We know full well the business we’re in as marketers is really the business of choice. But recent discoveries from behavioural science are leading to a psychological revolution that challenges many of the accepted models of how communication, creativity and advertising influence a consumer’s preferences.
Ever since smartphone makers began incorporating GPS receivers into their handsets, marketers have dreamed about making use of the technology. Their goal has been to use location to target consumers with messages based on not just who they are, but where they are.
But while telecommunications companies have talked about triangulating the location of consumers down to a matter of metres for the best part of a decade, a successful advertising model that uses this capability has yet to emerge.
For starters, consumers have hardly warmed to the idea of advertisers knowing where they are. On the flip side, even one of the most successful implementations of mobile location-based services, Foursquare, has not delivered a user base large enough to retain the interest of major brand advertisers.
But it seems that for those who have dreamed about a geo-targeted marketing revolution, it has been a case of ‘right place, wrong time’. New technology initiatives and business models, and increasing consumer acceptance, could see mobile location becoming a much bigger part of a marketer’s arsenal in 2014.
According to CEO of Brisbane-based mobile location-based services experts Locatrix, Mark White, the failings of many location initiatives to date stemmed from not taking into account what actual consumers want.
Locatrix developed Game of Phones, a smartphone-based game for Virgin Mobile which saw users collecting virtual prizes ‘dropped’ all across Australia. The game used location technology to determine when a player was within 50 metres of the prize, and then awarded them. White claims Game of Phones was Australia’s largest-ever location-based game.
White cites specifically the idea that someone might want to be offered a discount coupon as they walk past a shop or fast food outlet as a failed idea.
“Everyone sees that as a use-case and everyone hates the idea of that as a use-case,” he claims. “That’s a value proposition geared more to the advertiser than the user. And what we have to do is look at location-based marketing and ask how we use location to make sure we give the benefit to the user at the most appropriate time for them.”
According to White, the critical element when designing services that utilise mobile location is to ensure they have more attributes than just location. “If you are engaging purely based on location you are going to fail,” he says. “What you need to be doing is engaging your audience, and engaging based on things which are a combination of location, profile and content. And that hasn’t happened yet.”
The potential of location-based marketing services through mobile continues to attract the interest of major brands and start-ups alike.
According to the managing director for Adobe Systems in Australia, Paul Robson, the quest to incorporate geo-location into marketing campaigns is a natural extension of marketers’ desire to tailor those campaigns to the attributes of individual consumers.
“When we sit down to meetings with these organisations they all talk about personalisation,” he says. “They want to have a personal relationship with their customers, and they want to be able to provide them with relevant content, relevant data, and understand what they want.”
In many instances, brands will take what little geo-location information they can get, including making assumptions based on the IP address of browsing consumers, due to the strong uplift this can give to the effectiveness of offers, Robson continues. The ultimate goal, however, is to get consumers to log in to a service and part with more specific location details in the process, further refining the geo-targeting process.
Realising the opportunity, numerous Australian location-based services are poised to launch in 2014. These include the Melbourne-based start-up, Snap It Up, which aims to provide an engine for business to sell goods and services to nearby consumers. The concept essentially takes store-front advertising and extends it to people outside of line-of-sight.
Its co-founder, David Gillespie, believes Snap It Up will be especially effective for selling distressed inventory, such as for a hairdresser that has a vacancy, as offers can be posted in a matter of seconds. “From a bricks and mortar sense we know it works, and what we are doing is translating that,” he says. “We are creating a hybrid between physical advertising campaign and a Web-style banner ad campaign, but the idea is it can drive traffic to a physical store.
“What this is really about is providing time and place location-based offers. If you are having a quiet morning, you have the ability to influence the sales you have that afternoon.”
Another advantage of the model is that advertisers can learn now many people were in range of their offer but declined to take it up. Gillespie says Snap It Up is now talking to potential partners who operate in large numbers of physical locations. It will not be replicating the model of group buying services that have hired large teams of face-to-face salespeople.
“What we have come up with is a completely different business model that does scale without face-to-face sales,” Gillespie says.
The company has also invested heavily in the technology behind Snap It Up, including developing a location model that does not rapidly drain the battery of the users’ smartphone, and an enterprise grade ecommerce engine capable of handling millions of consumers, cross referenced to hundreds of thousands or stores.
“That has to be dealt with in real time as you move into the radius of the stores,” Gillespie says. “You can’t do that on an app.”
The old and the new
The uptake of geo-location services is also likely to be helped by a plethora of new concepts now entering the market, such as Tile, which has developed tiny devices to help consumers keep track of items such as luggage or house keys. Another example is goCatch, which enables consumers to track the actual location of an approaching taxi. Such services are further familiarising consumers with geo-location technology.
Also playing a role in the revival of geo-location services is one of the oldest mobile technologies – Wi-Fi. Vice-president of US-based ecommerce strategy firm, Acquity Group, Randy Higgins, has seen numerous mid-tier US retail clients seek Wi-Fi specific landing pages as part of a location-based strategy.
By encouraging shoppers to log on to a free in-store Wi-Fi network, Higgins says retailers can not only reach those consumers through the landing page, but also use geo-fencing technology from companies such as Digby to make offers based on where they are in the store, right down to the individual aisle. “While that creates risk around show-rooming, it gives them more control over the experience too,” Higgins says. “Consumers are getting a different message based on whether they are at the counter or the point of sale.”
Higgins says this strategy has delivered results for the US electronics retailer, Best Buy. “Two years ago the company was seeing massive attrition based on people going into look at a product and then buy it on Amazon,” he explains. “They’ve seen some reversal of that, by adding value to the experience in the store as well as being able to match prices.
“So it is almost table stakes that show-rooming is going to happen, and it is up to retailers to manage the message to the customer on their device.”
By having shoppers on their own network, retailers can also determine when consumers are comparing prices online, and with whom, giving them better intelligence on their competition and the ability to better match process.
Higgins says the next evolution will see integration of these campaigns into in-store digital advertising, enabling a more personalised experience that does not require the consumer looking at their mobile device.
“The potential is endless – I think we are at the tip of the iceberg,” he adds.
But according to White, whether such solutions prove viable in the long term will depend much more on the quality of the offer made, rather than the technology used to make it.
“A lot of problems with location-based services have not been technology problems,” he says. “They have been creating a user experience that has been most compelling for the advertiser, not the consumer. It is all about creating engaging experiences.”
For those advertisers that persevere, the rewards could be great. According to Snap It Up co-founder, Frank Stranges, should his own company crack the code it will enter into a fundamentally different way of communicating with consumers.
“Everything else to this point has been about communicating with consumers on the basis of who they are, whereas this communicates with them on the basis of where they are,” he adds.