Five years ago, the iPhone changed the world of mobile, connected devices. It also changed us. It gave us unprecedented mobile access to information and made sharing intimate details of our lives an afterthought, often to the delight of marketers.

Since 2007, consumers have been truly uninhibited about how and when they send messages, share photos, and post videos on the go. And, to be sure, our options have expanded far beyond the iPhone. In 2011, AT&T supported 33 new smartphone models from more than eight different manufacturers, in addition to the various flavors of the iPhone.

Now we’re figuring out that a more mobile lifestyle isn’t just about having a computer in your pocket and being on the move. It’s about the volume and kind of data we leave behind and the changing nature of the digital identity we create in the process.

Consumers share more about themselves, more freely, than ever. Yet they still want to feel like their data and identity are safe. They want to trust the companies they do business with, even though most will give personal details to a firm they’ve never heard of to get something free.

We’re changing. And businesses that think they know what consumers want may be in for a surprise. A local author recently found out that one of the best ways to find out how much snooping a consumer will tolerate is to watch them constantly and record their thoughts and moves.

You can’t make this stuff up. But a hypothetical scenario might help you appreciate what data is out there, what can be done if it’s harvested, and how our identities are squarely in the middle of the issue.

A Slippery Slope
What if you were led to my physical presence by a Foursquare check-in at a nearby bookstore, confirmed by a Twitter post about a clothing store two doors down? What if you somehow correlated those rather mundane occurrences and factored in a Facebook post I made a week earlier about an upcoming ski vacation?

Everywhere we go, businesses are counting on using our digital data. Cowboys Stadium in Arlington, in fact, is a mecca for digital marketing, with its hundreds of miles of fiber and cellular repeaters every so many feet. “Instead of just being a sunk cost, a well-thought wireless network can provide not only an enhanced fan experience but a wealth of opportunity for greater concession sales and advertising opportunities, which can be customized almost on a seat-by-seat basis,” says Paul Kapustka, editor of Mobile Sports Report, a technology website. Kapustka adds that if stadium owners and sports clubs factor in prior patronage and the latest wireless antennas, they can adjust pricing on the fly when their most valuable guests makes purchases as far as a mile away from the stadium itself.

These are not far-fetched scenarios, and they’re equal parts scary and exciting for consumers and retailers. And I didn’t even bring up facial recognition technologies, which will no doubt accelerate consumer-retailer matchmaking.

My point: most people would love to save effort and money by receiving a timely offer, but not everyone wants the neighborhood ski shop or their favorite football team panning through their digital lives and looking for retail gold.

In her book Identity Shift, Allison Cerra, the Plano-based chief marketing officer for Alcatel-Lucent’s Americas region, spells out the stakes for consumers in a networked society:

“In a world where just about any ordinary item—from pill bottles to dog collars to washing machines—can be connected to the network, more will be known about us through the connected things we own than we could possibly share via irregular social-networking status updates. Whether we realize it or not, the trace we leave behind us today becomes more indelible in the future as more objects are connected. My digital footprint reveals who I am, whether I am conscious of the trail left behind me or not.”

identity_03 In her book Identity Shift, Allison Cerra explores the stakes in a networked society.

Federal Trade Commissioner Julie Brill told a group of privacy advocates in Dallas last year that the amount of data now gathered by companies is “unprecedented.” This data mining from consumer devices is “largely unnoticed by the consumer, raising serious privacy concerns,” Brill said, according to The Dallas Morning News.

The problem is, consumers “have no idea that they are licensing the sites to free, unfettered use of photographs, email addresses, names, and contact information that they intended for personal friends, children and neighbors,” SMU Internet law professor and Gardere partner Peter Vogel told the DMN last year.

