 2019, according to BIA Advisory Services, ecosystem has been built upon; creation of an online profile of who a consumer is based on the sites they go to or what he/she likes on a social platform. But what is newer to much of the public is that where you go, can also be used to build a real world profile of places that a person goes to (i.e. fast food goer, luxury shopper, etc.).
Content costs money, apps cost money and consumers are only going to pay so much for what they use. The toll that consumers pay to gain access to this content or use an app is their data. What is needed is more transparency in how these companies are using this data; trust that it is being protected and opt out of data collection if she requests it. Third-party data is a big business and an integral part advertising and media industry. In the US this year, $19.2B (an increase of 17.5%) will be spent on third-party data and the solutions to manage and analyze this data according to IAB/Winterberry report released in December.
Location data companies need ensure they do not gather too much information about who that person is, like where she lives or that she might have a medical condition. These companies should only store data that is relevant for advertisers and purge these rest or else it is ripe for regulation. Rather than exactly what household a person lives, tie back to a zip code or zip+4 to not identify the exact person. Sensitive points of interest such as doctor’s offices, elementary schools, churches/synagogues/mosques should not be indexed so that there is no risk of understanding when a users is there. This goes under the adage, just because it can be done, doesn’t mean it should be done.
As the barrier to entry for location companies has been relatively low, many of them have not taken the time to build robust privacy policies, data collection best practices developed and little focus on security. All of this will cost money, but it is necessary if location data is to truly be self regulated. Companies need to make these practices core to how the conduct business as more regulation like CCPA begins to take effect or more onerous ones like the European Union’s GDPR will come a knocking.
So what should companies do when partnering with these companies? Ask lots of questions questions. For example: How do you handle personally identifiable information? Have you complied with GDPR if applicable? How are you thinking about pending California data legislation? Can I see your privacy guidelines? Can I see your security documentation? Do you have a notice process for data leakage? How do you handle identification of the household? As always, buyer beware. Be an informed buyer of data and make sure you are thinking how this would impact my business. Like Voltaire said way before Spiderman “with great power comes great responsibility.”
Dan Hight is the Founder of DH Advisors where he helps companies leverage technology solutions to drive sustainable revenue growth. His team brings a mix of traditional media, out-of-home, programmatic, mobile and digital media experience to help companies drive new revenue. If you are looking for help in building new revenue sources and partnerships, please contact Dan for more information.
This Post Has One Comment
Dan, I agree with you on many fronts. It is time for the industry to set standards and develop methods to ensure compliance, and not rely upon solely upon 3rd party firms like TrustArc or the Network Advertising Initiative. The reality is that location-based ad targeting is now more than a decade old, but most consumers remain unaware that location is used to create targetable audiences. In the vast majority of the cases, this audience segmentation is innocuous; Coffee drinkers, auto intenders, fast-food diners. And while I can’t attest to the practices of all the location targeting solution providers in the market, I would venture to say that most of them already operate without significant threat to user privacy. The more light that we shine on what and how location data is being leveraged, the more comfortable consumers will become with how their data is used.