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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of mobile.  Contact him today to learn more.

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Over one hundred billion dollars is spent annually on “traditional” online advertising, and each of the last three years have been prematurely declared the year of mobile advertising. For too long, the promise of mobile advertising has been based on technical, location-awareness-related advances the industry has heralded as beneficial, while these same advances scared consumers away.

This is finally changing and consumers are discovering simple, easy iterations of mobile technology that provide simple, easy solutions for problems they want solved. Saving money via special offers/coupons at known, nearby business locations is the best example and Groupon and their kind have driven socially-promoted savings on purchases that can be measured in increments of $Billions.

group-buying-sites

The Bridge To Mobile Commerce: Deals and Group Buying

Groupon is the fastest growing technology company in history and Founder/CEO Andrew Mason links their success to providing a “hybrid of local advertising and local commerce”.

Groupon’s unprecedented success should serve as a  lesson to the various elements involved that melding established consumer behavior and technology in a simple, easy way that also leverages consumer acceptance of social media  is a key factor for success.

The real power of this model lies in the fact that incremental, tracked purchases are made at the beginning of the consumer interaction, generating pay-for-perfomance, frontside ROI metrics that blow other “wait and see” methods of marketing out of the water. When you add in a “social media award” component (share the deal and get the deal for free), this model becomes even more powerful, as the campaigns quickly become viral and market themselves.

While Groupon, Living Social and the rest have been written about extensively, I am not sure the full potential impact of this model is understood. These companies solve an existing problem for local businesses by converting the traditional coupons, sales, and special offers they have used for decades into tracked offers that can measure in both financial upside and foot traffic. They also tap exisiting marketing budgets by stealing pre-allocated dollars away from traditional media via no-risk performance-based value propositions (that work).

This is in contrast to much-touted hyperlocal mobile push advertising campaigns that require a problem to be explained, before a retail business or brand will considering paying to try to solve it (assuming they agree the opportunity for ROI is there). More importantly, most retail businesses still do not have a way for mobile banner click-throughs to land a consumer in a place where a purchase can be converted. This is where mobile commerce comes in.

ebayMoving The Merch: “Redemption Is Mobile Commerce”

The quote above is from Dan Gilmartin of Where.com and I agree. While redemption of printed or digitally displayed group buying vouchers brought into a restaurant, hail salon, or spa (for example) works well-enough, retailers that sell lower-margin goods want converted sales that “move the merch”, as they say. Giving 50% of your margin away to Groupon and their kind, is a fine solution for high-margin, service-oriented businesses, but retailers need to link campaigns for specials to actual sales.

Converted sales transactions, rather than impressions rendered or click-throughs to a standard website, are what attracts small to medium-sized retailers that gain little from traditional brand marketing. Since non-standardized point of sale systems for redemption are still the Achilles Heel of the mobile coupon model, tracked, mobile commerce conversions will emerge as the new, essential “redemption metric” in 2011.

With $1.5 billion in mobile sales logged in 2010 (a 3X increase over 2009), Ebay’s mobile commerce success shows that consumers are willing to transact on a mobile device. In just the 30 days before Christmas 2010, eBay transactions were valued at over $100 million  in gross merchandise value, a 135% increase over last year (Mobile Commerce Daily).

“Today’s consumers are transforming the shopping experience with their mobile phones, and retailers who have not broken down their siloed channels will not be able to keep up,” says Jim Bengier, global retail industry executive for Sterling Commerce.

Coda-research

2011: The Year Of Mobile Commerce

In the rush to check off the branded app and social media platform “must-have yes boxes” , mobile commerce sites were passed over by retail brands, and consumers have been left to “pinch and zoom” and fumble with large format websites not optimized mobile devices.

How big is the mobile commerce opportunity? In July of 2010, a scant 12% of online retailers had a mobile commerce site and an even smaller 2% had an app with checkout capability (Acquity Group). Even with these dismal brand/retailer adoption numbers, US mobile-commerce (sans travel bookings) grew from $400 million in 2008 to $3.4 billion in 2010, and growth is predicted to be “explosive” in 2011 (Mobile Commerce Daily). Show me the money, indeed.

In 2011, linking a smooth-running mobile commerce engine to special offer and redemption platforms/efforts will emerge as essential, as this is the simplest way to track success in a way most retailers understand. Retailers who sell online should build robust mobile commerce sites linked to their etail “technology stack” in order to capture converted sales, driven by mobile (or social) marketing. Simply “scraping” an etail website and shrinking it to fit for mobile ignores key differences in mobile vs at-home consumer purchasing-related behavior.

Social Commerce: Sharing The Wealth

Of the 620 million consumers using Facebook, the most active 200 million access the social network through their mobile device.

Why do large retailers and brands spend money building up millions of Facebook Page fans and then drive them away from Facebook to convert a sale? It’s even worse if they send a mobile consumer to a standard website.

