Nick Cifuentes

In a just-released Forrester research report, it said that most marketers should refrain from location-based services, citing that just a mere 4% of the US online adults have ever checked in on the “location game.” And only 1% update these services more than once a week.

The study revealed some interesting statistics, as it looked at a large number of location-based sites, including popular players such as Foursquare, Gowalla, MyTown and Loopt. And to add to the study, a whopping 84% of respondents said they had no idea or were not even familiar enough with such types of apps. This study comes at an interesting time, since 2010 was marked the year of location-based services, igniting fires under social media marketers - all trying to integrate location-based strategies into their marketing programs.

And to add to the bottleneck, the report said almost 80% of location-based service users are male, with close to 70% of them between the ages of 19 and 35, and 70% have college degrees or higher. Forrester also discovered that 38% were more likely to say friends and family ask their opinions before a purchase, in addition, this crowd was very open to mobile coupons and offers as well. This vertical is also more resourceful with research prior to a purchase where nearly 20% are more likely to consult their phones before buying to conduct more research and read customer reviews.

Location-Based Reality Stinks?

This certainly brings most marketers back to reality before jumping on the location game bandwagon.

Although this data cuts down a very small segment to target, it’s still very approachable when you consider products that live in the gaming, consumer electronics, and sportswear verticals. These are the verticals that lead the way with testing these applications, according to Forrester. However, the location space is full of brands that are already proving they are not just for the male audience. Big players such as Starbucks, Oil of Olay, Bravo, Gossip Girl, Campbell’s Soup, Louis Vuitton, Bon Appétit, Lucky Magazine, TLC, and PepsiCo are all currently experimenting with location-based services.

But as in any new technology, there is always the question of adoption rate, and to be honestly blunt, these networks are very much in their infant stages. Foursquare has just over 2 million users; Loopt has 4 million, and MyTown with 2.5 million - barely a drop in the bucket from a marketing standpoint.

And the next question is scale, when this will happen? As of now, the digital social network rulers such as Facebook, Google and Twitter are not fully involved in the location game. When their entrance takes place, this will help set the market more efficiently, creating a much higher adoption rate. And a drastic shift in competition for the current market.

Thoughts…

As Forrester always does well, and does often - it reports the facts. I don’t think marketers should completely avoid location-based service programs, nor is Forrester saying that. They are however saying that you should tread lightly and not expect any massive returns as you start to experiment in this sort of advertising.

However, the market always moves quickly, as we all have become aware of over the past several years in social media’s popularity. If digital adoption rates stick, I’d say we would be in a good place to give this just a bit more of time before more users begin amass on each of these networks.

Depending on your specialty, I’d say it’s reckless to not at least consider location-based services when considering new social media programs. Your brand’s demographic might not fall directly into what Forrester reports, however, you should consider the question of “When?” At exactly what point will the ‘branded’ location-based network space take off in popularity? When will they eventually act like your Facebook branded community does now?

I think the real question is: Do you want to get involved now, or several months or years from now when every brand on the planet is doing it?

These types of applications will grow; they will be built beyond a cliché, cornball badge to tell your friends on Facebook or Twitter about. Monetary, if not branded products will soon replace these and be offered in place of  a ‘real’ incentive for checking-in. We already have started to see this in mobile coupon deals that Starbucks offers.

These incentives will get better and will have a stronger support system as the adoption rate increases.

We’ve just started in this game kids…just give it time.

An interesting and very poignant Nike ad surfaced Wednesday, featuring Tiger Woods standing in front of camera, with his deceased father, Earl Woods, speaking in the background. The ad is edgy, and is a move that calls out his person problems, well-timed the night before the Master’s started.

The ad first aired on ESPN and the Golf Channel Wednesday night.

The ad has been called “creepy” , “brilliant” , “bizarre” , and “uncomfortable” in one breath, and certainly a dedication to Tiger, who Nike is still standing by.

Foursquare – you’ve heard of it, probably even might be a member yourself. The quick-growing location-based social network is beginning to make reputable noise in the social space, and since August, traffic and user growth has soared for the new social noise maker.

According to co-founder Dennis Crowley, the platform is closing in on 500,000 individual users, with about 70% of the user base in the United States, and their international arm growing quickly – especially Tokyo, according to Crowley in an e-mail interview. These users are also checking in at an astonishing rate of 1.5 million check-ins a week.

If you are not familiar with Foursquare, the concept is simple – you sign up for an account and then you began the process of checking-in wherever you go; the majority of check-ins that are being done are through GPS-enabled mobile devices.

This social city-guide and game rewards you then for doing interesting things. The motive is to encourage people to discover new places and challenge you to explore your neighborhood in new ways. The rewards attached to this are tied to pseudo ‘badges’ a user is given for unlocking new places, times you check-in, how often, ultimately working your way to become the “Mayor” or “Deputy” of that locale.