Even when consumers aren’t responsible with their own data, companies that aren’t up-front about how they treat their customer’s information can lose clients and, worse, the public’s trust.In December, Dallas-based AT&T acknowledged in a letter to U.S. Sen. Al Franken that about 900,000 (about 1 percent) of the devices on its network used software made by Mountain View, Calif.-based Carrier IQ. The firm’s software provided AT&T with customer location and call-quality data to help AT&T provide better service and identify areas where it had spotty cellular coverage. Sounds good for consumers, right?

It may be, but the media storm leading up to AT&T’s letter began because a video posted to YouTube by a systems administrator showed the Carrier IQ software recording all kinds of consumer data on the sly while phones were in use. Rather than explain its technology and empathize with consumers, Carrier IQ’s first reaction was to send the systems administrator a cease-and-desist letter.

Later, Carrier IQ made it clear that its service-provider clients were not surreptitiously snooping on consumers and that the YouTube post showed results that weren’t at all typical of how its technology was normally used. Still, consumers felt wronged. The very idea that consumer movements and activities were being “watched” by carriers caused uproar and, in response, Sprint, one of Carrier IQ’s clients, announced in December that it would disable the software on all of its phones.

The New Currency: Trust
It is easier than ever for a business to get information about its customers, but it is difficult to know what you can do with what you learn.

In Identity Shift, Cerra, along with co-author and fellow SMU grad Christina James, surveyed 5,000 American consumers and closely observed, interviewed, and recorded 30 families, including five from Dallas. In an attempt to learn more about “the human spirit behind our interconnected networks,” Cerra hit a central theme that crushed Carrier IQ.

“Trust is the currency of our lives now,” Cerra says. “It’s earned over time and it is lost in a moment.”

Through her work, the author discovered many inconsistencies. Researchers hear folks saying one thing and observe them doing another. In one of the book’s anecdotes, a protective mother keeps the family computer in a shared room and closely watches what her kids do online. But while researchers are present, she casually tells her daughter to click through and ignore a PC security warning that popped up while browsing the Internet.

Cerra says the mother’s “learned helplessness” probably comes from seeing too many false alarms from the very same software programs and safeguards that are supposed to be protecting her.

She writes that consumers are well aware of the dangers of sharing too much data with sketchy sources. But dangle a coupon and all bets are off: “Despite this knowledge [of online threats], more than half in our study often share information about themselves in exchange for coupons, discounts, and updates. More than 20 percent admit to sharing as much as they can in order to get better, customized online deals. The knowledge of a threat is real, but it does little to deter the behavior of the U.S. consumer.

“We are not always rational, as much as we rationalize,” Cerra says.

And who we are online doesn’t always square with who we really are. That fact puts pressure on companies that want to use social media,
get closer to their consumers, and mine all the data that our digital lives make available to provide better products and services.

This all comes back to the iPhone, probably the most powerful catalyst shaping today’s digital consumer.

We’re entering a golden age of customized services, tailored advertisements, and made-to-order entertainment. But companies must be
careful to empower consumers without exploiting them. Consumers want services catered to them, but they also want privacy. Even if they treat their own personal details with indifference on Facebook, businesses can’t.

“It’s not exactly a clean debate,” Cerra says. “You want to have diagnostics, but at the other end, you have to be transparent so that you’re not perceived as doing something that’s not trustworthy.”

She adds: “The good news for service providers and companies in this debate is that ... there is a trend where consumers are starting to understand when they use online services that if you’re not paying, you are the product.”

Still, she says transparency is the best policy for any facet of business touching the digital consumer. That brings up the “shift” in our thinking, a central premise of Cerra’s book. It’s time to move the debate away from how to build just the right service, offer, or incentive for consumers. Instead, Cerra says, companies should give consumers the power to monitor, measure, and really understand what they’re opting into. Let them build it themselves and keep their offers, policies, and rewards transparent and simple.

“With consumers, if you try to get it all right, you’re going to get it wrong,” she says.

Phil Harvey is editor-in-chief of Light Reading, a UBM TechWeb publication covering the global communications industry.