Increasingly in 2011,  retail brands will use Facebook to promote special deals for fans, and give them the option to buy what they are promoting by linking to a mobile commerce page where that product is cued up. Facebook might-well offer these tools for businesses as a part of Facebook Deals, as they look to emulate Groupon’s incredible success.

Social commerce will take a while to catch on, but is on the horizon. It is an extension of mobile commerce, because technical integration with the “etail technology stack” is needed to create Facebook Commerce tabs, so secure transactions can take place within Facebook pages.

The power of social commerce really shines when, for example, mobile (or Facebook commerce tab) purchases driven by special deals offered to Facebook fans can be shared within (and extended to) the buyer’s social graph, after the purchase is made.

Mobile-Payments-M-Commerce-Transactions

Tap, Tappity, Tap: NFC  Taps Established Consumer Behavior

I’d be remiss if I did not mention NFC (Near Field Communication) in this post. While mobile and social commerce are next up for online purchases on a smartphone, mobile payments at point of sale for smaller transactions will also be a hot topic in 2011. The path to a “mobile wallet” will be rocky, but NFC will emerge as the best way to both validate mobile proof of presence, and conduct small “tap to buy” transactions using value deduction from a secure, preloaded digital account contained within the device. Consumers know NFC and it is easy to use. The fact that three big US carriers have buried the hatchet long enough to line up behind NFC via the formation of Isis, is a powerful signal.

These inherently mobile “real life hot links” need to go somewhere, so NFC will support the rapid growth of mobile commerce as well. Watch for NFC tags to start appearing in pilots/tests on out of home advertising, packaging, and even wine bottle labels.

Conclusions

Mobile commerce drives revenue and location-specific redemption of special offers that can be promoted via social media marketing. Redemption takes the form of real mobile commerce transactions linked to promotions that mimic the powerful Groupon model, without giving up the margins. Mobile commerce will grow rapidly in 2011, as branded apps fade in importance, in direct proportion to increased data speeds,  accelerated location-enabled smart phone adoption/usage by consumers, and the creation of mobile commerce sites by retailers.

Facebook will increasingly play a role in every brand or retailer’s marketing plan. With 200 million accessing it via their mobile device, Facebook will become a place where discounts, sales, and special offers are  not only shared and compared, but increasingly parlayed into converted mobile commerce sales. Facebook commerce transactions that leverage this same technical backside integration and occur within Facebook will not be far behind.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of mobile . He is also running sales for for mobile commerce solution provider Unbound Commerce. Contact him today to learn more.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of location. Contact him today to learn more.

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Last Monday, I attended an event at MIT in Boston. It was a standard panel-style presentation/discussion, with a moderator, sponsored by Nokia (thanks for the turkey wraps and little red gourmet cupcakes). It “sold out” in advance and I’d guess at least 200 people were there. It was, literally, standing room only.

Are Today's Agencies Enbracing Mobile?

Billed by organizers (Mobile Monday Boston) as a way for attendees to “learn the realities of mobile advertising”, the panel was stacked with ad agency people. Many attendees I spoke with saw this as a rare opportunity to hear directly from ad agencies, regarding their mobile plans. A finger on the pulse of those paying for the upkeep of the mobile heartbeat.  After all, if these agencies have the ear of the brands, then knowing their mindset regarding tomorrow’s mobile spend is very important, as the collective “Mobile Industry” springing up around all this “potential” needs to get paid today.

The Year of Mobile, Every Year

With the general mobile advertising outlook over-ripe from 3 years of unrealized, predicted mobile spending ramp-up, this night had the potential to shed some real light on the future of mobile marketing, and, perhaps, the fate of many of the companies represented in the audience. With livelihoods literally depending on brands spending real money via the mobile marketing tools many in the audience had invested so much time and money in, it is little wonder the event sold out in advance.

The Auditorium Fills Up! It Was Standing Room Only.

The predictions about the mobile ad spend have been recently correcting downward, as most brands idle on the sidelines, in a wait and see mode regarding mobile. Many dabble in mobile banner ads, a few skin up and launch product-related iPhone apps, and most have plugged into the free social media machine. But the big money is still not flowing and there is a backlog of companies waiting for the faucet to be turned on.

Are Agencies Paving The Way Or Blocking Progress?

Disclaimer: I have long-suspected large agencies of stunting the potential of mobile marketing because they fear that tracking and reporting real results regarding converted sales could shine unwanted light on all the untracked bread-and-butter mass broadcast marketing they run via traditional media. So, this night I came prepared to have my mind changed and I really expected to see and hear the excitement agencies were passing along to their clients. Why else would they have signed up for this panel? I was ready to be convinced that my conspiratorial theories were wrong (or at least have my mind set at ease).

