Location-based services (LBS) is an area that has been in the headlines for years, yet it is only now starting to get real lift. This is down to several reasons, including that location services are now sophisticated enough to be able to run in conjunction with other offerings, most notably, social networking, marketing and mobile money, which make for compelling end user interaction; and end users themselves are becoming comfortable with the idea of LBS, and seeing the value in these new services. Heather McLean reports..
With big brands such as Starbucks and MacDonalds enabling mobile marketing for discounts and vouchers plus contactless payments for customers, and dating agencies and social networks using LBS on the mobile to increase user participation, this technology is really starting to take off.
However, it is not all good news. While end-users are now getting used to the idea of LBS, and the subsequent permissions to allow your device to be tracked that those services entail, some companies are already overstepping the mark. Apple is the case in point, following the discovery of its eavesdropping faux pas that was uncovered at the end of April.
Apple was caught tracking users of its iPhones and iPads, even if they thought they had turned off LBS. Despite Steve Job’s explanation that his devices were actually tracking to the nearest base station or WiFi area in order to provide users with location-related services, rather than pin-point the actual location of the devices and their users, the net result is Apple, Google with its location aware mobile app called Latitude, and others with similar LBS offerings, are now under the microscope.
“People have a right to know who is getting their information. We need to address this problem now,” said Democratic senator Al Franken in a US congressional hearing on the Apple tracking issue.
Dr Windsor Holden, analyst at Juniper Research, commented on the Apple debacle: “The fact that Apple devices were quietly collating this data has rapidly prompted various individuals to raise concerns about invasions of privacy. That said, point number one: the phones have known our approximate location for some time, due to these wonderful newfangled concepts called GPS and triangulation, so it shouldn’t be any surprise that at least one vendor has inserted a piece of code that, as it were, takes continuous notes on this.
“Point number two: this would have been a splendid aide-memoire in my twenties, in as much as there were quite a few nights after which I had no memory whatsoever of where I’d been and it would have been quite nice to find out,” he stated.
Apple quickly released a software update that shrinks the amount of data stored on a device from one year’s worth to just one week, and also enables users to switch off LBS. But the damage is already done.
Paranoia and excitement
Reflecting the need for sensitivity around endi user paranoia on being followed electronically, Motti Kushnir, chief marketing officer at Telmap, which provides white label, hosted and managed LBS to mobile operators, states: “We have seen in recent years several attempts to create tracking services. One example of such a service is Google Latitude. These services never reached mass market usage and popularity.”
Kushnir adds: “We believe that’s due to the fact that users clearly do not want to be tracked at any time, and prefer to willingly share their location information whenever it’s relevant to the people they communicate with, to the activity they engage in, and on a limited-time, limitedgroup basis. We believe that LBS will need to seek user approval to share location information, in order to maintain users’ trust and sense of control.”
Yet LBS is an exciting arena, says Mark Squires, communications director at Nokia. He explains: “The idea of collective intelligence or the wisdom of the crowd is something that will come to life with LBS. The knowledge and experience gained by each individual user plays its part in creating a wealth of experience, which in turn benefits all other users; a service that gets better the more it is used.”
Squires comments: “We know that people want services and applications that connect them between the physical and digital world, with the mobile phone becoming the command centre for it. We also believe that people want localised and relevant content, services and applications that help them get the things done, when they want, and in context of where they are and what they are doing.
“Nokia is offering its global mobile mapping and navigation service, Ovi Maps, with the greatest degree of local relevance for consumers. Nokia knows that the more hyper-local the service, the more relevant and helpful for the user. This is why we have made it a priority to continually grow the content we offer over the past year.”
Micro to macro
On hyper-local services, Kushnir agrees that users like to use LBS to explore their home environment on a micro level, from neighbourhood to city, and sometimes country. “Users seek services that help them seamlessly pay for local services, like parking, book tickets, make reservations to local events and venues, communicate with their local community about local happenings, compare prices for day-to-day purchases, and more. Hence, we see more and more ultra-local content providers that enable accurate up to date search and discovery in users’ immediate vicinity,” says Kushnir.
