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Moxie Interactive’s Q1-2011 Trends Report
Executive Summary People used location-based services (LBS) in the past to make life more predictable – where the turns will be, where there will be traffic – and now they’re looking to LBS to make life more spontaneous – what new restaurants to try, where like-minded people hang out. These services are all available on mobile devices and don’t require that users be in front of a laptop or PC to get the most relevant information before heading out the door. Brands will need to find ways to use a combination of location and brand cachet to give people those recommendations. For some brands this means becoming a local in multiple markets and developing an authentic, local voice that people trust no matter where their planes land. Other brands will see that this means not just finding the cool places in a city, but also the cool experiences one can have, pushing people to become thrill seekers or local experts. Contents Introduction Trend 1: The Second Wave of LBS Trend 2: Check In Fatigue Trend 3: Place Based Loyalty
Introduction to Location-based Services Over the past few years more services that use geographic data to provide value to Web surfers and mobile phone users have grown in popularity. These location-based services (LBS) have gained the recognition of consumers and marketers alike due to their potential to deliver relevant information about a location or make it easy to share one’s location with friends, family, and even brands. Before 2010, location-based services (LBS) were mostly restricted to simple tools for finding locations on a map via Google Maps or Mapquest. Maps and location were used to learn more about where one was going to be or become familiar with a new town. This location data made life more predictable by answering questions such as: Where is this meeting? Where’s the closest hotel? Where will there be traffic? Where will the turns will be along the way? In-car navigation systems made these services more mobile, making it possible to enter an address on-the-go and get directions and traffic information in real-time. Over the years these services became more social. Services like Dodgeball, Brightkite and others relied on texting to “check in” to a location and keep friends in the know about what was going on. Keeping tabs on friends was the new game in town, and every new LBS startup thought the focus should be on using location to find out where your friends are hanging out.
What no one really anticipated was that these hooks to keep users playing Foursquare could actually serve as a more effective tool for connecting consumers to brands, not to people.
Along comes Foursquare, created by founders of Dodgeball and creator of a renewed focus on linking check ins to points, badges, and other game-like achievements. People still keep tabs on each other through services like Facebook Places and Foursquare, but location and marketing are now intimately linked. LBS has evolved from its infancy (GPS units) to its awkward adolescence (PC and feature phone LBS) to adulthood in the modern smartphone market. Like any industry, these services will continue to evolve beyond their current state to deliver new value to users and drive growth.
In 2011 the biggest changes in location-based services will be linked back to three major location trends: the new wave of LBS, check in fatigue, & location-based loyalty.
The Second Wave of LBS
Global awareness of location-based services is higher than most people would expect. A recent global Microsoft study found that 76% of Internet-using males age 18-34 in the US, UK, Japan, Germany and Canada had heard of location-based services and 70% had used them at least once. i In the United States, LBS users grew from 12.3 million in 2009 to 33.2 million in 2010. ii However, these consumers focus primarily on services like navigation and weather alerts rather than checking in. In fact, most consumers in the United States have not used a social location-based service like Foursquare or Gowalla. A Pew Internet & American Life study released in late 2010 showed that only 4% of American Internet users had checked in on a location-based service and only 7% use social location-based services regularly. iii
With more than 49 million mobile users expected to access social networks like Facebook and MySpace from their phone in 2011, the potential for location sharing catching on is high…
…especially now that Facebook’s location-based service, Places, has been rolled out to almost every smartphone platform. iv Some forecasts place smartphone adoption in the United States to tip over to more than 50% of the population by the holiday season in 2011, so marketers can expect that locationbased services of all shapes and sizes will only grow in popularity throughout the year. v Facebook only recently linked Places to its new Deals platform, which unlocks deals for consumers when they check in. Given Facebook’s user base of over 500 million, it is likely that more consumers will be exposed, and try out, location-based services via Facebook than on a specialized service like Foursquare. Throughout 2011, continued exposure to Facebook Places will familiarize more people with LBS and make them comfortable with exchanging privacy for monetary or social value.
Companies that want to offer location services will look for new ways to beef up their offerings beyond the check in and fulfill a more mainstream role.