To set the stage, here is the actual verbiage used to promote the event:

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The Realities of Mobile Advertising

Mobile advertising is getting a lot of hype, but what are brands really doing in mobile today?  What should we expect in 2011?  Our panel will discuss the realities and answer questions like:

  • How big is mobile brand advertising?
  • How does mobile fit into the big picture for most brands?
  • What are the hot issues for brands? Targeting? Buying? Ad formats? Measurement?
  • How has Apple’s promotion of iAd changed the market?
  • What are the opportunities for publishers and app developers?

Speakers:

Adam Towvim, Jumptap (Moderator), Brett Leary: VP/Dir of Mobile Marketing at DIGITAS, William Nann: Director, National Advertising Sales at Crisp, Brenna Hanly: Mobile Catalyst at Mullen, Jon Phenix: VP Sales, Nexage, and Stephen Bagdasarian: Digital Strategist & Mobile Specialist, Hill Holliday Advertising

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This was a who’s who of Boston Ad Agencies and the purpose was to have them explain their individual or collective “realities” right there, live and in front of a room of mobile industry “insiders”. Kudos to Mobile Monday Boston for putting this together, by the way.

Sponsor Nokia Kicks Off

Sponsor Nokia opened the evening with a slideshow overview of their plans to re-take a share of the booming US smartphone marketshare they let slide by. They announced a $10 Million dollar developer contest designed to lure apple-addicted code writers their way.

The slideshow touted their global marketshare and reminded us all of the gazillion Nokia phones they sell. Despite impressions here in the US (caused largely by iPhone mania), they are a real powerhouse elsewhere. The new N8 just launched in the US and the Nokia team even had a fishbowl full of business cards collected, for the purpose of handing out two new phones at the end of the night to two lucky winners. Nothing turns heads like free phones as schwag. They even branded the nametags at the conference, making it look like 200 Nokia employees were in the audience. First time I have ever seen a logo on a nametag. Pretty smart, actually.

The guy next to me took notes about all this on his iPad, and even snapped a few pics on his iPhone, as did I. Nokia is well-positioned to make some moves and has a track record a mile long but, in the US, they have a long way to go.

Patterns Emerge

Top Boston Ad Agencies Address Mobile

Jumptap’s Adam Towvim was the moderator and did a good job all night. He kept the panel moving and asked the right questions. As the conversation flowed along, some clear patterns  emerged.

The first was that fragmentation was generally viewed as a big problem in the mobile landscape and that it negatively impacted the ability of agencies to convey a concise strategy to their clients.

The second was that ad serving consolidation was needed to increase efficiencies, reduce redundancy, and allow the agencies to better know WHO was actually seeing the mobile ads and better-measure engagement, across all platforms. A tall order.

The various kinds of phones (feature phones vs smart phones vs “candy bar” phones) were mentioned as an additional challenge.  Ad exchanges and buyside technology plays (to aggregate various ad servers) were also mentioned as welcome tools.

Sponsoring or branding iPhone applications was discussed as a way that brands could get involved, but it was noted (and generally agreed) that few agencies were adequately staffed up for  this.

Brenna, the representative from Mullen mentioned that she worked on a crowded creative floor and only-recently heard mobile advertising even mentioned. She offered that only because the team had been shown a presentation on the potential of iAd had the topic even come up.

iAd was generally seen as a positive platform for creative to be conveyed on both mobile and on tablets, but soon the conversation shifted to the fact that Apple was wielding too big a big control stick and some brands were bailing out (IE Adidas).

The discussion was fairly interesting (and fair) but not very exciting. The focus seemed to be more about “glass is half empty” what-can’t-we-do problems with mobile reach and fragmentation. Branding apps and creative rich media used in addition to mobile banner ads were lightly touched on as positive. There was little “let’s dive in” energy and only a smattering of carefully worded cautious optimism. All evening, I had the nagging feeling that something was missing…what was it?

What Was Not Said

The time was 8:15 and the panel had been on stage for over an hour when, finally, it happened! Brett Leary from Digitas was talking about the potential of the iAd platform, when he mentioned LOCATION. Yes, that little teeny detail about mobile marketing was not mentioned for the first hour+ of the discussion.

As if startled awake, Steve Bagdasarian from Hill Holiday picked up the ball and ran with it, nailing  several important factors one after another that only mobile advertising can offer brands. He spoke of “marketing to context” and how mobile allows even a small campaign to yield very large results and learnings. He spoke of “completing the user experience cycle” and how the “where factor” adds a powerful new element for brands.

Finally, just as it seemed things might heat up and the true power of mobile fleshed out, the moderated session ended, and the floor was opened to audience questions.

A Murmur Of Energy

Astounded that it had taken until nearly the end of the evening for the fact that most mobile devices know where they are and can deliver contextually-relevant messaging to come up, I raised my hand and was called on first. I asked about Mobile Proof Of Presence and “checkin” transactions linked to marketing messages. I asked for each panelist to comment further and expand on the potential they saw regarding Location as a mobile differentiator.  A murmur of energy swept through the crowd.

