Location-based advertising via the mobile phone has long been a dream for the marketing community, but it has been scuppered by a combination of technology and privacy issues. However, with mobile phone manufacturers embedding GPS technology into handsets, and Nokia making headlines with its acquisition of NAVTEQ and directory assistance companies, are we on the cusp of a viable location-based advertising model?
By Neil Davey, editor
For most organisations, the mobile phone represents their single greatest untapped marketing and CRM opportunity. Mobile phone penetration has reached saturation point and yet the ability to meaningfully connect with the consumer and deliver value through the platform has fallen woefully short of expectations. There are some notable exceptions of course. Airlines have proven adept at using the mobile phone via the likes of SMS check-in and flight alerts. And some banks have also been inventive, sending out SMS to customers when their credit cards have been used as a security measure. Meanwhile, as mobile phones have evolved to become media-rich, so marketers have increasingly woven these capabilities into competitions and promotions, delivering exclusive multimedia content to consumers.
"If you're looking at a map on a phone, it is usually of the area that you're in, so therefore it would be quite natural for that map to be populated with offers and deals in the area."Russell Buckley
But by and large, firms have yet to use the humble mobile phone to its great potential, and particularly so in terms of location-based services – a field that has been hotly anticipated for some 10 years or so but has still yet to deliver. "Mobile at its core is anytime, anywhere, always-on, always-available, but location takes a step away from the experience and allows the consumer to find what they are looking for without having to input their address, it just automatically locates it," says Laura Marriott, president of the Mobile Marketing Association. "So you take a step out of the process and make it easier for the consumer to access the information more quickly."
Nevertheless, efforts to deliver location-based content have to date had limited success. It is now common for live events and venues such as the UK's Carling Academies to encourage attendees to receive updates and offers via Bluetooth capabilities, and in this environment the practice has proven fairly popular. Yet attempts to deliver location-based services have not had the desired effect – for a variety of reasons.
Issues surrounding privacy have represented the most serious obstacle to a location-based revolution for marketing. The mobile is a very personal tool, and whilst this is a great strength, it is also a great weakness. Any push-based marketing initiatives, such as SMS-based alerts, are undermined by the knowledge that whilst consumers may be happy to opt-in to the communication today, they may not be so happy to receive the message the next day. Quite simply, in this kind of campaign, there is no way to know how the customer will respond to receiving your message.
"Spam isn't necessarily about permission, it is about how the recipient feels when he receives it," emphasises Russell Buckley, a leading practitioner, speaker and commentator on mobile marketing, and chair of the Mobile Marketing Association for EMEA. "And as a marketer you have no idea what context they are gong to receive it in."
With marketers keen to avoid a scenario where annoyed customers withdraw their marketing permission, various companies have instead turned their attention to encouraging consumers to pull alerts, for instance visitors to a shopping mall requesting a company send them information about special offers. But this has hardly set the world alight. "It's not every effective because first of all people forget that it exists and how to interact, whether that be by a text message or short code," continues Buckley. "And secondly, if you don't do your job properly as a marketer and you haven't got the content that they want on a particular day then the chances are they won't try again."
"So there has never really been a seamless technology solution. And even when you get over this - and Bluetooth is an example that could work around the technology - there are still issues."
Mobile phone evolution
But if we've learnt anything, it is that the mobile phone revolution is built upon mobile phone evolution. Technology such as video cameras are now commonly embedded into handsets whilst improved user interfaces and screen sizes have also opened up new and compelling applications. Now, having witnessed the substantial growth in personal navigation device sales over the past 12-18 months, operators and handset vendors are looking to tap into this latent demand – a move which will have major implications for location-based advertising.
"We're actually beginning to see deployments and uptake in consumer adoption. Now is the time for location-based services applications."Laura Marriott, Mobile Marketing Association
"Handset vendors are increasingly putting in GPS modules, so the accuracy of positioning systems in hand moves beyond what we have with Cell ID, where the accuracy is based upon how close the cells are together and how well that can triangulate," explains Nitesh Patel, a senior analyst in the global wireless practice of Strategy Analytics. "GPS obviously offers better, more accurate functionality and handset vendors are now building the actual software for navigation into the terminal. Nokia Maps is one example and Sony Ericsson is working with Wayfinder to put that software on their handset."
This mapping technology opens up enticing opportunities for a market straining at the bit for a location-based advertising model. "Maps get over some of the issues experienced to date, because if you're looking at a map on a phone, it is usually of the area that you're in, so therefore it would be quite natural for that map to be populated with offers and deals in the area," says Buckley. "And if there aren't any offers and deals it is not blindingly obvious like a pull-based service and the consumer won't notice because he is actually using the mapping service. Therefore, this approach is perhaps indicative of the future."
Patel is in agreement. "It is gaining a growing amount of traction simply because when consumers receive advertising one of the complaints is that if it is not relevant then it is spam," he explains. "Location ties into that whole relevancy aspect of it if you're carrying the handset around with you. So we're seeing developments by a number of companies in this area, focusing on tying in location and navigation into search, whereby you request a location or search on a key word and it brings up results and as an added value you also get directions on how to get there and incentives as well."