Part of the next wave of innovation is restaurant and business locators on steroids. Not only does this mean a service will help users find exactly what location they’re looking for, it will recommend other places that the user will like as well. For a company like Google this means making robust updates to its suite of location apps. Google has already rolled out updates to make its Latitude and Places products more appealing to everyday consumers. Google Places’ HotPot is a location recommendation tool that is fueled by Netflix-like ratings of locations and a social recommendation system based on places friends have liked. Yelp! has started using Facebook’s OpenGraph API to make social recommendations based on reviews Facebook friends have posted.
Smaller services like Droplat, Tasker and Broadcastr show the range of specialty services that can be developed with location at its core.
Droplat creates location-based virtual storage: users have a virtual drive that follows them around from location-to-location, and each location has its own drive filled with files others have left behind. The service is small but shows how location can add a new twist to file sharing. Tasker is a robust location app for Android that can automate a phone’s entire behavior based on the location it is in. Users can set the phone to automatically switch to silent when entering the office, turn the volume up when entering a loud workspace, turn off 3G and switch to Wi-Fi when entering one’s home. Finally, Broadcastr is a startup that links locations to audio stories. One of the first projects on the service is a series of audio stories about the World Trade Center that people can access when they’re close to where towers stood. Broadcastr’s service shows how location-based media can add context for people who want to learn more about a location. Privacy will remain to be a major sticking point for many consumers, regardless of all the whizz-bang awesomeness that these location-based services offer. Microsoft’s LBS research found that just over 50% of consumers are “very concerned” about their identities being stolen via LBS. vi Just as job hunters have grown to protect their Facebook activity from the eyes of Human Resources and recruiters, the pitfalls of over-sharing one’s locations with friends and colleagues is also a concern. Smart startups and marketers will take data security and privacy seriously and will not abuse consumer trust.
Check In Fatigue
Up to now, letting the world know you’ve arrived has been accomplished via the check in—sharing location by confirming one’s presence at any spot.
“Check in here for a deal!” “Special Nearby!” “You’ve unlocked a deal!” The “check in” as a popular concept in LBS will be in for some serious changes in 2011 as consumers look for more convenient, private, and rewarding ways to declare where they are. A task completed by going through a series of confirmation screens to guarantee that: 1) (after waiting for the app to open) yes, you want to share your location; 2) (after waiting for your phone’s GPS to find your location) yes, you are at this specific location; 3) (after pressing “Check In”) yes, you want to share the fact that you’re checking in to all 15 of your social networks; 4) (after waiting for the check in to process) yes, you would like to redeem the coupon for free French fries you just unlocked by checking in. Checking in is a process that can turn users off to a service, partly because some people just don’t understand how to do it. The learning curve for social location-based services is high. A good example is a partnership between Gap and Facebook Places to give away a free pair of jeans to the first 10,000 people to check in to Gap retailers across the U.S. Facebook Places was only accessible to some smartphone owners at the time, so when feature phone users heard of the deal, they simply typed “Check in” on Gap’s Facebook Page, assuming they’d receive the deal via their ad hoc “check in” method. Unfortunately, the confusion around the campaign became the main lesson for most marketers interested in taking the leap into LBS.
The key takeaway for the companies behind these location-based services is to make the check in more valuable.
For Facebook, they have intimately linked their Places offering with Deals. The service is a natural extension of their local marketing initiatives – small, medium, and large businesses can all benefit from linking their company’s Facebook page to a physical location on Facebook Places. Business owners can then use the combination of Places and Deals to increase foot traffic. Facebook Places check ins have also become a focus of the Sponsored Stories ad units. Brands can have friends’ likes and Places check ins turned into small ads that show up next to user’s newsfeed. For example if someone’s friend checks in at Starbucks on Facebook Places, they would see that check in called out alongside the other Facebook ad units.
Foursquare has expressed intentions to make the check in more worthwhile by redoubling its focus on local tips, recommendations, and game-like rewards.
One tactic to spice up the check in is Promoted Places, which was used during the 2011 Super Bowl. Users from across the United States could check in to the Super Bowl, regardless of whether or not they were actually there. These users were then rewarded with a special Foursquare badge and a discount on goods purchased at NFL.com. Over 200,000 Foursquare users checked in to the Super Bowl. Another key for Foursquare is creating conversations around places. People do not just want to share that they’ve been somewhere: they also want to share what they think about it. Foursquare’s Tips feature makes it easy for people to leave behind tips about a location like what to eat, what not to eat and what to do. Other services are using the check in as a gateway to taking other actions: CheckPoint and ShopKick use location to detect the retailer a shopper is at, but the location takes back seat to scanning barcodes to unlock points and SKU level discounts at that store. Linking foot traffic to product interaction and driving sales will be a key challenge for retailers and brands looking to link location-based marketing back to increases in sales and building customer loyalty.