Again, Steve Bagdasarian from Hill Holiday lead the way. He was genuinely fired up and called mobile Location Based Services (LBS) “the future”. Steve described standard banner ad click-though measurement as “not suitable” for mobile and even tied in brick and mortar “here and now” campaigns as key. He even mentioned New England-beloved Dunkin Donuts as a willing participant in some tests his agency was running.

Will Nann from Crisp jumped in and added that he thought measurement was key and Brenna from Mullen asserted that “time and place marketing” and “learned purchase behaviors” would be very important. Yes!

Brett from Digitas (remember, he first used the “L” word), asserted that mobile could “use all the elements” and would emerge as powerful, as long as tracking could work across all platforms.

Another question was asked and the discussion spun off into tablets, Nokia hurriedly handed out two new N8 smartphones via the business card drawing, and the program ended.

Conclusions: Agencies Remain Cautious

It was an interesting event, don’t get me wrong, but I was left with the distinct impression that, even when confronted with a room full of mobile industry insiders clamoring for evidence of some optimism, agencies remain cautious and, unless prodded, will not push mobile on their clients, at least until reach is better understood and confusion caused by fragmentation reduced. This implied “all or nothing” trigger point felt, to me, more like a convenient excuse, than a real client-side-generated requirement.

Hill Holiday stood out as the most-willing to “go for it” and the resulting impression was not, at least to me, one of foolhardiness. It was, in fact, the opposite.

Test Small, Learn Big: What Can Be Done

To get ahead, in my opinion, agencies need to embrace the idea of “test small, learn big” and those out there with solutions for forward-thinking brands should describe them to the brand’s agency of record as a low-risk  trial. Or they should pull the “end around” and find a cheerleader at the brand to demand that the agency address the measurable mobile opportunity with, at least, a small foray.

Mobile solutions that offer low-risk pilots and can generate demonstrated revenue lift (without causing confusion) will open the doors to more and will win early. Dashboards that allow the agencies to view/understand metrics, own them, and pass these on to their clients/brands are essential, as the agencies need to made to feel they are in charge of the results and pass them on at their pace, in synergy with other non-mobile campaign results. Agencies that bring these platforms to their brands will be seen as innovators, but the platforms must first win over the agency and be prepared to let them be seen as the winners.

Even if on a small (initial) scale, trials of these mobile marketing tools can show the brand real numbers and label the agency as forward thinking and not afraid of mobile, even during this “fuzzy front end”. The time is now and those with numbers generated over time (even if small now, on a user percentage basis) will be well-positioned to win when the user numbers catch up. The brands whose agencies push this strategy now, will beat their competitors whose agencies fail to act boldly and try some of these new, exciting tools.

Just DO It (and log the metrics)

Doing versus talking about all the reasons not to do is essential, especially in the face of mounting evidence that mobile usage and search is taking off, while at-home desktop search is falling (+247% vs -15%). While the percentages of those who engage with branded businesses via the location-enablement of their phones are still small, this opportunity to learn is big. If a consumer is out and about and searching for something, brands need to be ready to show them WHERE to locate that item and buy it, right then, in that crucial mobile-only moment. And their agencies should be telling them the best way to do it.

Are the agencies hurting mobile? I think the answer is no, but they certainly can do more to encourage trials and not link mobile marketing to unrealistic requirements like 100% defragmentation and total, complete reach, with uniform tracking across every device or platform.

Agencies also need to take the time to educate their employees on the basics of mobile marketing and LBS. This is crucial. It was clear to me that some top people at the agencies represented at this event were not fully versed in how these tools really work and the potential value of the metrics that can be generated. They need to educate themselves.

The Shotgun AND The Rifle

Most of all, in my opinion, agencies must discard the notion that mobile campaigns that provide tracking dashboards and ways to demonstrate ROI will expose the inadequacies of the other more standard media buys that do not. There will always be a place for the shotgun approach in marketing. Mobile, using the power of location, is the highly accurate rifle shot.

Where Can I Buy These Cupcakes? They Were Awesome!

All in all, it was a good evening. I was relieved that the topic of location and the unique differentiating abilities of mobile platforms was discussed, even if it was tacked on at the end of the evening and initiated by an audience question. Clearly, we in the industry need to make it easier for agencies to focus on the full half of the glass, but agencies also need to put aside the convenient excuse that they will only let their brands dive in when every single element of mobile marketing is known and understood.

As the Mad Men TV show teaches us, the basic premise of advertising has been around for a long time. Mobile, on the other hand, offers us new and different and untested potential and there is a degree of “try it” needed if brands are to be exposed to the full potential of tracking incremental sales tied to specific mobile campaigns.

