Location Based Services (LBS for short) is not new technology. It is based on the technology entitled Geographic Information Systems which has been developed in the last 10 years. With the advent of the mobile phone and especially the smartphone with its advanced mini computer technologies, Location Based Services is steadily gaining acceptance in the market place. The proliferation in LBS has been mainly via users ‘checking in’ into location based applications, not unlike checking in via airport booking. But this is developing into the ‘check out’.
There are various definitions of Location Based Services and they all agree on the following:
1 – LBS is a software application;
2 – for an IP enabled mobile device;
3 – which requires knowledge of where the mobile is located;
4 – they can be query based services;
5 – providing the end user with useful information, an example of which is “Where is the nearest ATM?”;
6 – or they can be ‘push based’ by delivering coupons or other marketing information to customers who are in a specific geographic location.
Shopalerts, a partnership between AT&T and Placecast, is an offering to consumers which consists of messages, offers, rewards, or coupons sent to their mobile phone when they are near a store or brand. AT&T creates a ‘geo-fence’ or perimeter or the area to which the location-specific messages are sent.
This was tested from April 3rd 2011 through June 4th 2011 to AT&T customers in Chicago, Los Angeles, New York and San Fransisco who opted to receive messages. The pilot also included eight major marketers which included Del Monte, Kmart, MilkPEP and SC Johnson. The named marketers were clients of Draftfcb who conducted a post-test survey amongst the consumers who engaged with ShopAlerts to determine consumer preferences and attitudes.
Each of the four ShopAlert participants had different challenges and goals related to the their business:
- Del Monte’s Kibbles ‘n Bits pet food brand sought to create awareness for the brand when consumers were in close proximity of Target and pet food stores. The marketer also wanted to generate an awareness around its new Nature’s Recipe line of dog food.
- Kmart used the service to offer consumers mobile coupons that were scannable directly from the handset to the point of sale
- MilkPEP leveraged the alerts to generate awareness among consumers that chocolate milk is the ideal post workout option for replenishing fluids.
- SC Johnson worked with Wal-Mart stores in the geo-fenced locations to drive consumers to store shelves to check out Glade scented household products.
Participating consumers who opted to receive ShopAlerts received a maximum of three messages per week from three different brands based on their proximity to the brand’s geo-fence. The minimum time interval was two days between messages recieved.
Draftfcb polled consumers who opted for ShopAlerts among its four clients once the program ended. There was a near 100% open rate; 50% of consumers opted to receive messages from the brands giving additional information. There were in some cases 22% to 25% purchase conversion on some of the offers.
The program highlighted that finding deals was not the only objective for the consumer, they also wanted to hear from brands based on the fact that they offered valuable information, thus debunking the myth that ‘the dollar off’ method was the most successful type of communication.
Despite security and privacy issues, there are indications that consumers are steadily embracing smartphones and the apps, content and media consumption they enable. Organisations are setting their sights on using these devices to influence transactions. This cultural shift is an indication of a change in mindset of getting the consumer to the door.
There has been various opinions in regards to the ‘Check-in’ and its validity as some research would indicate, an example by Pew Internet & American Life Project being one. It was found in May 2011 that while 58% of smartphone users had used some form of LBS, just 12% had checked in ‘somewhere’.
However, the mobile advertising and marketing firm Hipcricket reported in October 2011 that interest in LBS offers has increased from 40% of smartphone users in 2008 to 54% of smartphone users in 2011.
The transition to harness geographic data to close a sale is partly driven by the fading novelty of the ‘Check-in’. Consumers are driven by gaining access to real time deals or purchases.
Location check-in service Gowalla has shut down. This moves comes just after three months after Facebook bought Gowalla. Facebook is looking to increase and improve location-based services on its site as rival check-in site FourSquare continues to grow in popularity.
FourSquare and Gowalla both caused a few ripples of concern at launch: several national newspapers sent reporters to track down FourSquare users based purely on public information from the app and their social media profiles.
Facebook has taken the Gowalla team on, including co-founders Josh Williams and Scott Raymond, in December last year. The Gowalla team are now working in Facebook’s own location check-in services.