Location-based marketing: Where is it today, and where is it headed?

Six years ago, when Wiley asked me to write a Dummies book on location-based marketing, I was equal parts thrilled and terrified. For one thing, I have several friends who are authors, and I know how much hard work goes into writing a book. For another, we were in the early days of location-based applications, and while new players were popping up every day, there really wasn’t any critical mass.

My co-author and I also were pretty sure that things were going to change a lot over the next few years, so it was hard trying to prescribe best practices while many were still trying to predict where the market was headed.

Background

My interest in location-based applications started with a check-in/photo-tagging service called Brightkite. When it launched in 2007, it was a novel concept; it gave those of us starting to explore social media the ability to check in and find one another at events or in big cities when we were traveling.

On the heels of Brightkite came Gowalla, and then Foursquare. Whrrl, Loopt and Path also entered the scene, while the big players like Facebook, Yelp and Instagram started encouraging their members to declare their location.

While my co-author, Mike Schneider, and I were exploring all the different services, tools and brands that were experimenting with location-based services, we suspected that the “active check-in” — the need to turn on one’s smartphone, open an app, search for a location, and then decide whether or not to share that location across other social networks — would become a barrier to mass adoption of location-based services.

As Schneider and I encouraged brands testing location-based apps to provide the right incentives for customers in exchange for their information and sharing, very few actually put real skin in the game. And we saw the number of active Foursquare users in 2012 tap out at about eight million, even though the company reported north of 25 million registered users.

As we were putting the finishing touches on the book, Schneider and I foreshadowed that based on what we were seeing, the more likely path to success for location-based marketing was around passive check-ins.

We also saw a trend toward location-awareness and check-in functionality being a feature versus a service. So instead of people actively opening a mobile app and using Foursquare or Gowalla to check in, they would be more likely to add their location to a picture, update or video on a platform like Facebook, Twitter or Instagram.

So where are we now?

On the positive front, it’s several years later, and location-based marketing appears to be making another surge. This likely has to do with a few different factors.

First, we are reaching a level of wireless penetration where nearly a third of the world’s population will own a smartphone in 2017, according to Statista.

Second, 80 percent of all social media is now happening through the mobile phone. And with platforms like Facebook, Snapchat, Instagram and Twitter leading the way — all of which encourage users to geotag their posts — we have a lot more data on who is doing what, where and when.

Lastly, the amount of mobile commerce continues to rise. As such, companies like Whole Foods (disclosure: client) use geo-fences to intelligently serve up local ads to nearby customers. This led to post-click conversion rates on ads nearly three times higher than the national average, according to the company.

Looking at the current state of location-based marketing, there are four important areas that underpin it. Some have progressed more than others this year:

Where are we going?

I was recently at the Techonomy Summit led by David Kirkpatrick and Josh Kampel in California’s Half Moon Bay. One of the sessions was a fireside chat between Kirkpatrick and Fitbit CEO James Park. When asked about the future of Fitbit, Park was quick to reply with, “More sensors — optical, electrical and chemical.”

What excited me about hearing this is that the current sensors that exist in smartphones and fitness bracelets are mainly optical, motion and location-aware. But having more sensors that can sense temperature/climate, stress and air quality, among other things, will greatly increase the context we have as marketers.

And with more sensors comes more data — an opportunity we’re still just beginning to explore.

Another area that is about to go big is augmented reality. Right now, a majority of the augmented reality apps (think Pokémon Go) have been built to entertain versus utility (not that there is anything wrong with entertainment).

But look at the Sunshine Aquarium in Tokyo to see where the future is headed. Facing a problem of tourists not being able to easily find the aquarium after getting off the subway, the Sunshine Aquarium decided to build an app that allowed virtual penguins to show tourists the way to the aquarium. This is a killer combination of overlaid animation or data combined with location awareness.

I can envision every major retailer using smart bots and AR (augmented reality) to create personal shoppers or concierges that know the customer and can show them in-store items they know they’ll like or offer them discounts on things they know they want to buy.

Clearly, other breakthroughs in technology are on the artificial intelligence front. A continued push toward more devices being connected to the Internet of Things and smarter marketing and advertising technology will evolve this space.

While we still have a long way to go, a lot of exciting changes are going on in this space — changes that would make Brightkite’s founders’ heads spin, I’m sure.

Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.

About The Author

Aaron Strout

Aaron Strout is president of integrated marketing and communications agency WCG. He is also the co-author of Location-Based Marketing for Dummies (Wiley) and an avid blogger, podcaster and speaker. Earlier in his career, Aaron spent time as head of marketing and social media at Mzinga and Powered/Dachis Group (now Sprinklr). Before heading off into the startup/agency world, Aaron worked at Fidelity Investments for nine years in a variety of digital marketing roles. He lives in the Bay area with his wife and three children. He loves BBQ, Boston sports and is an avid taker of photos.