Thanks again Mobile Monday for the event and to Nokia for sponsoring it. By the way, where did you get those little red velvet gourmet cupcakes? I wish I could use my phone to find the brand that makes them and then navigate to the authorized retailer near me right now that sell them. I wish the agency that handles their media would call me and hire me to help. Wouldn’t that be sweet!

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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of location. Contact him today to learn more.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec who started Boston-based Location Based Strategy, LLC in 2007 and is helping his clients harness the power of Mobile Proof Of Presence. Contact him today to learn more.

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The promise of location-based mobile advertising has been painfully slow to materialize. It seems the last five years have all been declared “the year”, with the usual cliché examples flogged. Most brands and their agencies still pace the sidelines, waiting and watching. If they do add mobile to their spend, they tend to replicate the click-though web advertising approach, and miss the full potential.

In this post I will explore the rush of start-ups seeking to perform an end-around on the mobile advertising blockage, by betting that personalized, actionable, tracked, direct to consumer sales promotions that are location-based will finally unlock the true potential of mobile. In past posts I have discussed incremental, tracked sales revenue “lift” and the importance of remembering that brands make money by selling more products through authorized retailers, not by exposing their brand or driving people to a corporate informational website.

 

Driving Boots In The Door Is Key

The difference between an ad and a personalized location-based special offer is subtle, but important to understand, as we consider why “personalized shopping” start-ups are springing up so fast (and attracting so much VC attention). Mobile marketing, when linked to a call to action based on real-time proximity to a retail location (and honed by a personal preference profile) can finally show ROI by linking itself to proven in-the-door foot traffic (and converted sales). Thankfully, the platforms are now there to allow this to happen.

Discounts and special “limited time offers” are not new and have been around since the first baker made a double batch of bread by mistake and needed to sell the excess before it went moldy. By dropping the price, he increased sales volume and attracted new customers to his bakery. By selling more, he discovered he got a better wholesale volume price on the flour. So, even though he grossed less per loaf, his net profit per loaf held up, and he sold more bread and made more money. Simple math.

I have an admission. I check-in on Gowalla,  tweet on Twitter, post Facebook updates based on where I am, scan QR codes, use apps to find business addresses, and see a lot of contextual mobile ads, yet, after almost 3 years as a full-time mobile LBS consultant, I have never actually bought anything as a result of a location-based offer. That streak ended last Tuesday.

$25 For $50 Gift Certificate Prompted My First Location-Based Purchase!

I spent $25 on a location-based offer from Living Social, for a $50 gift certificate at a nearby restaurant called The Fireplace. (My wife is a “foodie” and enjoys dining out the same way I enjoy a day on a trout stream). How could I not? What is really amazing is that, in the 2 days the deal was offered, 925 other people also bought it, generating $23,150 in tracked, incremental revenue, all tied to a single, specific marketing message. Obviously Living Social takes a %, so The Fireplace does not take all this in, but the real value to them is the opportunity to win over repeat customers when they come in the door and sit down for a meal. What traditional ad or coupon or campaign could they possibly run that offers this sort of (tracked) response?

My First Purchase Based On A Location-Based Special Offer!

I checked Living Social competitor Groupon as I was writing this up, and they were offering a nearly identical deal from The Fireplace as well! (Groupon is a volume-“triggered”, limited time, personalized, local discount offer platform). I thought I was misreading the numbers…but over 4,500 people paid $20 for a $50 gift certificate, so far. Wow…that’s over $90,000 generated from a single deal, and counting. When is Groupon going public?! Are they hiring!? Check out the numbers on these deals. Remarkable.

Volume "Triggered" Discounts

Living Social and Groupon are but two such companies harnessing the power of delivering opt-in deals based on location and, I believe, they are on the leading edge of a “personalized shopping” craze that is about to sweep the mobile industry. Groupon, by the way, is not even 2 years old and is valued at least 1.2 Billion (yes, Billion). If they can sell 4,500+ visits to a single restaurant in a few days, what else can they do?

Another standout to watch, besides Living Social and Groupon, is RueLaLa. They serve up invite-only fashion brand discounts (via daily “boutiques”) to 2.4 Million members! There are hundreds more personalized shopping wannabe’s starting up now, to vie for a slice of the personalized shopping pie. Here is a quick sampling; Eversave.com, Woot.com, DailyDeals.com, DailyDeals.net, SaleCamel.com, FuseDeals.com, DailySteals.com, and DailyCheckout.com.

The ones that will win will use algorithms to learn from real purchases and deliver increasingly personalized and location-based offers that drive (tracked) foot traffic into physical locations.

Platforms/apps that track in-store metrics showing both foot traffic (MPOP) and sales conversion (redemptions) that are fueled by personalized location-based special offers (delivered by smartphone), will bridge the gap between the virtual world and the physical world. These platforms (with Mobile Proof Of Presence as a foundation) are about to become the hottest thing going.