This is being enhanced by mobile advertising, Kushnir continues: “Today most major brands consider mobile as an integral part of their media channels, driven by the reach and interactivity of smartphones and their constantly increasing user base. Therefore it’s only natural that the hype and usage around LBS, combined with the mobile advertising evolution, will drive monetisation of LBS, and will emerge as a key business model.
“It definitely presents new opportunities to generate revenue streams through locationbased advertising, combined with relevant and personal retail offers,” Kushnir observes. “With the location element added, offers can be highly contextualised, relevant and timely. By considering user behaviour, search history and profile information ads and promotions can be highly targeted and engaging. Users can find this extremely beneficial and even cost saving, especially as many economies are still recovering from the world economic crisis.”
In 2010 LBS made a major shift towards becoming mass market services, especially basic navigation, notes Kushnir. He comments: “Therefore, LBS is now evolving into an array of services that go beyond navigation, especially as location has become an infrastructure layer that’s constantly active on devices, available to optimise a variety of services and activities that are managed through today’s devices.
“A good example is how social activity on the mobile these days is trending towards fully integrating location capabilities and features,” continues Kushnir. “As we all know, more and more users are engaging in social activities on their mobile. Consumers are now creating, posting and sharing helpful, relevant, realtime user generated content, and in many cases they do so through their familiar web-based social networks, such as Facebook and Twitter, both of which have added location capabilities to their offering during 2010
. “As a result users now have access to reviews, recommendations and group-buying offers (such as Groupon) with location-filters added to them. Users are able to access the type of benefits that are relevant to their current location, making their on the go experience richer, and more efficient and enjoyable,” he says.
US-based firm, Loopt, has taken LBS and combined it with social networking so that ageold question, “Where are you?” never needs to be asked again. By finding your location and pulling in data from Facebook, all users of this geo-social app are already networked to their friends, and can see where their mates are in relation to them on the Loopt Friends Map. Text messages are combined with each user’s location, such as “I’m running late!”, “happy hour?” and “massive queue!”. It also adds available vouchers and discounts to the user’s location, helping individuals interact more with their immediate environment.
On the most interesting developments in LBS for the mobile device today, Sam Altman, Loopt CEO and co-founder, comments: “The ability to run applications in the background was huge for geo-social apps. With this, geo-social apps can deliver relevant information to a user based on their location and overall context. These are the moments that really spark surprise and delight among consumers.”
Time to check-in
“Also, the ‘check in’ is something that was a fun entrée to location applications for a tech savvy user community,” continues Altman. “The most successful geo-social networks and apps will take location interaction three steps further. The goal should be for the service to enrich a mobile user’s real life.”
Check-in technology using GPS is very hot at the moment, says Cluny Venables, head of client direct at O2 Media, which offers mobile display advertising and direct text and email comms. This trend for check-in services is spurred on by the launch of Foursquare, which uses locationbased social networking, and the traction these type of services have gained in the US. Check-in technology enables customers to check-in to their location, and offers and deals are served to them accordingly, while putting them on the map so friends can see their whereabouts.
“Facebook Places is the latest and most high profile check-in offering,” says Venables. “It entices its users to check-in in exchange for promotion offers from companies such as O2, Mazda and Starbucks. The offering is much more basic than its smaller counterparts such as Foursquare and Gowalla, but it can leverage its 30 million UK customer base, a powerfully attractive enticement to brands that are looking more efficient ways to reach a customer.”
Yet Venables warns of the dangers this type of marketing can cause: “One has to question whether a customer who is looking for a deal in a location might have already gone in to that retailer or restaurant and paid full value. This form of marketing could be seen to be cannibalising a customer base. This has been one of the biggest challenges in the restaurant industry over the last two years, following the growth of online discounts.”
Venables continues: “Unlike other LBS that require the customer to log in to retrieve deals and offers, O2 Media drives value and consideration for brands by pushing messages to target customers in specific areas. O2 Media now has a customer base of over 2.4 million, and geo-fences have been set up around particular locations. As soon as a customer in the right target market enters the location, a message is automatically sent.
