OMMA Global – Location-based Services: How Consumers are Using Them (and How Marketers Should!)

The first day of speakers concluded with a pair of sessions that discussed current statistics and trends for location based-services.  I had, of course, checked into the conference via Foursquare several hours beforehand.

The Shopping Shift? — How Hyper-Local Communities Can Influence the Purchase Funnel

Melissa Parrish, an analyst in the interactive marketing department for Forrester Research, presented a report on location-based services.  Forrester expects continued growth in internet and internet-centric phone usage (by 2015, over 40% of US adults using a cell phone will access the internet through their phone)

Three categories of LBS to watch:

Mapping, Navigation, and Search

  • 14% of online cell phone users look up directions or map at least once per month
  • 50% of smartphone users look up directions at least once per month
  • 31% of smartphone users have used a mapping app in the last month
  • Online or off, the top 3 search topics include “local” (restaurant, event or movie, retail store)

Shopping

  • 43% of US online adults with search online for and use coupons
  • 30% of US mobile owners are interest in receiving a promotion on their cell phone
  • 44% of 18-24 years olds are interested in receiving a promotion on their cell phones
  • 39% interested in mobile app to download coupons
  • 31% interested in mobile app to alert them to discounts and offers
  • 33% interested in mobile website to find coupon codes for use in-store

Social Networks

  • 4% of US mobile owners have ever used location-based social network
  • <1% of these users use them weekly
  • 70% of LBSN users influence the purchase decisions of others

Marketers have several things to keep in mind when implementing a LBS:

  • Privacy concerns
  • Marketing messages and offers must become integrated with the user-experience; focused on service and contextually-relevant (not just display spam)
  • Mobile software must become more interoperable and multi-tasking
  • Applications and programs need to focus on utility

Until location-based social networks become more integrated, marketers should:

  • Start testing (if you have the budget and culture to support it)
  • Make mobile coupons easy to find and redeem
  • Create very clear opt-in and opt-out mechanisms
  • Explain what you’re doing with data that is collected (if you think that you can’t explain it to them, then rethink how you’re using it!)
  • Optimize your other campaigns for mobile devices
  • Think about how your mobile presences can be supported through other budget buckets
  • Investigate the mobile specialties of the vendors and partners you already work with

PANEL: How to Make Location-Based Programs Pay Off in National Level Success.

To get a sense of how location-based services are being used across different industries, a panel of marketers discussed how budgets are shifting from national to local ads and services.

Dave Walker, CEO of Geomentum (moderator)

Joan Gillman, President of Time Warner Cable Media Sales

Alistair Goodman, CEO of Placecast

Anupam Gupta, President and CEO of Mixpo

Melissa Parrish, Analyst at Forrest Research

Walker asked the panel to address four points:

1.       How do hyper-local services pay off?

2.       Myths of hyper-local technologies

3.       Case studies

4.       “Trend Dynamics Smackdown” – Where do we see hyper-local heading?

According to Gillman, leading brands are combining location-based strategies with national strategies.  They seek to make ads more effective by making it more contextual.  It becomes important to integrate the different messages directed at different markets, especially in a competitive landscape.  Goodman notes a few critical points for mobile strategy.  It must be opt-in.  The offerings must add value to the consumer’s interaction.  The message must be integrated with other parts of the marketing campaign.  Finally, marketers must use other touchpoints and channels to advertise and grow the mobile campaign.   Gupta recognizes that marketers can extend the tools they currently use locally (i.e., television) as well as add components from online to develop a location-based strategy as part of an integrated marketing strategy.  Parrish reminded the attendees to not forget to anticipate potential operational difficulties.  Determine who will manage what before a strategy is implemented.

In regard to myths, Gupta noted that many believe implementing a hyper-local strategy is hard.  Rather than just apply the same strategy at scale, he notes that a company can use technology (at-call developed ads instead of pre-built ads) to scale the media mix.  Gillman addressed the myth that you need an app to reach mobile users.  He noted that mobile web and SMS can be used with an even greater reach than apps, and that many of the same hyper-local tools can still be used with these tools.  Gillman addressed the myth that one has to buy across countless markets to achieve local marketing.  Just as Gupta addressed technology, she noted that services and software tools exist to extend local reach and simplify versioning of advertisements.  Walker added the myth that it takes too long.  Traditional methodologies might take an exorbitant time (tens of thousands of man-hours), but new technologies (like that used for air traffic control) can now address these countless segments in minutes.

In analyzing case studies, Gillman spoke about national QSR restaurants that are combining television campaigns with local couponing rates.  They are able to use different television ads and determine which messages are producing the highest redemption rates.  Financial service companies are using local video on-demand services and lead generation to find leads without increasing out-bound marketing.  Finally in auto, creative is being delivered across the US only in cable zones who match specific census demographics, to maximize return on investment.

Gupta sees many advertisements moving from television to online.  Marketers who take advantage of location-based services generally have good awareness but are looking to increase conversions.  Fast-food restaurants, for example, are using time-based ads to see whether coupon redemption is higher for breakfast or lunch foods.  Goodman described the research that it done as part of Placecast’s Shop Alerts programs.  Sonic Drive-In can rotate what menu items are promoted throughout the day, and they are able to offer a unique promotion or promotion code for a unique restaurant.  The North Face, meanwhile, can vary phone messages based on activities (e.g., different messages to runners vs skiers) or geography (e.g., weather reports for a specific ski trail.)  Walker noted how important both place and time are in location-based services.  Parrish shared anecdotal data of a tween-focused retailer.  When shoppers were offered online offers while in a store, there was an increase in online sales at time of promotion.  That is, they would buy the item online while viewing it in-store.

In regard to future trends, Parrish doesn’t believe that hyper-local is a fad.  Marketers must find a balance between utility and operational efficiency.  When those come together, hyper-local will be “quite real.”  However, Gupta doesn’t know whether local will replace national.  The key is that a consumer to receive a relevant message, which benefits local.  The key, in his mind, is that the consumer receives the right media mix.  Gillman sees it becoming a wholesale reallocation of marketing budgets as technologies continue to develop to support increased localization.  National spend will move to local, and current local spend will be reallocated to new buckets.  Goodman sees a time very soon when all of the functions of a mobile phone will be location-aware.  This will create a shift not just in how consumers are interacting with their mobile devices, but also in how money is being spent between national and local.

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