How location-based advertising will shake up the trade
Kartik Ram
19 July 2010
Unlike our Western counterparts, the growth of mobile advertising in the UAE has been evolutionary rather than revolutionary. Though our wireless speeds are formidable, the mobile medium remains largely untapped for targeted customer engagement, beyond unruly SMS spam.
Mobile advertising is still a tiny portion of the overall online advertising pie – about 2 to 3 per cent excluding text messaging. However, Gartner has forecasted that the overall mobile advertising segment will become a $7.4 billion market by the end of 2014. So, what’s the ‘killer app’ for mobile marketers? It’s location, location, location!
Location is the new demographic. It’s no longer just about age, gender, and socio-economics, but about reaching mobile users who are in a geographic position to buy. Consumer research indicates that consumers are interested in receiving location-based marketing on their mobile phones from their favorite establishments, provided that it is opt-in and perceived as a valuable service.
Location-based advertising will soon change the way hundreds of brands in the region play out their dream of hyper-targeting customers. It’s as much about being less annoying as it is about their return on investment as compared to traditional advertising. Now, brands that have a physical presence with an unparalleled way of driving traffic into physical stores, and it is taking off today.
As an entrepreneur who follows the industry, I have come across campaigns by McDonalds, Starbucks, Pepsi and Nike, all trying to crack the code around how customers can be engaged with location based advertising. Small and medium-sized businesses in the UAE are also jumping on the bandwagon.
Providing more value for smaller businesses requires delivering a sufficient number of consumers, making it easy to buy through a self-service process, and providing some kind of return-on-investment measure such as increased store traffic. Enabling local businesses to easily opt-in their own base of customers to a programme – similar to following someone on Twitter – is one approach that can gain traction quickly and change the playing field.
The critical success factor for brands will be to tie the customer’s location with other existing customer relationships like loyalty programmes and outdoor media, because it will bring a lot more context and ‘stickiness’ to mobile advertising.
Just knowing somebody’s exact location isn’t enough to make smart marketing decisions. Jeff Montgomery, Placecast’s chief revenue officer said the company has learned three things on location-based advertising. Firstly, timing affects the location, meaning that a hotel is very different on a Monday morning than a Friday evening, and this impacts the user’s experience and needs. Secondly, consumer behaviour can be changed, but the message – the advertisement – has to give consumers time to respond meaningfully. Lastly, brands need to give consumers control on the messages and ads they opt-in to receive.
At the MobileBeat 2010 Conference in San Francisco last week, Facebook’s Mobile chief, Erick Tseng, asked the audience, “How many people have ever used a type of coupon where an offer is pushed to you based on your proximity to a store?” No hands went up. Tseng continued, “To me, those types of coupons would feel like spam. However, if there is social intelligence on top of the location-based ad that makes it more relevant, I am interested.” The tools to make this happen could boost Facebook’s already-big mobile audience of 150 million users.
Who’s going to be making money from location data? No one, from upstarts like Placecast and Foursquare to giants like McDonalds and Google, has a definitive answer. LikeList, a company that refers businesses to consumers based on peer recommendations, said the value of location-based services resides in the bond between the user and the business. The consumer-business relationship is getting much more personal and there’s a windfall for the companies who can exploit that.
Just recently, Google has successfully been awarded a patent on location-based advertising they had filed six year ago, firmly planting their foot once more on trends that will drive the market. Location-based advertising makes great sense for an end-user, since the more relevant the ads are, the less intrusive they feel. However, the business model is still in its infancy and unproven – it will take some maturing before Google, like others, can truly reap the fruits of this trend.
Kartik Ram is a Dubai-based digital media entrepreneur
Source: http://www.khaleejtimes.com/displayarticle.asp?xfile=data/opinion/2010/July/opinion_July113.xml§ion=opinion&col=
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