What your wireless carrier knows about you

How Verizon sells customer data
How Verizon sells customer data

Data collected from your smartphone is shaping the future of marketing -- and cell phone companies are cashing in.

What your phone knows about you -- where you are, what you're searching for and what you like -- is mouthwatering for advertisers. Combined with other third-party data, including your age and salary range, marketers are using cell phone customers' information to make decisions about how they advertise.

Though all four major carriers sell their customers' smartphone data, Verizon's (VZ) year-old Precision Market Insights program is the farthest-reaching. Here's how the Precision program works, according to Verizon spokeswoman Debi Lewis:

When you sign up for Verizon service, you agree to let the company use your location, Web searches, app usage and other data for its Precision Marketing Insights program (you can later opt out). Verizon sends that data to an internal database, matching it up with a deep trove of demographic information about you from companies including data giant Experian. The data are stripped of any personally identifying information, aggregated into categories and are placed into reports for Precision customers to use.

The one-two combination of phone activity and personal demographic information paint a revealing portrait of subscribers' habits for marketers.

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Maybe you're the owner of the Phoenix Suns basketball team (a Precision Insights customer), and you're interested in the types of people who go to the US Airways Center for a game. How many of them have attended your team's games in the past? Do they make enough money to think about buying a season ticket? During the game, are fans ages 25-55 searching for restaurants near the stadium?

Or maybe you're more interested in what happens after the game. Do most attendees get on the train, or do they catch a cab? Do male fans tend to head to a particular local bar for a post-game drink?

Verizon's Precision reports can offer answers for those previously unanswerable questions.

Using Precision, the Suns determined its fans tend to be tech-savvy travel enthusiasts with a household income of $50,000 or more. About 22% of the crowd for Suns games in March were out-of-towners, and 13% of spring training attendees also went to a Suns game. Verizon says Precision helped the Suns gained a 35% "lift" in identifying people who might buy season tickets.

Verizon shared sample Precision reports with CNNMoney that show marketers can look at a variety of data, including moviegoers or people who attended a "pop star concert" based on their income, age range, ethnicity, primary language and even whether children are living in the household. A "heat map" shows where those customers are located. Marketers can also choose from among 800 "attributes" -- including both mobile data and demographic information -- to define a target group they're looking for, such as "young professionals."

The Suns are among a "few dozen large brands" that have partnered with Precision, according to Verizon.

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AT&T (T) and T-Mobile (TMUS) told CNNMoney they sell anonymized and aggregated data, but they would not comment in more detail about those services. Sprint (S)declined to comment for this story.

The fact that the carriers' programs are based on the sharing of deeply personal details can be unsettling to customers. Lewis, the Verizon spokeswoman, stressed that the data can't be traced back to an individual, and that subscribers have the ability to opt out of sharing their data.

One privacy expert says that isn't enough. Peter Eckersley, the technology projects director of the digital rights advocate Electronic Frontier Foundation, thinks the data being shared are too valuable for carriers to share without active approval from users.

"The default setting is for you to share information that reveals incredibly intimate details of your life: where you go to church, which nightclubs you frequent, where you fall asleep every night," Eckersley said. "The fact that you have to actively opt out of something like this is ludicrous."

Concerns aside, the reality is that the sale of customers' personal data is an increasingly lucrative business across all sorts of industries. Credit card companies, junk mailers and loads of other marketers have long used anonymized data to make money.

Now, technology is changing the business of big data -- and Verizon and others are harnessing tech to make customers' information even more valuable.

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