Gowalla, Foursquare and their kind and doing some great things, but should consider that advertisers will want accurate metrics regarding brand interaction, within a retail environment where hundreds of brands might be present. For coffee shops and restaurants, their model works pretty well, but inaccurate and “fake” checkins are going to prove an achilles heel as/when the brands with the real money to spend get a taste of “tighter” MPOP accuracy via other options.

In April of this year, I wrote a post about the significance of validated MPOP (Mobile Proof Of Presence) and maintain that hyper-accurate MPOP validation linked to special offers, not mobile ads for brands, will be the key to finally unlocking the full potential of mobile. And it’s happening.

The LBS world was recently rocked by news that a pre-launch application called Shopkick had attracted $20 Million in VC funding. That’s right, the application has not even launched in beta, and the company has attracted what Mashable calls “an obscene amount of investor attention”.

 

Why, you ask? Because Shopkick intends to validate MPOP in a whole new way (they call it the Shopkick Signal), via installed in-store equipment that eliminates fake checkins and delivers marketing messages based on very tight proximity, within a store and without GPS. This means brand-specific checkins are possible, and they are accurate. According to a recent Techcrunch article, Shopkick co-founder Cyriac Roeding is quoted as saying, “This is all about foot-traffic. So far, no one has nailed a way to entice people to actually come to the store that makes sense to the retailer“, Roeding says. He goes on to say,“This is the physical world equivalent of an online click,”. Hmm.

Attracting "Obscene Investor Attention"

I assume the platform also will learn actual shopping and buying behavior and personalize the offers it serves up based on a powerful cocktail of mobile delivery+retail locations+brands carried+loyalty rewards+MPOP+special offers+redemption/ conversion tracking.

The platforms (like Shopkick) that capture accurate metrics generated by opt-in consumer interaction with retail locations (and sales conversion of branded products carried within those locations) are going to become very attractive to retailers, brands, and agencies sick of being screaming at by their clients to provide just such a solution. Remember, this is information that consumers ask for, and they are rewarded with savings on products they buy, in stores they visit.

Brands and retailers alike might finally step off the sidelines and onto the field, if they can track ROI and link incremental sales to campaigns, while providing a positive consumer interaction with both the brand and the retail stores authorized to carry it. The era of personalized shopping is upon us and mobile, at long last, might finally starting living up to its potential.

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Wilson Kerr is a LBS Consultant focused on helping companies understand and harness the power of  Mobile Proof Of Presence. He is also wondering  how he will slip the waitress his 50% off Living Social coupon at The Fireplace without his wife noticing.

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Wilson Kerr (@WLLK) is the Founder of Boston-based LBS consulting firm Location Based Strategy, LLC and helps brands understand location-based forces that drive changes in human interaction and communication. He can be reached at Wilson@LBStrategy.com.

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As a LBS consultant seeking to fortify my position as a thought leader in the area of checkins and Mobile Proof Of Presence (MPOP), I scan daily blog posts, articles, tweets, newsletters, and emails for real, live examples of companies harnessing the potential of MPOP to drive sales lift.

Many experts (myself included) have opinions about how impactful the phenomenon of “brands delivering personalized marketing messages to opt-in consumers at the exact time and place they are most-able to act upon these messages” will be. My use of the word “phenomenon” here tips my hand, but specific examples that can be seen as validating use cases are generally still hard to find.

Checkin

Checkin Platforms Have Paved The Way

While the potential has been in-place for some time, it has only been in the last 6 months that the stage has finally been set for cases of  lift to be demonstrated. By “lift”, I mean proven, incremental sales tied to opt-in location-based marketing campaigns delivered via mobile platforms that leverage the fact that a consumer willingly notified the offer-serving platform they were in physical proximity to the point of sale. We have Fourquare, Gowalla and other “checkin” platforms to thank for this shift, as their success has accelerated consumer and brand awareness (and calmed the hand-wringing “privacy alarm” naysayers).

The Meat Of The Matter

The Meat Of The Matter

While checkins are hip and fun, the real meat of the matter here is in mobile payment systems, offer redemption tracking, and algorithmic “learnings” by the platforms that deliver real, actionable value to consumers.

This is what will get us over the hump, as the offers are not only unintrusive, they are personalized, actionable, and tied to a system that gets smarter over time, based on real consumer redemption/purchase behavior. Pie in the sky? Amazon nailed this years ago and new “customized daily deal” companies like RueLaLa, Living Social and Groupon are out of the gate and growing fast.

On July 14, Mobile Commerce Daily Associate Editor Dan Butcher posted an article that stopped me cold. Titled,“McDonald’s Goes With Near Field Communications For Sales Lift”, it succinctly describes a program that utilizes nearly every ingredient of (what I believe to be) the recipe for a new form of location-based marketing. Dan’s post was covering a July 5 post by Senior Analyst Red Gillen of financial consultancy Celent titled, “A Merchant’s Argument For Mobile Contactless Technology“. Note that the (bold) emphasis is mine, throughout.

