Despite serious concerns about aggregation of personal data for more targeted advertising, users are not leaving Google products.
DWR surveyed more than 60 Google users in the past week to find out how concerned they were about Google’s aggregation of consumer data, as well as whether that would lead consumers to stop using Google products. The results are clear, and the response is a resounding “no.”
The survey results show that while, on principle, consumers were “extremely” or “somewhat” concerned about Google aggregating personal data for more targeted advertising, users were already accepting the new terms and conditions ahead of the scheduled March 1 changeover date. More importantly for Google, very few respondents were planning on switching from Google products to alternatives.
Key findings include:
- 60% of respondents were “extremely” or “somewhat” concerned about “Google aggregating all your personal data to serve you more personalized advertisements.”
- 69% of respondents were “not at all likely” to “stop using Google products” such as email, search, Picasa or Google chat.
- Only 28% of respondents were “extremely” or “somewhat interested” in the concept of “more personalized advertisements.”
This report is a follow-up to our report entitled “Opt-out of Google?” from January 25, 2012, (http://bit.ly/yS92pY), which cited several potential risks to Google’s advancement in strategy with respect to consumer data. In this report, the results varied by age, as we predicted last month, with an inherent bias toward trusting Google by younger users.
The results were split by age, with the age 18-to-30 year old Gen M crowd much less concerned, and more accepting of personal data being used by advertisers. The highest level of concerns of personal data clearly correlated to the older respondents.
The most interesting data from the survey came from a secondary level, where respondents were asked “Why”, after the question “How concerned are you about Google aggregating all your personal data to serve you more personalized advertisements?” The responses were colorful, intriguing, and insightful, including:
Responses in favor of data aggregation
- “I get everything from Google for free and understand they need to make money.”
- “Have already been experiencing personalized advertisements on Facebook.”
- “I’m willing to trade off some privacy for convenience when I feel that it’s to my benefit. I don’t like getting ads, so I don’t see the change as being to my benefit at all. It just gives Google more grist for its advertising revenue mill. I will think more about using Google Tools in my classes, given their use of the data.”
- “Although Google’s aggregation of personal information may be a little disconcerting, it’s a fact of life on the Internet that if you share information, people who own websites, big and small, have access to that information.”
- “Honestly, I figured they went ahead and did it anyway?”
- “They’re a trustworthy company. I’ve been using their services for a long time and they’ve earned my trust. Advertising is thought of as a nuisance because it interrupts a show I’m watching, distracts from a web page I’m reading, or isn’t relevant to me. More personalized advertisements at least solve the relevancy issue.”
- “I view it as a necessary evil that must accompany the many benefits of modern society.”
- “As a fairly private individual by nature, I’ve had some serious misgivings about the exposure of my personal information online. As a firm believer in privacy rights (from a broader social and legal perspective), I have also been quite concerned with individuals’ seeming lack of privacy over the Internet. However, I must say that these concerns (serious as they are) have not prevented me from subscribing to services like Google, Facebook, etc, which is certainly a commentary on the utility (in some senses, necessity) of these services. I wonder if there will be a breaking point at which I will no longer use these services ….”
- “Doesn’t thrill me, but I thought that they were already doing it anyways, and I value the email, documents, phone, and picasa features that I regularly use.”
- “They have the data anyways – maybe I’ll actually want to see an ad they serve me now.
- “Google already serves up contextualized ads. This seems incremental. Also, I’ve not had any reason to distrust Google after many years of using their products.”
- “It’s inevitable. Market research and data mining has been around for eons, now it’s just more efficient”
- “I already am subjected to that with facebook. AND I’m pretty sure Google already does it based on your search history from your computer.”
- “I started trusting Google with my most personal data a long time ago.”
Reponses against data aggregation:
- “It creeps me out that Google knows so much about me.”
- “I don’t feel like I really understand the changes or the true implications of changes. Fear that I am losing privacy and that information might one day be very public”
- “for me, the whole concept of someone compiling data on me is just worrisome. truth be told, this act by google, as a stand alone, doesn’t really bother me, but what is frightening is the path this will eventually lead us down”
- “Google is not regulated. It needs to have serious safeguards in place to deserve this level of trust from me.”
- “They, and the government, should keep their big, fat noses out of my business/affairs.”
- “If Google screws this up, they ruin the golden egg. They’ll invite (and deserve) more regulation. Their stock price will be hammered. Real risk isn’t evil Google, it’s clumsy Google – there have been several cases where GOOG has inadvertently released data (Buzz, Docs). One also fears the kind of embarrassing profile that may linger in your browser results from otherwise benign surfing.”
- “It’s a bit big-brother like, but I find facebook much scarier. I really don’t pay attention to google ads when I’m using gmail…I don’t think I’ve ever clicked on one.”
- “they haven’t shown they deserve my trust.”
- “The aggregate is such a large number… Also, so many other tools (fb,etc) where this is already happening.”
- “Because my business is none of their business.”
- “I like porn too much.”
- “Aggregating my data to create a more complete profile for Google seems a bit invasive. Even though we provide Google with all of this data by using each of their services, knowing their disassociation across platforms allows me to feel a bit more anonymous.”
- “They should not be allowed to act like big brother. Personal research should stay that way. Personal.”
- “While I believe Google has good intentions, I will never feel comfortable having people access my personal information”
- “I find it inappropriate that Google take my data from one context and use it in another. For example, when I send email or conduct searches, I expect that to be absolutely private, while I understand that when I am on Facebook or share photos on Shutterfly that I am showing a more public side. When I am very fearful that the data from my “private” side will be used in my “public” side and that information will be revealed about me that I choose not to share. I am likely to continue to use search or other public features of Google, but to pull the two google email accounts that we currently have (and associated chat accounts) and convert them to Yahoo! or another provider.”