On the move
In perhaps the biggest indication of the direction the sector is taking, in October last year Nokia followed up its acquisition of a large number of directory assistance companies across Europe by buying up location-based services firm NAVTEQ. The industry is now holding its breath for the handset firm to marry those two plays together.
But Nokia is not alone. Google is pursuing its mobile strategy through Android and is doing business with several phone companies. Navigation device manufacturer TomTom is nearing the acquisition of its main map supplier Tele Atlas. And social mapping application firm Loopt has partnered with CBS Mobile in the United States and is reportedly already undertaking a location-based advertising pilot scheme.
Marriott is sharing in the excitement of these developments. "I started in location services in 1998 and we've been talking about location services for a long time," she emphasises. "But now we're actually beginning to see deployments and uptake in consumer adoption. Now is the time for location-based services applications."
Laura Marriott, Mobile Marketing Association
So is the path finally clear for location-based advertising to make its mark on the map? Unfortunately – as is so often the case – some problems are still clouding the issue. "The technology barriers are pretty much minimal now," says Patel. "In the US, especially, on CDMA networks, penetration of GPS is quite high so that is not really a problem in those markets. It is more a case of doing it correctly for the consumers and, on the supply side, getting merchants and other players in the value chain too."
Buckley agrees. "The big challenge for whoever launches the service is that if you have location-based services you have to find a way of populating that inventory with advertising offers – and that is pretty challenging in its own right because most shops are local and you will have to manage that whole sales inventory of hundreds and thousands of retails and all the different offers they want to make at the specific times they want them made," he says. "You are talking about hundreds of millions of variables and just the artificial intelligence that you would need to apply to get the right product to the right person at the right time is quite mind boggling. Just the database management is a hugely challenging, let alone the physical going out and getting the offers in the first place."
Indeed, few are more aware of the problems that this could present than Buckley, who was part of the founding management team of ZagMe – a pioneer in this field – back in 2000. Recruiting some 85,000 consumers and running around 1,500 campaigns for the likes of Burger King, Reebok and The Body Shop over SMS, the initiative experienced significant logistical issues that would be relevant to any similar programme today.
"When we were at ZagMe we were only supporting two different locations and it used to take a team of five people two days to plan all the different offers - and that is just on two locations," he explains. "So if you multiply that by 5,000 you can understand that it is very complicated. I hate to sound so sceptical about it because it is something I really want to see happen and it is something that has a lot of potential in the future but once you start thinking about it is not as easy as it seems."
Still some wrinkles
Whilst location-based advertising looks to be finally taking shape – with mapping potentially representing the key to the future – it seems there are still wrinkles to be ironed out. Of course, for those marketers who have been eyeing location-based advertising for 10 years or so, waiting a little longer will seem to be of little consequence. However, in the meantime there are other opportunities that are up and running for them to explore.
"My message would be 'watch this space'," says Marriott of location-based advertising. "See how it develops. But start with the technologies and strategic opportunities that are already mainstream, things like text-based mobile marketing, text-based mobile advertising, mobile websites. Location services are coming. But if you want to see immediate success in mobile marketing stick with the tried and true."
Indeed, such is the fervour surrounding location-based advertising, that perhaps existing mobile phone CRM and marketing initiatives are being overshadowed. Buckley believes that if firms really want to tap into the mobile phone's potential they need do little more than start focusing on the here and now.
"To an extent it seems a shame that a lot of people are focused on what might happen in five years time rather than what is achievable now," he concludes. "It is easy to understand the principles of location-based services – I am walking past a shop and I get an offer – and that sounds really exciting and futuristic. But there is an awful lot that they can already do in terms of the mobile as both a marketing tool and a CRM tool – but they are not."
Click here for Russell Buckley's report on location-based advertising, 'Location based marketing – theory and practice'.
MyCustomer.com 20-Jun-2008
Story read 2133 times
MJ Nash, Chief Strategy Officer, WanderSmart Technologies, www.wandersmart.net
At 1020 Placecast, we have been operating a location-relevant ad network across WiFi, fixed broadband and mobile for over a year and a half at scale, which is only technically and economically feasible by leveraging our proprietary technology platform which manages each impression as a unique piece of perishable inventory, specific to time and location. While on the surface it seems easy, it's actually extremely difficult.
Another misconception is that location-based advertising must be interruptive and forced on the user (yes mythical Starbucks coupon example, I'm looking at you). We leverage location as another critical piece of context that can make advertising more relevant and integrated into the user experience, rather than more intrusive to users.
Regarding sales, we have spent over 18 months building a direct sales force and educating agencies on how Placecast targets audiences using the vector of “place” -- the combination of location and what Placecast knows about that location at that time. Once again, it sounds easy but in practice it's extremely difficult due to how media is bought and sold. However, once advertisers have seen the performance and the scale at which Placecast operates their skepticism is answered.
There’s a long road ahead, but we can say that the value of location has already been proven. Now we just need the carriers, Google, Nokia and Apple to push the market for LBS forward!
http://to.swang.googlepages.com/lbs
FYI
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