“O2 Media has pioneered this programme and it is primarily used as a way to drive consideration and incremental sales. Brands such as Marks & Spencer, Co-Operative Group and Starbucks use this programme to talk to potential customers when they are moments away from a store or restaurant,” she states.
How to sell LBS
On selling LBS, Julien Parven, head of marketing at Daisy Distribution, says: “It’s only since duty of care legislation was tightened that LBS became far more attractive as business tools for companies needing to seriously manage the health and safety of their employees. It suddenly became high priority to ensure employees working remotely were not only contactable, but locatable. This undoubtedly increased demand for LBS, and there is now no shortage of providers out there.
“From our perspective, as a distributor, it’s also about uncovering whether or not LBS are going to generate worthwhile revenue for our dealers. Ultimately, partners will build enough a capital into their business if the LBS can become integrated into the company’s supply chain ordering, its inventory, and the overall workforce management solutions,” he continues.
“This has become achievable by LBS becoming much more than who is where and where can we find them,” Parven observes. “Solutions have developed so you can also find who is nearest to a particular location, and what stock they have got if it’s an inventory-based company. The technology has become so advanced that it allows companies to provision the right people for the right jobs, thus creating that extra efficiency and extra productivity.
“Again from a mobile dealer’s perspective, being able to provide this kind of solution absolutely allows you to develop and deliver a level of integration into your customers’ businesses. Therefore, for Daisy Distribution’s core market, there is no doubt this is an opportunity to not only create greater revenue for our partners, but to help them consolidate their existing revenue base,” Parven notes.
He continues: “I personally think that LBS are on the cusp of being a real explosive technology and are one of the big touching points in the whole convergence proposition. For the mobile dealers, LBS are a way of enhancing their relationship with their customers and securing that commitment, while for the nonmobile dealers, it’s an opportunity to lever the revenue from the mobile business. In simplistic terms, it is a win-win for both partners from both ends of the spectrum within the marketplace.”
For dealers looking for sales opportunities in LBS, Squires says according to independent studies, today 100 million people are using GPS enabled devices globally, with a potential of more than 800 million by 2013.
The business opportunities for all players in the value chain are huge, Squires adds, and mobile navigation for smartphones still offers an enormous business potential. “The market is far from being mature. Getting from A to B is just the beginning; helping people to be a local wherever they are is the key differentiator.”
Squires says dealers should be finding out about the individual wishes and requirements of their customers, and demonstrating tailor-made benefits of different LBS applications, in conjunction with a powerful device.
“The dealer is the most important link between the application and the prospective user; the dealer is the ‘translator’ of the capabilities that a service provides, and of the individual benefits that customers can gain from the service. Here, specialist counselling and expert advice mean a powerful edge over any anonymous ordering process,” states Squires.
On the future for LBS on the mobile, Venables comments: “There is no question that the popularity of LBS will grow, and the technology and offerings are still in their infancy. Google’s recent announcement that 30% of mobile searches are done locally demonstrates the potential surge in this area.
“Interestingly Mintel’s most recent report from January found that less than 5% of consumers access GPS functionality on their mobile phone every day, suggesting a low adoption level in LBS currently. However, the emergence of multi-function smartphones at affordable prices will give wider access to devices with LBS capability.
“We could suddenly see a surge of users in the younger market as they adopt this technology and take advantage of Facebook’s offering. Facebook’s sharing capabilities will only drive the interest in this channel up. Established companies such as Foursquare have seen great growth in the US, but they will face challenges from established social media companies in the location war,” says Venables.
Squires concludes: “Mobile services today are aggregating social networks like Facebook and Twitter, offering ‘best buy’ opportunities depending on your location, and letting you know if you need to hurry up to catch your flight because of traffic. In the future, the mobile phone will become the nerve centre of your life, and your personal concierge. Usage may have already begun, but development is far from being complete.”