Trust in apps is on a downward trajectory

Late last month, Mark Zuckerberg addressed a global audience at Mobile World Congress in Barcelona.

Whilst the presence of Facebook (and just about every other technology giant) marks the ascendency of the mobile device as the primary digital touch-point for the connected consumer, in Zuckerberg’s keynote, the Facebook CEO touched on the concept of consumer trust.

“There are real issues for companies. Trust is such a huge thing when it comes to sharing personal information.”

Zuckerberg was talking about the NSA security scandal and how that had eroded trust in Facebook (and other Internet businesses).

But the point should not be lost on the mobile industry where the dominant model for the app economy is freemium and, to a large extent, consumer data is the currency that makes it all possible.

What underpins this transactional relationship is consumer trust and it follows that, for the mobile industry, this should be the watchword for how mobile businesses build and retain customers.  The less confidence people have in their mobile device, the less they will use it and the apps on it. That’s bad news for everyone.

Yet for almost as long as apps have been on the market, consumers have been bombarded with stories in the press and across social media platforms that raise privacy concerns about the way apps gather and store and use personal information.  As an industry we have a long way to go.

MEF, the global community for mobile content and commerce, recently published a global study in association with AVG Technologies into the issues around consumer trust in mobile, which canvassed the opinions of more than 10,000 mobile users in 13 countries and shines a light on the industry blind-spots, showing exactly how and to what extent trust is hampering it.

First, the research demonstrates an erosion of trust over time. 40 percent of consumers cite a lack of trust as the reason they don’t purchase more via their mobile — by far the most significant barrier. And it’s getting worse. In 2012, 35 percent named trust as an obstacle compared to 27 percent in 2011.

Second, 37 percent claim a lack of trust prevents them from using apps once they’ve installed them on their phone. Third, 65 percent of consumers say they are not happy sharing their personal information with an app. 16 percent claim that sharing too much personal information is what prevents them from purchasing via their mobile device.

What’s more, the research demonstrates a link between a downturn in trust and a downturn in mobile purchases.  MEF’s 2013 Global Consumer Survey saw the volume of mobile purchases decline from 70 percent of mobile users in 2012 to 65 percent in 2013.

What strikes me as strange is how few consumers are willing to take action to protect their privacy. While half of mobile users around the world consider it important that apps explain what they’re doing with personal information, relatively few factor it into their purchase decision.  Fewer than a third read user reviews for privacy-related complaints or survey an app’s privacy policy prior to use.

Three main points emerge:

1. In the app economy under the dominant freemium model, consumer data is fuelling the growth of the industry.

2. Consumers have issues with the privacy of their data, and this is a significant obstacle to a range of desired outcomes — be that a transaction, continued app usage, or more general brand exposure.

3. Despite their concerns, surprisingly few consumers are prepared to take action to ensure an app doesn’t impinge on their privacy.

The mobile industry cannot afford to be complacent about mobile users’ current tolerance.

This report shows remarkably few consumers are yet ready to take action regarding their concerns about trust in mobile apps.  The danger is that this leads mobile companies in to a false sense of security.

Take as an example the premium SMS market in countries such as the USA and Indonesia.  Most providers were legitimate businesses, but there were a few cowboys who abused their customers, creating damaging headlines and destroying trust. Yet consumers continued to buy services.  Short term commerce opportunity prevailed over a long term view of the market.

In 2013, the US operator community decided to terminate all PSMS billed subscription services. In Indonesia, the authorities ordered all PSMS customers to be unsubscribed from their services immediately.  In both cases a loss of trust had put a sudden end to an industry worth hundreds of millions of dollars.

This must teach us that the mobile app community cannot afford to be complacent about their customers’ current tolerance for information sharing.

It is vital for everyone in the app ecosystem — marketplaces, developers, publishers and aggregators — to tackle the issue of consumer trust together, adapt to a culture of transparency and take practical measures to help consumers understand that their data is the backbone of the app economy and how as an industry we are capable of using it responsibly.

Andrew Bud is the global chairman of MEF, an international trade organization representing the global mobile content and commerce industry. MEF is headquartered in London and has chapters in Asia, EMEA, Latin America, Middle East, Africa, and North America. Andrew is also the founder of SMS industry leader mBlox and of personal authentication startup iProov. An industry veteran with more than 25 years experience at the mobile coal-face Andrew has championed countless mobile industry issues. He helped found MEF in 2001 to support the mobile industry as it grows into new geographies and new vertical markets.