The popularity of many of the apps that we use today is largely driven by the fact that they are free. However, there is still a cost to us. That cost is our personal information. While we can do some things to protect that information online, that ability is limited. So, what types of personal information is collected by apps and most interesting to advertisers? And how do we teach our children to better understand the business of “free” and how to protect their privacy and safety online?
These are the questions I dug into in our Managing Family Life Online episode on advertising, personal data and free apps. Joining me on this episode were advertising experts Cynthia Machata, NA Managing Director, Mx Planning at Havas Media and Meghan McGuirk, VP Group Director, Digital Investments at Havas Media. We covered a range of topics, including the type of data is being collected about us to how it’s being used, and what parents and kids should understand so they are well aware of what risks they take online and how they can best use free apps in a safe way.
Our data is everywhere
I regularly speak with parents, students and schools about what it means for our data when they download a free app. There seems to be a common understanding that if an app is free, they may have to see ads within the app. But I also find that many people don’t realize the exchange of information happening behind the scenes in order for those ads to be displayed.
Advertisers on free apps use two types of data to create and display their ads to us: first-party and third-party data. First-party data is collected directly by the app or the company you are engaging with. Third-party data is data about you used by a company that comes from some other source, such as your credit card company.
Additionally, wherever we go on the internet, we leave small breadcrumbs or pieces of information about us. Website, search engines, etc. can collect this data and infer things about you. Ever wonder why you see the things you’ve been browsing on a website show up as an ad in Facebook or Google? It’s because you’ve left behind a trail of hints that connect back to you.
The value of personal data
While there is a lot of information that can be collected about us is all data created equal? What data is the most valuable to advertisers?
Meghan McGuirk shared that for consumer-packaged goods (CPG) brands, purchase-based data is the most valuable information that advertisers use. This data isn’t just collected online either – a lot of it is collected when you use your loyalty or rewards cards at your favorite stores. This kind of data provies a lot of insight into what you’ve bought before and what other products or services might be of interest to you. For consumer brands, it is very important to have this type of first-party data to ensure their advertising will be effective.
“There is no data that’s not valuable, but there could be data that isn’t valuable in certain applications or at scale,” said McGuirk. “No data is bad data. It just depends on how you use it.”
Favorite social media channels for advertisers
Facebook is a big partner for a lot of advertisers and brands because there is so much scale on Facebook and Instagram, which is owned by Facebook; the amount of people they can reach is unparalleled by other apps. Audience reach is one of the most important metrics for advertisers.
McGuirk said that other social media channels like TikTok have started to become a big topic of conversation in advertising. Brands are working to take advantage of both the free organic reach available on TikTok as well as its newer paid options for advertising.
Another key consideration for advertisers is looking at how much time people are spending on different channels. “People are spending an average of 90 minutes a day on TikTok and that is a lot of time,” McGuirk said.
Pinterest is another platform providing big opportunities for advertisers. Although this is not a platform heavily used by younger users, it is essentially a search engine. People are searching directly for what they want on Pinterest and brands have an opportunity to gain visibility there. It collects a lot of data about users and can help advertisers accurately target the types of consumers they want to reach.
Balancing personalized ads with privacy
While all of this data collection allows advertisers, apps and websites to ensure a personalized experience for users, there is an increasing concern among consumers about it. According to a study by Consumer Reports in 2020, 96% of Americans believe more should be done to ensure that companies protect their privacy.
But consumers are willing to make a trade-off if it means they will have online experiences more tailored to them; in fact, 81% are willing to trade their personal data in exchange for personalization.
So how do you balance personalization with privacy? The winds are beginning to shift, and big companies are beginning to take action in an attempt to strike this balance. Google and Apple are the most notable; Google has announced plans to eliminate third-party cookies on Chrome, which will go into effect in 2022 and Apple has positioned itself as a guardian of privacy, specifically around its iOS 14.5 update.
In reality, while these proprietary approaches seem like a push towards increased consumer privacy, neither of them are truly protecting the kind of data collection that some consumers may seek. While both Google and Apple may be cutting out 3rd parties from doing any tracking of their users, they themselves will continue to collect data so they can either sell that data in aggregate to interested advertisers or so they can advertise to their users themselves.
Google’s new Flock solution, while eliminating 3rd parties from tracking their users, will still collect user behavior and group their customers into cohorts. It is this aggregate data that Google hopes will be useful to advertisers, while eliminating the need for individual-specific data.
Interestingly, Google’s move is similar to what Facebook has been doing for its advertisers for some time already. Machata claims “it will be impossible to follow consumers going from one site to the next. But, that doesn’t mean they can’t target within platforms.” Machata also said advertisers are beginning to look at this approach as the next ecosystem and are working to prepare for that.
Advice for parents
With the world of online data collection, privacy and advertising in flux, there is a lot to keep track of and stay educated about. But there are some tenets that remain true and guidance that is still applicable regardless of all the changes coming down the road. Whenever your child gets a new device, downloads a new app, or buys a new game, here are a few things you can do to protect their online privacy and educate them about how vulnerable our personal information is online:
- Know what you’re getting into. Review and read the terms and conditions on apps, games and websites before allowing your child to create an account. Details about what information is collected and how it is used should be included in those terms. If it is an app that has not been heavily reviewed on the app store yet and you can’t find any information about privacy and how the data that’s being collected will be used, that is a red flag and it’s worth waiting until the app is older and has more reviews before downloading it. When it comes to data and your children, if they are not old enough to have an email address, know that they will be using yours to create an account and keep an eye on that.
- Talk to your kids about what “free” means. While your kids may have been able to download an app without paying any money, they are certainly paying with something else: their personal information. Discuss with your kids what types of personal information might be collected and used by the app and why. This discussion can help make them aware that everything they are doing on it could be tracked, used or sold to advertisers by the company that made the app.
- Use privacy settings but explain their limitations. Get your kids involved and have the find the privacy settings on a new game or app, and set them together. Explain to them that while these settings protect them from strangers seeing their posts or contacting them, it actually does not stop the company who made the app or game from collecting information about what they are doing.
- Check back often on the apps their children already use or want to use. Apps release new updates all the time and sometimes privacy updates are a part of it. Ask yourself: Can your child actively give data on an app? What info are they able to give out about themselves or about you?
The internet is complex and is accessible and widely used by so many of us, young and old, because it is largely free to use. It’s important to remember, and to teach our children, that the internet is also a massive network of information online that we seek, is collected about us, and is shared with others. We are constantly making a tradeoff between the benefit of the internet and the personal information we are willing to give up for it. While there are things we can do to protect the privacy of that information, they are limited. It’s a reality we and our children must better understand so we can navigate it safely and wisely.
To watch the recording of this or any or our past webinars, please visit /internet-safety/webinars.
Founder and Global Director of Trend MIcro's ISKF
Lynette Owens is the Founder and Global Director of Trend Micro’s Internet Safety for Kids and Families program. With 20+ years in the tech industry, Lynette speaks and blogs regularly on how to help kids become great digital citizens. She works with communities and 1:1 school districts across the U.S. and around the world to support digital literacy and citizenship education. She is a board member of the National Association of Media Literacy Education and serves on the advisory boards of INHOPE and U.S. Safer Internet Day, and on the national advisor council of Media Literacy Now.