Bare with me while I explain how consumers are like submarines. Subs detect what’s around them in two main ways. They can listen passively to ambient noises (rocks shifting, whale songs, incoming mermaids) or they can actively generate an intense sound, a “ping,” tracking what the sound bounces off. Pinging gives a more accurate picture of what’s around, but it’s riskier: making noise can give away your position to enemy subs. One can easily imagine a sub captain holding their breath with every ping, wondering what attention it’s attracting.
It’s becoming the same for mobile social media users who, with applications such as Foursquare, Gowalla and Twitter, ping their whereabouts with GPS-enabled phones. They’re able to tell the world where they are minute-byminute (“Privacy is no longer the norm,” sayeth the Zuckerberg), presenting marketers with a remarkable advertising opportunity.
But many of these users are sending updates to friends, not companies. One can picture these folks holding their breaths, wondering if nearby marketers are about to torpedo them with advertising, or just silently follow them through uncharted social waters.
It’s probably going to remain the latter for the time being. While Foursquare and Gowalla are definitely growing, both in terms of service offerings and consumer usage, the number of geolocation service users is still quite small, and most marketers seem to think it’s not yet worth significant investment. And there have been problems. Foursquare, for example, has had trouble keeping user data safe and, more important to advertisers, has so far been mostly unavailable to talk about business partnership.
For those who have yet to “check in” or earn their first geolocation marketing first badge, here are the basics: a GPS-enabled phone can broadcast where it is in real time. If a mobile user downloads a brand’s app and agrees to activate that broadcast functionality, a marketing team could (conceivably) know the moment the person passes by or enters a retail location and instantly beam them ads, customer surveys or coupons. There are other possibilities, to be sure, but that’s one of the most likely starting points.
Gowalla and Foursquare are the two biggest names in geolocation platforms at the moment, made media darlings in part by the sizeable cheques given to them by venture capitalists. In June, Foursquare, at less than two years old, landed $20 million in fresh venture capital. A month earlier, its younger competitor Gowalla was given $8.4 million. Users of both services “check in” to locations. Through integration with Facebook and Twitter, check-ins serve as a notification system for a user’s friend circle, telling everyone where they are. It’s handy if you’re trying to meet a group of friends at a mall, for example, to know how close everyone is.
Marketers should note however, that like other social media channels, these platforms are billed as services, not ad-delivery vehicles. But a few up-and-comer companies appear to be perfecting the geolocal formula, working with retailers directly to find that perfect balance between service and the sell. With some tinkering, geolocational marketing could live up to its hype.
And some marketers are already finding a way to be relevant. Both Gowalla and Foursquare have reward systems–points, badges or virtual objects that are given to users for accomplishing certain tasks: going out four nights in a row, visiting the same restaurant multiple times, attending a special event. Foursquare uses its reward system to anoint “mayors” of locations, a title bestowed on whomever checks-in the most. Companies such as Starbucks and Dominoes have jumped on this opportunity in some regions to drive customer loyalty.
Starbucks mayors, for example, get discounts on coffee. Both services allow users to plan trips using their mapping functions and by setting up reminders to do things like try new restaurants that have been recommended by other users. Gowalla offers preprogrammed trips and lets users create their own to share. Any location fortunate enough to be added to a popular Gowalla trip should see increased foot traffic through its doors.
Some marketers are actually developing Gowalla trips as well. The Levi’s jean company has been creating movie-inspired trips called The Godfather and Rocky to bring people to films’ locations, part of this summer’s “We Are All Workers” campaign. There are prizes–real and virtual–available along the way.
Finally, Foursquare also allows users to “shout,” which means leaving virtual messages about a given location for other Foursquare users to find when they’re nearby. In Chez Moi’s neighbourhood in downtown Toronto, a user named Hao N. tagged it with the note, “Try the creme brulé.” This is a marketing gimme, as discovered by a Toronto location of the pub chain Fionn MacCool’s that shouts its daily beer specials.
But for all the shouting, who’s listening? According to new research, not many yet.
Forrester’s recently released study Location-Based Social Networks: A Hint of Mobile Engagement Emerges, which surveyed nearly 43,000 Canadians and Americans, provides a solid, wide-scale look at how North Americans are using LBSNs, or not as the case may be. Fully 84% of those surveyed said they were “not familiar with such applications”–more than eight in 10 North Americans don’t even know these services exist. Only 4% said they’d ever used one at all.
“I think its still really early for apps like Foursquare,” said Les Tapolczai, director of marketing and planning at Toronto digital agency Henderson Bas. “It’s a really niche system, but the people who use them are hard-core into it.”
