Location-based Marketing – Friend or Foe?

Posted on: June 1, 2011


According to this Social Media Examiner article ‘2011 has been hailed as the year of Geolocation’. A fairly bold statement for an emerging technology and considering the same prediction was made for 2010, or is it?  Have the stars finally aligned for this (somewhat) new technology to be harnessed and do marketers now have the ability to produce and provide relevant content?

If you think about it Geolocation and the idea of location-based marketing have been swirling since mobile phones started to integrate GPS into handsets – or at least since 2002. Does anyone remember the movie Minority Report? Pile on the emergence of social media, over sharing of information by consumers and the fact that almost everyone wants to be heard (and located), has opened up the opportunity floodgates to marketers. As it stands right now it appears some brands are ahead of the curve and already making noise in this space.

There are two current examples that have caught my eye. First, Starwood Hotels and Resorts loyalty program Starwood Preferred Guest, long known for being an industry innovator, has teamed up with Foursquare for a contest that is rewarding members for checking-in at Starwood properties between May and July.  Starwood is not only giving away free points and free night stay but has also integrated Foursquare’s Mayor status into the promotion. The Preferred Guest member with the most Foursquare check-ins across all Starwood Hotels will earn the title SPG Mayor and will be able to provide travel tips and guidance to others. Click here for the full article from Mobile Marketer.

The second is a partnership that may change the entire landscape of location-based marketing in the retail space. Groupon and Loopt have recently announced a partnership that aims to target consumers by location and alert them when to deals close by. As stated in the article, “Targeting Groupon customers by their physical locations will help local merchants unload perishable inventory…that’s a win for everybody,” and truly a great example of how this technology can drive incremental engagement.

Certainly Starwood and the Groupon/Loopt partnership have found a sweet spot in the market and we should look for more examples as other brands start to duplicate and find their own niche. However, there are still some challenges to consider in this space. Fortunately, research is emerging and can provide brands with relevant data to consider when entering this space.

For example research from Frank N. Magid and Associates indicates there is still a long way to go before usage of location based services reaches a saturation point.

The above graph shows the use of social networking on a mobile device is ranked 8th but no other location-based services made the top 20. Foursquare check-ins ranked 27th, tracking family/friends through GPS ranked 28th and utilizing service products such as Groupon and LivingSocial ranked 29th. Not exactly a glowing endorsement for implementing such an initiative.

So back to the original question, is location-based marketing our friend or foe?  Well, like all emerging technologies it has taken a while for the marketplace to understand how to utilize the technology in order to provide relevant consumer content. With partnerships forming and some successful campaigns in the books – and more on the horizon – it appears we are moving towards market relevance and an exciting new way to engage our customers.

For more information, please contact Mark Dority, Strategy Director, ICLP Americas (San Francisco) via email, mark.dority@iclployalty.com.

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2 Responses to "Location-based Marketing – Friend or Foe?"

What do the percentages in the graph refer to?

The percentages in the graph refer to the “activities done regularly on a mobile phone” as determined by the survey participants. The actual survey question, “Which of the following things do you do regularly on your mobile phone?“

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ICLP is the world’s leading specialist loyalty marketing agency with over 20 years of experience creating and managing profitable relationships and driving incremental revenue. With offices in 15 key locations around the globe, ICLP offers a full range of loyalty services, from strategy and creativity to insight and global delivery.

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