Geolocation

According to some, 2011 has been hailed as the year of Geolocation¹. This appears to be a fairly bold statement, for an emerging technology and considering the same prediction was made for 2010. Have the stars finally aligned for this (somewhat) new technology to be harnessed and do marketers now have the ability to provide relevant content?

Geolocation is the identification of the real-world geographic location of an object and, such as a mobile phone or an Internet-connected computer or for our purposes the person using to such a device. At the very least, geolocation takes the 'Place' element of the traditional marketing mix to the next dimension, and crucially not only enables brands to be able to transmit relevant messages and offers at the right time and to the right person, but now at the right place, wherever they might be. Geolocation is therefore seen as the loyalty marketing utopia.

Where is Geolocation today?

The short answer is it depends on where you are in the world. For many developed markets, such as the US, Europe and UK, brands have been utilising a mix of SMS push marketing and offers provided via mobile applications. In the Middle East there is low participation and a distinct lack of critical mass at the moment, although a few brands are using location-based services as part of the marketing mix. In Latin American countries with emerging economies there is growing demand for geolocation services which is supported by an approximate 30 percent smartphone penetration rate in the region. Asia would seem to have the most opportunity based on its history of advanced technology and early adaptors.

There are a number of services currently running that allow you to be located - Facebook Places, Twitter, Foursquare, Gowalla, Yelp and Loopt - and tell your friends where you are. However from a commercial B2C perspective, geolocation is still somewhat of a mystery. The basic concept of geolocation is to identify the location of the consumer in order to communicate to them in a very targeted manner. Integration across all dimensions of marketing will, in essence, create a new audience - not just in retail (the obvious sector) but within all sectors including travel and hospitality.

Challenges facing brands

With most emerging technologies there are a number of challenges, and geolocation is no different. In its current form, geolocation is very fragmented offering numerous platform providers and at present there is no clear route to success.

The above graph2 shows the use of social networking on a mobile device is ranked 8th, but use of location-based services did not make the top 20. Foursquare check-ins ranked 27th, tracking family/friends through GPS ranked 28th and utilising service products such as Groupon and LivingSocial ranked 29th. Not exactly a glowing endorsement for implementing such an initiative right now.

Additional challenges include:

• Data is the most obvious challenge. How do the brands and platforms effectively mine the data to target the consumer at the right time in the right place with the right offer? There needs to be a certain level of personalisation and relevancy in order to create the perceived need for the offer being pushed.
• What are the commercial implications of these initiatives? How can they be measured? In addition, how are brands measuring their success now? One answer is many brands now have a KPI for "Member Engagement" so these interactions (check-ins, rewards, etc) can be measured but it is still early in being able to translate this into commercial value.
• Sufficient buy in and investment by brands - this means infrastructure, technology and data.
• The verdict is still out if there is a global solution for geolocation. For example the biggest provider, Facebook Places, is blocked in China however Foursquare is able to operate. Furthermore there are significant connectivity issues - 3G networks are not always reliable in all parts of the world - and where they are available there are often very high data roaming charges.
• Finally, the consumer themselves. As research highlights², there is no critical mass so it is difficult to tell if consumers will get overwhelmed with push-based messages. In addition, privacy has shown itself to be a big concern.

Opportunity awaits

The emergence of social media and the sharing of information by consumers have opened the opportunity floodgates to marketers. Due to its large number of users and breadth of Facebook Places, it would appear to be the optimal platform to extend into location-based initiatives versus dedicated platforms. However, the dedicated platform providers are certainly moving the dial. To contextualise, Facebook has 687 millionusers but only a small percentage of these are checking in - 65 million mobile users. On the contrary Foursquare has 10 millionusers, having checked-in a total of 600 million timesworldwide³, so we would be naive to deny platform providers their place in this sector.

Leading the way

As it stands right now it appears some brands are ahead of the curve and already making noise in this space.

• American Express and Foursquare recently formed a partnership in the US where cardholders are required to sync their cards with a Foursquare account in order to get discounts at retailers and restaurants.
• Starwood Hotels, long known for being an industry innovator, has also teamed with Foursquare for a contest that is rewarding its Starwood Preferred Guest members for check-ins at their properties. Starwood is not only giving away free points and free night stays but has also integrated Foursquare's Mayor status into the promotion, meaning the member with the most check-ins will earn the title SPG Mayor and in turn will be able to provide travel tips and guidance to other members.
• JetBlue Airways was the first US airline to announce integration between its TrueBlue frequent flyer programme and Facebook Places. Members of JetBlue's Go Places receive 25 TrueBlue points for every check-in at an official JetBlue airport location. With redemptions beginning at 5,000 points the ROI for the consumer (200-1 ratio) is not great but still an important step in the evolution of geolocation.
• Groupon and Loopt recently announced a partnership aimed to target consumers by location and alert them with deals close by, and may change the entire landscape of location-based marketing in the retail space.

What is the future of Geolocation?

From a consumer perspective there is the expectation for a branded experience across all marketing touchpoints. From a brand perspective it is especially important to develop partnerships and integration of mobile applications to capitalise on the consumer's location in order to target that specific individual with offers.

Data will ultimately be the driver for this technology. It is our opinion the American Express/Foursquare model is the most effective at this time. Having the ability to track customer interactions, spend and establishing ROI, this type of arrangement could become the norm.

Like all emerging technologies it has taken a while for the marketplace to understand how to utilise technology in order to provide relevant consumer content. Which brands have the capability and foresight to jump into the fray? Which industry sectors will climb to the top and develop the type of case studies that can be duplicated across sectors. It always seems new technologies come from science-fiction movies and novels, are we seeing this come true again? Is life imitating art? It appears the movie Minority Report and its director, Steven Spielberg, had the foresight for geolocation marketing and hit the mark a decade before it actually became a reality.

 

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¹ Social Media Examiner

² Frank N. Magid and Associates

³ Sean Clark, Growing Loyalty with Location Based Marketing