One of the most influential trends of 2010 was the increase in daily deals sites like Groupon, LivingSocial, and others.
These services highlight that the long arm of the recession has got consumers thinking even more about saving money, and technology has stepped in to help consumers on a budget. Business will search for more ways to use location-based incentives to build loyalty through location-based deals and promotions. Retailers are especially eager for linking foot-streams back to marketing efforts, but other companies such as those in Consumer Packaged Goods will find ways to co-opt location for their own marketing ends. Most importantly, consumers respond to these location-based deals: 52% of female mobile users in the U.S. say they are “very likely” to visit a restaurant or store that gives them a coupon via a location-based app. vii
Brands will also need to decide on which platform to put their marketing dollars behind.
With its global reach and more than 500 million users, Facebook’s Places platform seems like the smartest choice for reaching the largest possible audience. National advertisers will probably want to look to Facebook first when planning a location campaign. Microsoft’s research for Data Privacy Day in January 2011 revealed that Google Latitude/Places and Facebook Places have been used by most of those who have used location-based services (52% and 50%, respectively), compared to less than 15% for Foursquare. viii However, veteran services like Foursquare and even Scoutmob could make more sense for local advertisers and small and medium businesses looking to increase exposure through LBS, or for those looking for more fun incentives than simply a discount. Services like PromoterBee could also play a role, helping businesses easily manage their LBS presences through a simple interface that makes it easy to deliver location-sensitive deals and promotions to interested mobile and social consumers. These sites have made their mark in developing tools for small businesses to track campaign success and customer loyalty, so they can provide valuable insights into what works and what doesn’t work when it comes to location-based deals for small business. Google and Facebook will have to work to edge in on the local business side of LBS, but they are already dominant in the digital marketing space for small businesses, so even at the local level it makes the most sense to turn to these two companies first. In fact, most local businesses are already looking to Facebook to solve their LBS problems. A recent survey found that 32% of 8,000 small businesses surveyed are using Facebook Places, with 12% planning to do so in the coming months. In contrast, only 8.7% of those surveyed had used Foursquare. ix
Impact on Lifestyles
The overall impact of location on consumers is a more fluid, spontaneous lifestyle. Barring a major privacy snafu, consumers will grow accustomed to location-based apps and will strike a balance between privacy and security while getting all the benefits of location-based marketing. For marketers this will open up new possibilities through just-in-time marketing. One area this will manifest is in push notifications, facilitated by geo-fencing and a move away from checking in. Push notifications arrive in the background and notify users of updates from different services. Geo-fencing will make it possible for users to get push notifications on nearby discounts, promotions, and campaigns without being a drag on monthly text message limits. Ads and deals can be served up only to people who are close to the advertiser and there is no need to over-extend the campaign beyond reaching people who are nearby.
Other marketers will look for ways to use location to automate as much of the LBS experience as possible.
ShopKick’s proprietary hardware makes it possible to detect users in the store without having to use GPS, effectively automating the check in. ScoutMob uses the GPS to automatically detect nearby deals, rather than the most recent deals, creating a more location-relevant recommendation on what deals to redeem and where to eat. Google’s Latitude is an example of automation as well – the service runs in the background and then recommends locations to check in; Latitude can also detect when someone’s traveled via plane or by car on a vacation based on background location gathering. LBS is no longer a simple tool to make sure people get where they want to go: LBS is now a tool for figuring out what to do in the first place. Over the next year brands will need to tie themselves to locations in a way that encourages spontaneity and gives people things to do when they’re bored. A mix of smart planning, deep understanding of local cultures, and a focus on fun and rewards will put most brands ahead of the curve in developing location-based solutions that participants enjoy and want to use again and again.
