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Why location-based services are just getting started

Why location-based services are just getting started Eric Anderson
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On the subject of mobile check-in apps, I have been the unimpeachable Mayor of WTF. I enjoy the mild dopamine kick of meaningless milestones as much as the next digital marketer -- a condition that comes from years of monitoring ad click-through rates -- but try as I might, I just can't do geo. Foursquare sits in the dustbin of my unused apps, taunting me with the prospect of countless unearned badges. Facebook Places reminds me that it's now possible to neglect my social network in multiple channels.


So, I had my own special interest in the outcome of my agency's recent study of geolocation app usage among 437 smartphone users. I wanted to know whether I was the lone Luddite in a universe of happy location-sharers.


Nope, not alone.


The study found that while 39 percent of smartphone users who know about location-based services (LBS) are also using them, the remaining 61 percent are thus far choosing to sit out this dance. At first glance, that may sound like a glass-half-full for LBS, but when you look at the reasons why most smartphone users aren't avidly broadcasting their arrival at the laser hair removal clinic, you start to see the tell-tale ruts from consumers digging their heels in. 


The chart below shows the concerns expressed by non-users. We weren't surprised to see privacy at the top of the list, because let's face it: we marketers tend to do the absolute minimum required to reassure consumers about privacy. Even when we're being well-behaved about how we're using the data we collect, we tend not to want to bring it up with users, lest we shatter the illusion that we're simply giving them stuff for free because we like them. We expect that anyone who [shudder] really cares about privacy will read our fine-print policy. As the recent Apple geotracking scandal handily illustrates, the minimalist approach to privacy is a recipe for backlash.





The bigger revelation from our survey was that a combined 45 percent of non-users either perceived no benefit to geolocation services, or saw them as redundant to other ways of connecting. No benefit? Obviously they have not tasted the sweet victory of earning the Lookin' for Love Badge.


Clearly consumers want more from LBS, and we marketers have an unfortunate tendency to translate that phrase as "consumers want discounts." Not so, according to our study and chart below. Only 8 percent of consumers saw discounts and rewards as the most important benefit of a location based service, and only 4 percent are really jacked about the badges (and you know who you are.) One might counter-argue that consumers aren't excited about LBS discounts because the discounts haven't been big enough to get excited about; however, Groupon's recent acquisition of Pelago may put that argument to the test.



For most marketers, there's a longer but more rewarding path to LBS success than discounting or badging. Our survey found that 41 percent of consumers see the LBS social connection as most important, and another 21 percent especially prize the recommendations that those connections provide. In our view, these data points are a blinking red arrow directing marketers to the real opportunity: we need to help consumers make better use of their trusted contacts to get real-time recommendations.


Our Digital Futures Group calls this concept "guided exploration." The simple idea is that a given consumer will try a new restaurant not because of a $5 discount, but because the few friends that really know the foodie scene have recommended it. They don't care as much about what their whole network thinks (sorry, Facebook) or what everyone in town thinks (sorry, Yelp); they want to tap specific personal networks for specific interests.


The new LBS Color, which was released to considerable buzz after our study had already been produced, offers a form of guided exploration with the concept of "elastic networks," based on real-time proximity. You can connect with everyone standing near you at a Decemberists concert, for instance, with reasonable assurance that members of this impromptu network have similar tastes in music and could recommend other bands worth checking out. Relevance doesn't equal trust, of course, but it's a step in the right direction.


Marketers can get into the guided exploration act by building their own LBS experiences around their brand's own area of expertise, using white-label platforms like Double Dutch. For instance, an outdoor apparel company could start an LBS featuring local hiking trails, and users could connect only with their outdoorsy friends, and not with their father-in-law whose idea of getting in touch with nature is watching Discovery Channel. Brands can also build such experiences on existing networks, with tools like Foursquare "Tips," which allow the brand to play the trusted advisor role.


Finally, I hesitate to bring up the subject of hard work, but there's no substitute for it when it comes to making LBS effective for marketers. Our study found a very high correlation between LBS usage and frequent social network updates: 60 percent of LBS users are daily social networkers, as opposed to only 39 percent of non-users. That means the squeakiest wheels on your brand's Facebook page are also the consumers most likely to talk about your brand on an LBS, and/or participate in the brand experiences you offer on an LBS.



 
By itself, this finding is not surprising: an LBS is, after all, a social network in its own right, so we'd expect habitual networkers to continue that behavior across channels. Simply put, the people who talk about your brand in social media will also talk about it in mobile. The best way to influence that behavior is exactly the same as it has always been: take excellent care of your customers so they'll say nice things about you.


The social-mobile connection is also a reminder that marketers need to move across channels, just as their customers do, by promoting their mobile experiences in their social venues, and sharing their location-based content produced by their followers in all channels. Brands can also look to their most avid social followers to pilot their mobile initiatives. As your brand ambassadors become more deeply networked across devices, so does your brand.


If LBS players can get out in front of privacy issues and make mobile connections more relevant to what consumers really want, it's a near-certainty that adoption will reach critical mass, and more marketers will jump on board. If that happens, I may even be willing to give up my mayorship.


Eric Anderson is a partner and VP of marketing at White Horse.


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Eric Anderson is the Vice President of Digital at People to People Ambassador Programs, the leading provider of educational travel experiences. He is the author of Social Media Marketing: Game Theory and the Emergence of Collaboration, published by...

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Comments

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Commenter: Eric Anderson

2011, May 10

Thanks very much, Dean, and thanks also for introducing me to iLoop -- they hadn't been on my radar. The AR aspect is very interesting and has potential to drive more exploration, if consumer adoption follows suit.

Commenter: Dean Westervelt

2011, May 09

Great piece, Eric, and grabbed your Whitehorse white paper as well. Your comments (and those within the white paper) point out that third-party LBS might not be needed - seemed to jive with a very interesting MediaPost piece talking about iLoop using AR to drive loyalty, particulary among smaller businesses.

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=149735&nid=126366

Anyway, thanks, good read.
Dean