It seems like only yesterday RWW’s own Marshall Kirkpatrick wrote the foreword to a book discussing the new ecosystem, business models and value chains in a hyper-connected world. In actuality, it was a little over a year ago when the book, The Shift, was released. It documented an 18-month primary research study commissioned by Alcatel-Lucent to assess the market potential of various network APIs – including presence, profiling and location, among others – across an ecosystem of developers, advertisers, consumers and enterprises.
Culling the inputs of over 10,000 respondents from the research, my co-author and I boldly predicted a $100 billion incremental market opportunity when telecom networks are leveraged as development platforms. The impressive figure is derived, in part, through the creation of new business models between developers, advertisers and service providers.
Allison Cerra has more than 15 years experience in the telecommunications industry, working in both the service provider and equipment vendor categories. In addition to Identity Shift, Allison is the co-author of The Shift: The Evolving Market, Players and Business Models in a 2.0 World.
Among some of the more interesting APIs across most audiences? Those contextual APIs – such as a user’s presence, profile or location, for example – that, in combination, form a compelling constellation of a user’s likes, dislikes and behaviors. For this reason, these same APIs can raise eyebrows among privacy-conscious consumers and advocacy groups. When asked which entity users were more likely to favor in sharing said sensitive information – the service provider or application developer – it was the service provider that earned nearly three times the number of “trust” votes. If nothing else, the study raised an interesting question: Do service providers occupy a coveted trust position with users precisely because most have not shared this valuable customer information or does the trust relationship give them permission to do so?
We set out to answer just that, with another study aimed at more than 5,000 US consumers across multiple life stages (from teens to mid-lifers). To understand where the business opportunity lies, one must first understand how a user’s identity is enhanced or diminished across the multiple network and device connections consumed each day. To understand the fundamentals of identity as perceived by the consumer, we utilized both quantitative and ethnographic research (whereby we visited with consumers in 30 homes across the United States, filming their behaviors for hours). What resulted was the creation of what we call the 3P construct of identity.
The 3Ps
First, there’s presentation. This speaks to how a consumer goes about constructing and managing the ideal image of himself. While we may mock those we label as “narcissistic” in their pursuit of putting their best foot forward (in either the real or virtual worlds), to most of us, presentation really matters (not surprisingly, even more so as the age of the respondent skews younger). In fact, while nearly half of the population is presentation-oriented (as measured by a psychometric panel in the study), they represent nearly two-thirds of likely buyers for identity services. Needless to say, being mindful of the consumer’s innate narcissism may be useful to those selling these services.
To understand where the business opportunity lies, one must first understand how a user’s identity is enhanced or diminished across the multiple network and device connections consumed each day.
Next, there’s
protection
. Protection deals with those reveal or conceal behaviors we employ to safeguard that which is most valuable to us (such as information about ourselves or loved ones). This is the one category that seems to steal the headline of the day. Security breaches, company privacy missteps and identity theft victims are journalistic fodder. And, while older respondents tend to be a bit more protection-centric than the norm, it’s not merely the age of the individual that affects his paradigm, but his life stage that is perhaps even more important. Parents, in particular, gravitate toward protection-oriented services that help manage the connected lifestyles of their digital native children (thereby defending the most precious “valuable” in the family).
Finally, there’s preference. This one is for all those bargain shoppers; the folks that relish a great deal. They get excited when services are personalized to their interests. And, in an overwhelming virtual world with billions of choices, they look forward to a serendipitous experience that serves up products and services even before they realize they have a need.
A Gold Mine of Potential for Marketers AND Consumers
Exposing identity-centric APIs to developers unlocks a veritable gold mine for providers and marketers and creates valuable new user experiences that can positively impact quality of life. Take an application I heard about at this year’s Mobile World Congress event in Barcelona:
A healthcare developer created an app that marries a user’s health profile (think of a chronic diabetic) with device location. By sensing where the patient is – such as at a restaurant – the app is able to seamlessly push menu options that fit the user’s unique dietary restrictions to the device before he can be seduced by tempting alternatives.
While it is true that consumers hold service providers to a higher standard than application developers, there is evidence to suggest that the gold can be mined if the user retains control. This may seem like an obvious finding but consider how many privacy policies are buried, unclear or non-existent.
Even for someone who may be a bit more protective in what he exposes about himself, the opportunity to gain personalized recommendations that help manage a health challenge becomes much more compelling and suddenly less intrusive when put in this light. That’s just location and profiling. Imagine layering in network presence to detect bandwidth and local time and you now have a turbo-charged application that serves up even more targeted options for the consumer – think breakfast, lunch or dinner with images of recommended dining options.
Who’s the Boss?
So, back to our question: Can service providers monetize the customer profile or does doing so damage the trust position meticulously acquired over the years?
The reality lies somewhere in the middle. While it is true that consumers hold service providers to a higher standard than application developers, there is evidence to suggest that the gold can be mined if the user retains control. This may seem like an obvious finding but consider how many privacy policies are buried, unclear or non-existent. Add a lack of usable tools for managing one’s identity, and it’s no surprise many consumers remain wary. However, according to our research, companies that place the user firmly in control will have the best chance at the gold. Even our most protection-conscious individuals in the study – mid-lifers – agree: more than 80 percent are very or somewhat comfortable sharing information about themselves if they have control over who sees it.
The New Battleground
Identity is the new battleground in the war for the consumer. It is no longer “ownership” of the customer that matters, but “ownership” of the coveted trust position that enables new value chains to be created around the user.
Identity is the new battleground in the war for the consumer. It is no longer “ownership” of the customer that matters, but “ownership” of the coveted trust position that enables new value chains to be created around the user. Our research confirms the importance of trust as the new currency: the degree to which a user trusts a particular brand is strongly correlated to his willingness to pay for a new identity service. (Other factors, such as how much the brand is loved or hated, for example, have virtually no impact on the same.)
For service providers, navigating the trust fault line is the opportunity of the networked age in which we now live. For developers, creating more personalized applications aimed at unique needs unlocks new potential. For advertisers, more effective targeting may finally answer which half of the marketing budget is wasted. And, for consumers, an ecosystem ripe with new value chains and business models is capable of delivering richer services with greater value. The potential windfall is great – but only for those who understand and respect the consumer at the center of the debate. After all, only he can cast the winning vote with his heart, mind and wallet.