Red Gillen

Red Gillen Of Celent

Mr. Gillen researches payment initiatives and visited with McDonald’s in Japan, to discuss mobile technology. He starts off by saying, “..The focus of our discussion was McDonald’s use of mobile technology for sales lift purposes — i.e., as a channel to distribute coupons and special offers, to entice customers into McDonald’s restaurants.”

He is already speaking my language. “Sales lift” is another way of saying incremental purchases and his immediate shift to the importance of using mobile to drive more customers through the retail door struck me. Too many view the “mobile web” as a smaller version of the web and miss the obvious real world implications of being able to walk around, while online, with a device that knows where you are. Coupons are old news but linking Near Field Communication (NFC) as the “mobile technology” behind redemption by a specific customer and, thus, proving that customer was in a specific store at a specific time is not.

He goes on to describe the program in detail by saying, “Customers (now about 18 million of them) register as members of McDonald’s “Toku” promotional program.  On a weekly basis (in time for the weekend), McDonald’s sends program members a mobile e-mail, with a list of coupons and promotions available that week.  Customers then have two choices.  One is to use their mobile browser to open mobile coupons, which are shown to McDonald’s cashiers (a promotional code is clearly visible).  The other, if customers have already downloaded the McDonald’s app (which 8 million have already done), is to download the coupons to their contactless mobile wallet.”

Wow. An opt-in program. Time sensitive offers delivered to a mobile device. Two ways to redeem the coupons. One of them involves mobile NFC payment tied to a downloadable opt-in branded app that serves as a “contactless mobile wallet”. Hmmm.

McDonald's Mobile Coupons

McDonald's Mobile Coupons

Red is just getting warmed up. Remember this is not a pilot or a concept, this is  happening. He goes on to say, “Either way, the customer gains the benefit of the coupon.  However, with the contactless version, there is a special advantage.  Namely, McDonald’s is able to close the loop between coupon distribution and redemption.  By associating redemption patterns with a customer’s “Toku” membership ID number, McDonald’s begins to develop intelligence about that customer’s preferences.  Based on this, McDonald’s is able to configure and send out highly personalized promotions (by menu item, specific restaurant, time of day/week, etc.) to the customer’s mobile phone, which the customer is more likely to redeem. This increasingly tightening marketing loop cannot be achieved with plastic membership cards, nor with mobile browser-based coupons.”

So, the NFC redemption system learns as it goes and is able to generate increasingly personalized time/place/item offers based on real behavior within the application. This is the “walk-by-and-get-an-offer Starbucks Cliche” so often flogged in LBS circles, but it’s real and it’s live now and, apparently, used by 8 million opt-in consumers in Japan, in conjunction with a distinctly American brand that is hardly a fringe player in the quickserve landscape.

The finale is contained in the last paragraph, “Once customers tap their contactless coupons, the data is leveraged to immediately send orders back to the kitchen..This just goes to show that contactless is not just about payments.  In fact, it often isn’t about payments at all..”

 

NFC Contactless Payment and Redemption

Red’s point is that, even though NFC is most-often associated with cash-free payment (for example in mass transit ticketing), the real power of this model is that the system is using the personalized, tracked coupon redemption patterns to learn from the consumer’s behavior in order to both prove increased store visits and sales (lift) and increase efficiency via the speed of the resulting transaction.

I have covered why this is so important for brands to understand in previous posts, but suffice it to say I am excited to finally see the first real examples of companies leveraging the power of tracked, cutting edge mobile LBS technology, while also respecting and harnessing the power of consumer preference.

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Wilson Kerr (@WLLK) is the Founder of Boston-based LBS consulting firm Location Based Strategy, LLC.

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By Wilson Kerr of LBS consulting firm Location Based Strategy, LLC.

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Nokia’s newly-announced free navigation is being positioned as a planned part of their Location Based Services (LBS) offerings, delivered via their “Ovi” web services platform. The goal is to drive more device sales and, in the future, make money by selling web-based services and displaying ads to those who own these phones.

Is “free nav” from Nokia a part of a plan, or a defensive reaction to try to take back lost smartphone market share and try to establish a US beachhead in the face serious pressure from “new” movers and shakers like Google, Apple, RIM, Palm, and others?

Nokia Jumped On The Free Nav Bandwagon

It certainly seems Nokia had no choice but to go this route, as they are in market share freefall and have had no answer for the beloved iPhone, years after its launch. They lost 10% smartphone market share in Q4 2008, while Apple and RIM took off. In the middle of all this, Ovi’s May 2009 app store launch was widely considered a flop. Now Google is in the mix too, bringing some serious mobile advertising chops to-bear. Nokia makes excellent hardware and have a dominant global market share position (38%), but they seem to have stood by and watched, as the US mobile advertising market rapidly evolved. They let Google jump behind the counter while no one was minding the store.