- “I’m trying to get off the grid – not on it.”
Our analysis of the full range of responses concludes that:
1. The results aren’t a huge surprise, but they demonstrate a clear disconnect between concern vs. action. While many respondents were concerned about aggregation of data, most had already accepted the new terms and conditions from Google, and were unlikely to leave Google products.
2. Switching costs remain a significant hurdle for Google users despite concerns.
3. Once-bitten, twice-shy, but Google marches on despite previous missteps with consumer data such as Google Buzz (http://bit.ly/w8JcQD). Gen M users trust Google more than older respondents do, which is also positive brand reinforcement for Google.
What does Google’s new policy potentially mean for retailers?
Daily deal services — such as Groupon and LivingSocial — have trained consumers to seek discounts on retail purchases of products or services, such as for food or a massage. Access to more detailed, personalized data means more opportunities for targeted advertising, including banner ads similar to those used by Groupon on LivingSocial.
At a secular level, the behavior of ad-driven or ad-incentivized buying is not new. It has been our position that, for example, consumers have been trained to wait for TV sales on either Black Friday or ahead of the Super Bowl (see our related research piece entitled, “TV sales…problematic for the TV industry and the food chain”, http://bit.ly/rFgrDd). This behavior will become more pervasive and accelerated by more personal, targeted advertising by companies such as Google.
Is this a “good thing” for retailers?
While more daily deal-type consumer behavior means traditional retailer product and service margins may face erosion, it also means opportunity for more new, lower-margin retailers to push their sales strategy in attempt to take market share from the incumbents. This, again, is similar to two retail trends from the past five years, where a) consumer foot traffic has moved from big-box retail to clubs and wholesalers at lower margin, and b) more consumers are buying online to save money vs. traveling to purchase at a retail store.
We are heading toward an era where more and more consumers will likely purchase online, from home, and at a discount to local retail prices. This likely change in consumer behavior will force local retail to become more creative in its approach to sales and marketing.
What does this mean for advertisers?
Welcome to the land of the advertising Holy Grail. Or should we say Holy Grails? The promise of targeted advertising has existed for years, much like the promise of interactive TV. However, Google’s change of policy opens the door for policy to meet technology, allowing consumers to see more highly targeted ads. This means advertisers can restructure their advertising budgets to be much more segmented by channel and, more importantly, by customer acquisition costs. This can mean a closer watch on marketing costs per user (CPU), or some flavor of effective costs per user (eCPU), depending on the level of virality around a marketing campaign.
In our view, some of the social gaming companies, such as Facebook, and media services companies, such as Netflix, are significantly ahead of traditional packaged goods companies, and stand to benefit the most, early on, after the Google policy change goes live.
What does this mean for Facebook and its upcoming IPO?
Will the privacy or aggregation of data bother consumers? In our view, Facebook faces a similar risk that Google faces: What happens if there is a data breach? The IPO will raise the already-high profile of Facebook, and we believe this profile will only grow over the next 24 months, especially if Facebook develops its own mobile-ad-based network. We believe that, eventually, Facebook could also get involved in the TV hardware business to seed another potential market opportunity.
Future data breaches may prove costly, and we’re not talking just financial
We have seen new policies enacted in Europe (http://bit.ly/zjIoMF) that have made fines for data breaches significantly more expensive, and, as we saw in the data from the survey respondents, some users are one data breach away from leaving Google products. While we acknowledge survey respondents as being truthful, in our view, survey data has some limitations with respect to intent-to-purchase data (lower than reported in a survey), as well as on the downside about potential intent-to-switch to another service.
What does this mean about data security? Bad news for consumer electronics companies?
It becomes even more imperative for service providers to deploy more assets in defense against hackers. As more and more data is aggregated, the bull’s-eye on these providers, whether it be Google, Amazon, Facebook, or Sony, gets bigger every day. While Sony has been the (successful) target of hackers in the past year, it is our understanding that companies such as Microsoft face a significant number of attacks on a daily basis. The difference to date has been, in our view, that software and Internet companies are skilled at defending against cyber-data attacks, significantly more so than consumer-electronics-based companies.
The underlying fundamental question is considered by many to be secular in nature–software and networking companies have a significant, built-in advantage over hardware-based companies primarily reliant on software and networks of other companies.
At the end of the day, one breach could expose any unprepared company, especially with a huge loss of customers. It is our strong bias that the next big negative headline risk on a data security breach comes from a consumer electronics company vs. a software or Internet company.
In a rather blunt-trauma fashion, Google will likely learn that it needs to reconsider its communications plans with its biggest resource: its users. By not broadly communicating or discussing its changes, beyond its own “official” blogs and landing pages on the web site properties, Google has opened itself up to what we believe is fairly justified criticism for poor communication.
Although we did not ask the question in the survey, in our opinion, very few Google users actually know that Google has “official blogs,” much like most users understand that there are “Google Labs,” never mind how to find them. We believe this policy change might awaken Google to take more of a study next time about “life outside the bubble” of being based in the Silicon Valley, and require more time chasing our favorite consumer, Joe-Six-Pack in Middle America.
Is more trouble on the horizon for Google?
Will there be a temporary restraining order in the U.S. to halt Google? It is unclear to us, as we don’t offer that type of consulting or advisement. Our point is simple: There will likely be noise raised against Google beyond consumers in the next two weeks, and a delay in the policy change, to us, is likely.
Please note: DWR survey results are qualitative in nature and not quantitative, and we are not presenting them as statistically valid. The purpose of the survey was to drill down a few layers into consumer attitudes, concerns and behaviors.