Survey: Location Services Have Die-Hard Fans, But Privacy Is A Big Issue

One of the big selling points for consumers deciding to upgrade their feature-phones to smartphones is “location-based services,” like maps that constantly update themselves as you move. A new study commissioned by Microsoft (NSDQ: MSFT) finds that consumers who are aware of location services are very fond of them, but that they’re also seriously concerned about sharing that information with groups like advertisers — and even with their own social set. Another finding: There’s a fair amount of confusion about what exactly location-based services are, even among some people who say they are users. The study also contained findings about which location services are the most popular, and which demographic groups are the heaviest users of LBS in general.

As smartphones take off, location-based services, in particular, are dramatically increasing the amount of data available to advertisers, and potentially the government. Here are results of the survey, which polled 1,500 people in five different countries: the U.S., U.K., Canada, Japan and Germany:

Consumers who use location-based services (LBS) love it: 62 percent of consumers surveyed were aware of location-based services, and 51 percent of them had actually used the services, with 40 percent using them every week. Of the consumers using them, 94 percent said they were either very valuable or somewhat valuable.

Only a few want to share their location with others: These “social” users of LBS, who are sharing their location with services like Facebook Places, Loopt or Foursquare, are distinctly in the minority, with only 18 percent choosing to share their LBS info with others. The usage rate varied slightly among the five countries included in the study–Canada was highest with 21% usage, U.S.: 20 percent; U.K.: 19 percent; Germany: 15 percent; Japan:15 percent.

Younger users and men are most likely to use LBS: Perhaps unsurprisingly, 18- 34-year-olds are most likely to use the services. Men are slightly more likely than women to use LBS, and have less privacy concerns about sharing their location.

Privacy concerns loom large: 58 percent are concerned about controlling which organizations and people they share their location with. It’s interesting that 70 percent of U.S. consumers have this concern while only 54 percent of Germans do, because German privacy regulators are some of the world’s strictest.

Free stuff rules: Even though consumers are concerned about organizations–like ad agencies–getting their location info, more than 70 percent prefer LBS applications to be free. And the response rates they report to mobile advertising are great–nearly one in five consumers has seen a location-based ad, and almost half of those have taken action on such an ad, like redeeming a coupon or visiting a particular store.

Google (NSDQ: GOOG), Facebook are top dogs in LBS: Asked to name specific services they were using, most LBS users named services run by the biggest internet companies–Google Places, Google Latitude and Facebook Places were the most popular location services. Services that involve sharing one’s location with friends were less popular. Out of the 300 U.S. respondents who said they used LBS, nine said they had used Foursquare and six reported using Loopt. The most popular location-based service was simply finding one’s own location with GPS.

There’s confusion over just what LBS is: While 51 percent of consumers reported using LBS, only 30 percent say they’re “familiar” with the services. Even among the group of consumers (38 percent) who say they haven’t heard of LBS at all, some are still saying they’re “familiar” with LBS or even are using LBS. That suggests that consumers are somehow using those services without really being cognizant of that fact–i.e., that they’re providing their location info in order to get, say, a list of the nearest banks or restaurants and don’t know that they’re actually using a “location-based service.”

Methodology: The study was commissioned by Microsoft and conducted by Cross-Tab Marketing Services & Telecommunications Research Group. Interviews were conducted online Dec. 13-15, 2010. The full study and an executive summary are available on Microsoft’s website.