There certainly are signs of growth worldwide. Foursquare got good PR over its 100 millionth global check-in in July, just two months after it its 40 millionth check in and four months after its fi rst anniversary. It has also reported more than 1 million check-ins per week since February. But not only do these big numbers include countries where mobile penetration is much higher than Canada and the U.S., they swim in a milieu of apples-to-oranges social media statistics that marketers rightfully struggle to decipher . For example, Facebook has 500 million regular users and has been around since 2004, but marketers are only now starting to grasp how to engage this community. Tapolczai says Henderson Bas has pitched national advertisers on using LBSNs previously, but many are slow to jump on board because of its new, unproven marketing value and Forrester’s report on the relatively small audience.
Among those who told Forrester they did use LBSNs more than once a week (1%), once a week at the most (1%) or “rarely” (2%), the demographics skew strongly in one direction–almost 70% are between 19 and 35 years of age, and nearly 80% are male.
“They are also well educated with 70% having a four-year college degree or post-graduate degree,” according to Forrester . “These demographics point to a typical early technology adopter demographic.” This certainly describes the creatives at Henderson Bas who Tapolczai talks to about the service. He says they salivate over the possibilities they could present to clients.
“Let’s say you go to a movie,” he says . “You could get served with a notice to go to the nearby HMV and buy the fi lm’s soundtrack. And checking into a movie provides some lifestyle information. We thought about what Amazon does, where they serve out recommendations based on topics related to my interests. You could so the same thing here. If I like a certain restaurant or coffee shop, then [a marketer] could serve up information that makes sense for that area.” Or, armed with information about a user’s favourite restaurants and foods, an LBSN could make recommendations for users visiting new cities.
It may take more than day dreaming to get more users on board geolocation services, however. Many are apprehensive about security concerns around this new technology. A recent Webroot study of 1,500 social media users showed 55% of geolocation service users are “very” or “extremely” concerned about privacy, despite Zuckerberg’s declarations. Granted, Webroot is an online security company that stands to benefi t when people feel exposed online, but the survey’s participants may be reacting to a few well-publicized privacy breeches.
In June, just ahead of its latest venture capital acquisition, Foursquare seemed to suffer a large-scale privacy leak when users’ location data was broadcast online, ignoring their personalized opt-out privacy settings. Not great timing, but the $20 million in new money came through regardless and the problem was solved within a few days.
Mass media also picked up on the sardonic efforts of For The Hack, a “concept and idea factory” that created PleaseRobMe.com, which accumulated LBSN updates and published them as potential advertisements to burglars, telling them who was currently out of the house as a means to raise “awareness about oversharing.”
Privacy aside, the newness of this technology also means there are still bugs to work out. Foursquare’s system can be gamed so that users don’t have to be physically present to check in to locations. And company’s whose shiny applications rely on GPS tech wait patiently as smartphone penetration rates–the limiting factor on their market size–climb steadily but slowly.
One company that may have circumvented the GPS issue is Placecast, the four-year old San Francisco tech company that provides geolocation marketing solutions to marketers. Its technology lets consumers give permission to brands to beam them display ads or text SMS messages. While Placecast can use a phone’s GPS unit to fi nd participating consumers, they also use the existing infrastructure of partner telecoms. This means any kind of phone, even last-generation “dumbphones,” can receive time- or location-sensitive messages directly.
“If you’re a brand, you don’t care just about iPhone users, you should care about reaching as many customers as you can,” said Alistair Goodman, Placecast CEO.
The company has been working with Sonic fast food restaurants to create discount offers store-by-store that change as the menus switch from breakfast to lunch to late night. It has also partnered with outdoor clothing maker The North Face to not only create in-store messages, but news feeds at events like World Cup ski competitions.
The latest LBSN to fi nd the media spotlight, however, is Shopkick. It recently announced a partnership with Simon Property Group which operates more than 370 shopping malls in the U.S. Like its forbearers, Shopkick lets users check in to retail outlets. Users get the expected blast of store info and marketing messages, but they also get Kickbucks, the system’s own reward program that can be used in-store, converted to Facebook points or currency with third-party organizations such as Napster.
Rather than GPS, the system uses inaudible audio signals to automatically ping phones as they enter individual stores–and not before, avoiding the remote check-in trickery of Foursquare’s less scrupulous mayors.
Tech reporter and geolocal skeptic Sarah Lacy, writing for the blog Tech Crunch, said she would actually consider using Shopkick for this reason. Plus, she said, sharing info “is between a retailer and me and they already know I’m in the store so it’s not much of an invasion.” Lacy also appreciated that her incentive points are transferable to other online and offl ine retailers. Her only hesitation? “It’s only on the iPhone.” That will likely change.
By the time you’re reading this, Shopkick should be active in about 25 malls in major American markets with some sense of how many shoppers are trying it out. Putting it in malls seems a smart idea to catch the throngs of young adopters cruising the corridors, and if the points system proves enough of an incentive, the kids may do what every social media company dreams about: tell their friends.
Then they too may be willing to sound off a few pings of their own. They may be targeted for advertising, but it may also be worth it.
