BrainTrust Query: The Future of Location-Based Marketing

Discussion
Dec 02, 2010

By Ron Stack, CEO of Zavee.com

Through a special arrangement, presented here
for discussion is a summary of a current article from the Hanifin Loyalty blog.

The
Location Based Marketing Summit held recently in New York blended strategic
and tactical insights about location-based marketing techniques. Most of
the speakers observed that the discipline is still in its earliest
stages.

Ian Schafer, CEO for Deep Focus, considers the smartphone to be "the
next generation loyalty card," with targeted deals and discounts being
available upon check-in (or perhaps even without a digital check-in). By way
of example, he highlighted ShopKick, which has a hardware platform that pushes
reward currency to the consumer as soon as they enter the merchant’s
store (without the consumer even having to check-in or make a purchase).

Overall,
it was agreed that location-based applications can at least provide:


  • People – other users who might have something in common with
    the user;
  • Content – messages or offers based on what the user likes
    that is at/near her location;
  • Time and Place – targeted, timely messages or offers based
    on where the user is right now;
  • Context – communications based on prior behavior, as tracked
    by the location-based device.

The potential of location-based data is that it can drive better business
decisions by adding additional dimensions (i.e., time and place) to what is
otherwise known about each consumer’s behavior. One great example cited was
the Microsoft Bing ‘Home Turf Finder’ for the World Cup, which identified certain
bars in New York City as "home turf" for fans of a particular team. The determinations
were based in part on editorial sources such as Thrillist, but were
mostly derived from ‘heat maps’ of consumers who had checked in or tweeted
their support as well as their location.

Several
speakers also noted Google’s recent announcement that 30 percent
of mobile searches and 20 percent of all internet searches have local intent,
and said that all of the major players (e.g., Facebook, Google, and even wireless
carriers) were already focusing on local information.

There was also considerable
discussion of Groupon, although some panelists expressed doubts that the "deep
discount, deal of the day" model
provides sustainable customer growth. Speakers agreed, however, that geo-targeting
adds value by increasing both relevance and personalization.

Overall, panelists
agreed that there is great demand for marketers to engage with consumers at "the
right place and the right time, all the time." Mobile
couponing, despite being a fragmented space, seems to have taken hold. As a
result, one area in which technological developments are anticipated is indoor
navigation, where GPS signals are sometimes degraded and are not designed to
be accurate enough for navigation within a store.

Finally, the issue of consumer
privacy arose in almost every session. John Nicholson of law firm Pillsbury
Winthrop Shaw Pittman concluded that "the
more value a marketer delivers, the more information a consumer is likely to
share,"
and that an application that seems to exist only for marketing purposes is
unlikely to gain the consumer’s trust.

Discussion Questions: What does the future hold for location-based marketing?
What are the potential benefits for brands in understanding consumers’ local
shopping behaviors?

Please practice The RetailWire Golden Rule when submitting your comments.

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12 Comments on "BrainTrust Query: The Future of Location-Based Marketing"


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Paula Rosenblum
Guest
10 years 5 months ago

There’s another dimension of value to location-based marketing–it keeps consumers engaged in the store, rather than price comparison shopping on the web. I actually believe this is the single most important aspect to any kind of mobile marketing programs…keeping the focus on the in-store experience.

That’s why location-based marketing is here to stay.

Mark Johnson
Guest
Mark Johnson
10 years 5 months ago

Content, delivery and control of the number of pushes will be key. People are already concerned about phone spam, this will be another issue. Even if consumers opt in, if the marketer is not skilled in loyalty/CRM/CEM best practices it will fall to spam and damage the whole industry.

Ryan Mathews
Guest
10 years 5 months ago

Mark is right–it’s not the vehicle that’s critical here, it’s how it is steered by marketers. No question location-based marketing is valuable provided the privacy concerns are addressed and that marketers are selective in how they use it.

Max Goldberg
Guest
10 years 5 months ago

The future of location-based marketing is bright. The panelists pointed out a number of features and applications. The key is to reward consumers for providing information. Using this information, retailers can better target offers and tract purchase behavior. Location-based marketing has just scratched the surface, when combined with augmented reality applications, look for this sector to experience significant growth.

Ben Sprecher
Guest
Ben Sprecher
10 years 5 months ago

Others here have mentioned the risk that location-based marketing will become spam, and that will risk poisoning the location-based marketing (LBM) well.

Spam is simply unwanted communication, so the key question LBM marketers must address is: “how do I make the consumer *want* my marketing?”

The short answer: “relevance.”

If you make sure your message is relevant to the consumer in question (ideally, based on their demonstrated buying preferences), that’s a big part of the answer. With LBM, you can go even further and make sure the message with relevant content is also delivered at a relevant time (shortly before a purchase occasion) and place (near the appropriate retail location).