“While smartphone sales overall increased 3.7% in Q4, Nokia’s share slid from 50.9% to “just” 40.8% on 15.6 million units. While many, including Samsung and HTC gained, it was RIM and Apple that made the biggest advances. RIM increased its share of the lucrative market to 19.5% (7.4 million units) from 10.9% while Apple more than doubled its share, up from 5.2% to 10.7% (4.1 million units).” Source.

Nokia dropped $8BN to buy Chicago-based Navteq, the leader in US base map data and Nokia bought their own navigation routing engine (Gate5) in 2006. Nokia acquired Boston mobile ad agency Enpocket almost exactly a year later. Navteq, before it was acquired by Nokia, invested in (and now owns) marketing agency Acuity Mobile. In December of 2006, Navteq bought The Map Network, a small company that was doing some very interesting things around placing the branded locations of hotels and restaurants near convention center maps. This morphed into Direct Access (video link)– a program that allows retailers to plug in locations and logos, as ads, into Navteq maps. They also own Traffic.com, which makes a majority of its revenue from location-aware advertising. Location Point (video link) is what Navteq calls their ad services.

So, the Nokia/Navteq paid services and advertising capabilities deck is long, but can they sort out all the moving pieces to form a coherent strategy and move “beyond the device” and establish new effective revenue-generating touch points with the users of their devices?

What started this ball rolling, remember, was when Google blew the lid off the “free nav” can of worms back in October 2009, announcing free navigation on free maps, via their Android mobile operating system (on up to 35 phones)! Google loves giving away a free services to open up more opportunities to sell ads. Maybe we should start calling this disruptive innovation tactic “Freegling”?

So Nokia answers Google to try to gain back marketshare. Not much of a statement until you stop and consider that Google is not a device manufacturer. Google sells ads and they are very good at what they do. All products lead to this profit center and they can loss leader like mad to drive more people to see their ads. Free is their friend and people like free.

Free works, as long as there is a “Trojan horse” element in the form of advertising, paid value-add services or market share upside that pays for free. Nokia is certainly in a good position today, as they have sold more phones capable of running navigation served by their Ovi platform than there are dedicated personal navigation devices on the planet. While device sales are brisk now (esp in Europe), the long-term problem is that they have almost no market share in Google’s US back yard and they have no track record of getting people to pay for Nokia services, after they buy the phone.

Nokia launched its first phone in 1987. Google’s founders were likely in 7th grade and would not start Google for 11 more years. Nokia has a market capitalization of about $47BN, while Google’s is about $172BN. Nokia says it would like to generate about $2.89BN in annual revenues from web-based services offered to users of its phones by 2011. Google makes this amount via web-based services..about every 5 weeks. My point is that, if Nokia hopes to catch up by charging the millions of users of their devices for “after sale” services and delivering ads on the back of free navigation, they had better get moving.

Nokia is now up against a lot more than Google for ads and apps. Their free nav move has just forced every other navigation platform and device company to rapidly accelerate their location-aware advertising and web services plans. Location-specific advertising served by proximity to those using their phones to get where they are going is (finally) about to become the hottest game in town.

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Wilson Kerr started the Location Based Services (LBS) Consulting Firm Location Based Strategy, LLC in 2007. He is amazed by how fast the ad-supported mobile navigation landscape is evolving.

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Nokia N95 GPS phone

Agencies ready to spend more on mobile
Nov 9, 2009: A joint study by Millennial Media and DM2Events.com indicates that ad agencies plan to spend a lot more on mobile advertising, including location-based ads, next year.

The September DM2Events.com survey covered 100 agencies. The key findings include:

  • Nearly one-third of ad agencies (31%) expect to spend between $100,000 and $250,000 on mobile advertising in 2010, compared with 22% a year ago
  • Almost 13% plan to spend $250,000 to $500,000, up from 4% in 2009
  • More than 15% will earmark more than $1 million for mobile campaigns, compared with 11% a year earlier
  • Only a quarter of the respondents (23%) are budgeting less than $100,000 for mobile and 10% don’t know how much they’ll spend on mobile

The study also found 60% of current non-mobile marketers plan to buy mobile advertising in 2010. Two-thirds of the agencies (67%) rated mobile advertising as “somewhat valuable” and 30% said it had become an “indispensable” part of the media mix. Among agencies that have run mobile campaigns, 78% said they met campaign goals and 80% said they had developed internal resources to support mobile efforts. The most common reason for campaigns falling short was lack of reach, cited by 26% of those surveyed, followed by running the “wrong” creative (18%). It was found that the single factor which would do the most to boost mobile ad spend would be the standardisation of devices and ad units.

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