If someone wanted to bid on your personal data, how much would you auction it off for? At frog, we are seeing lots of business models that depend on analyzing data trails (also known as “digital exhaust”) left by all of us as we navigate our way through the connected world. What we want to know is, how much is each piece of information actually worth.
Of course just asking people outright won’t offer much insight— after all, if I asked you, “How much money would you want for your Social Security number?” or, “What can I give you for your Web browsing history?” you would rightly be suspicious. Even if I managed to convince you that I was doing some legitimate research and you wanted to help me, you would likely have trouble giving me an answer. So, to get the answers we needed, we decided to conduct an experiment. People were offered the choice of two services, like Web mail, that were free, but one service collected some personal data and the other didn’t. In each case, almost all the respondents rationally chose the free service with no data collection. Next we offered them the same two services, but the service that didn’t collect data had a small fee associated with it, ranging from 50 cents to $20 a month. By tracking how people changed their mind as the price of the service changed, we determined what people thought their data was really worth. In effect, we asked people to “put their money where their mouth is.”
The following chart depicts the price at which 50 percent of people would pay to protect a given piece of data.
The three tiers of value
There seems to be three tiers of data that people are inclined to protect and think are valuable.
The top tier includes social security and credit information. No surprises here—we’re trained to guard this data, and most Web service providers wouldn’t have a legitimate reason to ask for social security numbers or credit card information (we could not get 50 percent of users to give us their social security number within the $20/month bounds of our experiment, so in fact the value is more than $240). We would suspect nefarious purposes!
The middle tier contains digital communication history such as instant message or chat sessions, Web browsing history, real-time location information and health information. We can think of this as true “digital exhaust.” This is not information we purposefully create. Rather, it’s information that’s generated by our actions and interactions. The thought that people want to make use of this information makes American consumers a bit cautious—we instinctively feel that communication should be private and, perhaps, we are a tad ashamed to make it all public. There may also be a notion of control—we can’t control the flow of this information, but we place a higher value on it.
The third tier of the least valued information contains facts about us. It includes our online shopping history, advertising clicking trails, as well as contact and demographic information. There were a couple of surprise insights in this tier.. We found that people place a relatively low value on our “social graph”—all that information we post on Facebook—despite the media attention about the hazards of over-sharing. The second is that the gap in value between generalized, anonymous demographic information ($3/year) and targeted, personalized information such as contact info ($4.20/year) is relatively small.
What does it mean?
Business models that depend on analyzing data streams from click streams, social profiles, and purchase histories will face little resistance from consumers. Consumers have trouble seeing the threat of giving up that information, but businesses understand the value and are willing to pay for that type of insight. Conversely, businesses that hope to make money from defending and protecting social profiles will struggle, We’ll share more about that later, but our data shows that online reputation defense will not be a mass market business.
One sector that could benefit from the open sharing of personal data is the health care industry. Health records are ripe for their version of Mint.com—someone to take the data stream produced by health, fitness, and life-tracking devices and transform it into interesting and actionable insights. Whoever cracks this nut will face less resistance from consumers than companies such as Google that is trying to monetize our search history.
Image by Iker Ayestaran