Privacy Implications with Proximity Marketing

The tremendous growth of smartphone sales has put a spotlight on the use of proximity marketing. Companies like Euclid can use WiFi tracking to follow customers through a store, see where they pause and where they continue without browsing. Qualcomm’s Gimbal platform offers the same type of functionality using iBeacon tracking. With all of the security concerns of the past several years, the question of legality and transparency is one that must be answered before businesses commit to the expense of proximity marketing.

There are several different types of proximity marketing, all with their own unique privacy concerns. WiFi and iBeacon tracking may be used to anonymously collect data about general traffic statistics, but they also can be used to log information about individual devices. NFC (near field communication) marketing offers no data collection on the part of the marketer. It only sends out pre-programmed data when requested.

The distinction between these two types is fairly obvious. One includes location analytics and may represent a violation of privacy, while the other simply allows consumers to interact with the products and stores around them. While there are plenty of examples of data doing good, like the use of real time data to improve traffic flow and public transportation, the public has concerns. From a retailer/marketer perspective, marketing that also includes location analytics offers significantly more value, even with the potential for public censure.

The question then becomes what is allowed by law, and what code of conduct should marketers follow? Many areas of digital marketing already skirt grey areas. SPAM is a ubiquitous problem that affects all Internet users. Ensuring that proximity marketing does not become another type of SPAM comes down to the value exchange. Does the marketing content add value to the end user?

As proximity marketing gets off the ground, those implementing these marketing techniques need to consider two things: What information to collect, and what information to send. Collecting information from individual smartphone users has serious implications. First, is it legal? The law allows marketers to collect information from consumers who have chosen to “opt-in.” For ethical marketing, always be clear about what exactly consumers are saying yes to. Is it ethical, regardless of the laws and regulations? Ethics play an important role in marketing. Consumers respond negatively to marketing that is perceived as intrusive or harassing behavior. The suggested “Code of Conduct,” recommended by Senator Charles Schumer in partnership with several Local Analytics firms offers some guidelines on transparency that can help keep the public on-board with proximity marketing and ahead of the regulatory curve.

  1. Any type of geophysical location tracking should be completely transparent. All marketers should inform consumers that their location is being tracked and the data saved.
  2. It’s all about anonymity. If information is tracked anonymously, meaning it is not tied to the individual user, no consent is required. When companies track general traffic flow, the types of devices connecting to their networks and other broad information, the proposed “Code of Conduct” does not require any notification to consumers.
  3. Any personal information, whether tracked individually and aggregated later or kept as individual statistics, must be obtained with individual consent.

These recommendations are currently exactly that – recommendations. There is no legal requirement forcing businesses to adopt these strategies, but with the public outcry against technology that violates privacy, it may be wise for companies to adopt them now rather than pay fines later. After all, marketers already track Internet usage to create more individually targeted advertising. Many users already find these practices to be intrusive, so it is vital that companies act now to avoid negative publicity.