Location and tracking data are collected around the world from mobile devices every single day. These small files, just a few bits in size, amount to several terabytes of data overall. And they have the potential to be a real moneymaker.
Regardless of whether a user's location is reported voluntarily by Foursquare or automatically by his smartphone, service providers are collecting and analyzing that data. After all, each phone is in contact with one of the provider's transmission cells, and these cells can be used to accurately track the owner's position.
American provider Verizon has been doing a healthy business by selling this information since 2012. Before it's sold, however, the data is anonymized so that the buyer has no way of identifying the individuals concerned. This smartphone data is interesting for various reasons. The information gathered by providers includes not just where users were, but also what apps they've been using -- and how. When analyzed for different purposes, findings about customer usage behavior may be worth its weight in gold.
Location and movement data is frequently updated. Traffic planners are keen to use it to gauge the development of traffic flows. Analyzing how the density of traffic is distributed along a highway can lead to better traffic planning, which in turn helps relieve the congestion faced by towns and cities. Metropolitan areas can also use the data to improve the management of parking guidance systems.
However, this data is just one aspect of the story. Things get even more interesting when we consider its use in advertising. The magic word here is "targeting," a process that is made possible by the analysis of data from multiple sources. Advertisers often create profiles to enhance targeting. Facebook has been passively collecting data from user smartphones for some time, according to the Wall Street Journal, but does not yet use location data from smartphones to target ads.
Marketing firms and advertisers can ascertain whether users have entered specific search terms, enabling trends to be identified and analyzed more quickly. In combination with app usage information, businesses can find out what stores, restaurants, and other products and services users may be interested in.
Hyperlocal targeting, or context-aware mobility, offers another level of customized targeting. In this scenario, providers collect data from multiple sensors on mobile devices, identifying their exact locations and creating context. Advertisers can then send customers targeted advertising related to their surroundings, such as special offers at shops or attractions nearby.
And that's not all. Other companies are now also interested in obtaining customers' personal -- as in physical -- data. Fitness wristbands such as Jawbone's UP and Nike's Fuelband track their users' physical exertion and transmit the readings via an app to the manufacturers' servers. The servers collect information about frequency and duration of exercise, as well as what sport the user participates in. Do they prefer cross-country running or mountaineering? This knowledge alone is ideal for targeted ads.
There's clearly a lot of money to be made in this market. ABI Research predicts the market for GPS personal tracking devices and applications will grow at an annual rate of 40 percent, with both markets exceeding $1 billion in 2017. With all that data available, marketers will be dying to make use of it.
The challenge comes in how to safely handle all this data. Customers have become increasingly aware of how their data is being collected and evaluated, and will need far more information as this trend continues.