http://totalaccess.emarketer.com/Chart.aspx?R=105666&dsNav=Ntk:basic|awareness,+familiarity|1|,Ro:-1 http://totalaccess.emarketer.com/Article.aspx?R=1008161&dsNav=Ntk:basic|location+based+services|1|,Ro:21 http://www.pewinternet.org/Reports/2010/Location-based-services.aspx http://totalaccess.emarketer.com/Article.aspx?R=1008161&dsNav=Ntk:basic|location+based+services|1|,Ro:21 http://gigaom.com/2010/03/26/1-in-2-americans-will-have-a-smartphone-by-christmas-2011/ http://totalaccess.emarketer.com/Chart.aspx?R=105670&dsNav=Ntk:basic|location+based+services|1|,Ro:9 http://totalaccess.emarketer.com/Chart.aspx?R=104992&dsNav=Ntk:basic|location+based+services|1|,Ro:20 http://www.businessinsider.com/most-users-dont-want-to-share-their-locatoin-2011-1
The Moxie Guide to Location-Based Marketing
So you’ve read about location. You’ve sat through ten presentations with the cliché “Location, Location, Location” somewhere in the title, and you’re still clueless about how to get started in tying locationbased services back to your marketing efforts. Hopefully our guide to location-based marketing can help you get on the right path:
Register Your Stores
o The first step to location-based services is the simplest: make sure your retail locations are accurately listed with the services you want to work with. If the location data isn’t accurate, users won’t be able to find your stores or products. Discovery is a key feature of location-based services, so you’ll want to make sure your locations are as easy as possible for search engines and consumers to find.
Know the Landscape
o When it comes to awareness and reach: Google Places and Facebook Places will be the first place for most brands to look. Google Places doesn’t prominently feature many social features such as check ins, but Google has been updating its offering to include more of these tools. Currently it functions as an easy way for users to find businesses and rate them via Google HotPot in order to receive personalized recommendations of restaurants and other local spots. Facebook Places is linked closely to its Facebook Deals platform, which gives consumers discounts on products and services when they check in to a business or venue. Places is available on every major smartphone platform through the respective Facebook app as well as through Facebook’s touch-based site at http://touch.facebook.com . Foursquare has the largest profile among services that are completely dedicated to location with around 6 million registered users. Brands can partner with Foursquare to give users badges in exchange for checking in, award deals and discounts in a way similar to Facebook Deals, and also create tips and things to do at specific locations.
Know Your Audience
o Facebook Places has the widest reach of any social location-based service currently available, with over 150 million Facebook Mobile users capable of accessing the service. According to a recent study from Lightspeed Research, location-based deals appeal to both male and female consumers of all ages. Foursquare can be an effective tool for spreading branding or cross-promoting a product at a retailer. Pepsi’s partnership with Vons Grocery Stores and Foursquare show this service can be integrated into a loyalty program to market consumer-packaged goods that don’t have stand-alone retailers. Though Foursquare’s growth has picked up over time, it mainly appeals to tech-savvy, younger consumers. Google Places may lack the social features of Facebook and Foursquare, but businesses and consumers are familiar with the service. Given Places’ link to Google’s search engine, it has a wide reach across all Internet users, and its tie to Google Maps makes it a popular service among mobile users as well.
Know What You’re Trying to Accomplish
o o Facebook Places will mainly look toward incentivizing check ins with a deal and measure redemption to see if it drives traffic or repeat customers. If your brand wants to look for opportunities beyond deals, there are different tactics that can be used on other services: • Google Places: For businesses looking to dip their toes into location, Google Places makes it simple to get relevant information to consumers searching for your business. Google Places listings show up in Google searches, and they can be augmented with “tags” that make it possible to attach photos, videos, coupons, menus, and other content to one’s listing. This added information makes it easier for consumers to engage with the brand online and can translate into increased foot traffic for local stores. • Foursquare: Create a Foursquare account for your brand to establish your brand as a local expert. MTV and Gossip Girl have not only used Foursquare to reward users with branded badges, they also provide relevant local tips on cool places and events going on around town (New York City, in both cases). • Gowalla: Gowalla is a smaller location-based service, with only around 1 million users, but they won a key partnership with Disney theme parks due to their focus on travel. Sometimes turning to these smaller services can be a way to differentiate and provide a fun experience that simply isn’t possible on a service like Facebook Deals or Foursquare.
SCVNGR: SCVNGR focuses on making the real world more like a video game by providing challenges for players to accomplish wherever they show up. They can range from the simple: check in, take a photo, add a comment, to the more complex: scan a QR code, pose next to a mannequin, etc. SCVNGR adds a scavenger hunt feel to location-based services, potentially making it more engaging and a good source for gathering user-generated content such as photos and videos tied to the location.
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