The marketer who masters relevance in content, time, and place will not have to worry about being treated as spam.

Of course, this is the same issue faced in all marketing (whether it’s billboards, TV ads, newspaper inserts, etc.); the difference with mobile is that, for the first time, you can control delivery down to the specific person, time, and place.

Bill Hanifin
Guest
10 years 5 months ago

I’m not too worried about the spam/annoyance factor as the construct of LBM allows consumers to be “voyeuristic,” i.e. observe the offers that swirl about them based on their current location. The consumers can choose to pursue any or none of them and a great level of control is in consumer hands.

I’m more concerned about why merchants have not adopted the tools out there today. Local merchants have the ability to compete with national chains at a low cost per ad. Maybe they just need more time and education to figure out how to embrace the concept and the tools.

Steve Montgomery
Guest
10 years 5 months ago

I understand the potential benefits for both the consumer and the retailer if the LBM is handled properly. My concern has been voiced by others on topic–what is it isn’t? Today’s Chicago Tribune had an article regarding “do not track” on the internet. If LBM isn’t handled properly and strictly on an opt-in basis we may soon see the same topic but now cell phones will be the focus.

Herb Sorensen, Ph.D.
Guest
10 years 5 months ago
“Normative appeals were most effective when describing group behavior that occurred in the setting that most closely matched individuals’ immediate situational circumstances e.g., ‘the majority of guests in this room reuse their towels’), which we refer to as provincial norms.” This is from a study by Cialdini and others (J Consumer Research, August 2008,) which demonstrates the tremendous power of what he calls “provincial norms,” that is, how other people are behaving in the situation YOU are in. The “immediate situational circumstances” mean that telling a shopper that “other shoppers in your peer group, when standing right here, purchased X,” is a powerful selling message. This is EXTREMELY potent for creating a sale. Especially for the retailer who doesn’t really care what they buy, just wants them to buy something here, for sure. The problem with this is that the brand supplier does care what they buy, and very likely does not want them to buy the “provincial norm,” unless it is their own. This goes to the heart of a lot of what is… Read more »
Camille P. Schuster, Ph.D.
Guest
10 years 5 months ago

The tool does not discount the consumer-centric business model. If all the consumers with smart phones want intrusive messages where they are, if they want their movements tracked, and if they want their activities interrupted with messages and deals, then this model of how can retailers and manufacturers make it work for them will have traction.

However consumers only want these things to happen IF they receive commensurate value. The conversation needs to change direction: what do consumers perceive as too intrusive, which consumers perceive that activity as too intrusive, what kind of messages add value, or which messages generate behavior. Do teenagers want their movements tracked or do they want to receive messages when purchasing condoms or pregnancy tests?

What is appropriate for which consumers in which situations is more important than what can I do to generate sales.

Jonathan Marek
Guest
10 years 5 months ago

Location-based services are still clearly in their infancy. Mobile location-based services have the potential to change retail far more than non-mobile search or social networking have to date (which is already quite a bit!). The idea of ubiquitous information access with the context of knowing where you are (and I presume, by you telling your device, what you are doing) is incredibly powerful.

Mobile search combined with content from Yelp, OpenTable, TripAdvisor, etc, is an obvious start, and has not been close to perfected. Real-time price comparisons and product review content while in store, over your device, is also obvious, but not perfected. Still, my prediction is that several “killer apps” that will seem obvious in retrospect aren’t even invented yet.

Joel Rubinson
Guest
10 years 5 months ago

I am trying to think about location-based marketing as it could be, not as it is. As such, it is an amazing part of the future of marketing programs. I’d say the big idea is to connect off premise to on premise. Price checking Amazon while at Walmart is a small inkling of this. Another might be creating a shopping list at home by imaging UPC codes and having the app check prices of nearby supermarkets. I mean, this is just an off-the-top-of-my-head idea, but the power of location aware is probably beyond what we can imagine.

Fabien Tiburce
Guest
Fabien Tiburce
10 years 5 months ago

A note on methodology and expectations. I don’t think we should judge any new technology, however successful, on initial customer response. Mobile users are fickle and like novelty (the majority of iPhone apps are used just once!). Just because I try a service does not mean I have any long term loyalty for it. Retention and ROI are as important as ever in this new mobile space:

1) How many customers are still using the service 30, 60 and 90 days after they sign up?
2) What percentage of customers, brought in via a location-based marketing service, come back?
3) What is the cost of acquisition and what is the lifetime value of that customer?

A 3+ months pilot should help a retailer answer these important questions before it commits too large a budget to a promising but unproven mobile-marketing initiative.

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