In addition, the platform makes it very easy to connect your updates to your Twitter and Facebook profiles – seemingly synching your entire network with each update you post on Foursquare. Something that was not in place last year when Foursquare introduced themselves at the SXSW, but is working it’s way into a much more seamless process in 2010 and allows for a much higher engagement and viral distribution.

The concept is quite ingenious and despite it’s evolving stature; it is beginning to make quite the name for itself. Just in the past month, it’s been reported that Foursquare inked several major media partnership deals, including Bravo TV, Zagat, Warner Bros., HBO, the History Channel, ExploreChicago, and more.

These “branded” type of channels could be, if used and marketed properly, great engagement tools that focus around brand awareness, content sharing, and goes one step further and creates a physical presence with your brand using local stops where you instruct users to go. With the user taking part in the brand’s “game”, it allows the brand to create custom badges with Foursquare directly to keep user’s engaged and work toward further outreach goals.

Zagat @ Foursquare

Zagat’s official Foursquare page is calling the partnership “Foodie Love” and there is a custom badge to go along with taking part in the Zagat experience. The page offers people to follow Zagat and then take part and in various venues where Zagat wants users to check-in from, mainly a variety of restaurants throughout the country; check-in there, become a Zagat Foodie, and unlock the Zagat Foodie Badge. And through further engagement – Zagat is going to have a online video series on their website called “Meet the Mayor” where they will feature discussions with prominent Foursquare mayors.

Harvard @ Foursquare

The prestigious Harvard University has also partnered with Foursquare to create a channel where they list locations, experiences and ideas for students and visitors to go and check-in – taking part in the Harvard community; soon unlocking a custom Harvard Foursquare badge. Whether that helps with the admission process…I’m going to say doubtful – but hell of an engagement tool!

New York Times @ Foursquare

The NYT recently closed a deal with Foursquare and created a branded channel that is celebrating the 2010 Vancouver Olympics by sharing tips on what to see and where to go in Vancouver and Whistler. And if you check-in to two recommended venues you get to unlock the Olympics badge.

Conclusion

There is no doubt that Foursquare is growing quickly, with the focus mainly on gaining users, not revenue at the moment, according to Crowley; with now nearly 500,000 users, this number is likely to grow fast! After the Bravo TV deal was inked last month, a number of major brands, as shown above, came knocking at the door to work with Foursqaure, no doubt helping them earn some revenue. And with the ability for locales to offer up free food, drinks, discounts, coupons just for those who might become the “mayor” or “deputy” of their venue; being on Foursquare could soon become like being on Twitter…maybe? In addition, Crowley did confirm that Foursquare is working on creating actual incentives for users who garner specific badges and points in their account - not just pseudo “Mayoral” titles.

To that end, Foursquare is working on a set of services and tools, according to AdAge in early February, to begin offering paid services on a three tiers: one for small (local) businesses, one for retail chains, one for large marketers. Begin throwing these offers around, and soon Foursquare will move pass just the “engagement” level that these major brands are seeing above as far as click, follows and check-ins; and offer nailed-down analytics (impressions, clicks, friends, etc…) and deals could be sold against impressions such as web ads, clicks such as search ads, or even what Kunur Patel in AdAge said, “ a completely new model: cost per check-in.”

The idea that there is an overabundance of content in today’s digital spectrum is no surprise. In earlier times, newspapers, magazines, and various publications alike made a push once the web turned circles in the early 2000’s and content distributors rushed to get their publications online. This rush has since grown, and seen an extreme swell of content on the web, much of it free, much of it paid – creating the big issue that stands in front of publishers today: how do I further monetize?

Digital media might be popular, but from a marketing standpoint, it has not been easy on publications. Ad rates on the web could not match what was being garnered in print, essentially endangering the publications lifespan because of a lack of monetization. What saving-grace could be sitting in the weeds waiting to peek it’s head over – mobile device, and by that, I mean devices that are MOBILE.

As mobile devices increase in use (seen in the eMarketer.com study above), publications are flocking to create applications that can live and function within this new space. Everything from portable phones, to the hot, soon-to-arrive e-readers, tablets and other wireless internet devices; content distributors are seeing these ‘apps’ as the opportunity to both expand their reach and monetize their content at the same time.

Mobility In Play

Conde’ Naste Publications were one of the first to deliver full magazine issues on apps, staring with GQ’s December issue. By mid-February, according to Advertising Age, it sold nearly 7,000 copies of the December issue app and more than 15,000 copies of the February issue app at $2.99 each. When comparing this to the magazine’s print publication, which averaged nearly 194,000 single-copy sales per issue over the second half of last year, it’s not anything mind-blowing – yet. Conde’ Nast refers to this as a start to something much larger, as they prepare to get in a position to make a major play on the iPad, which is opening many content distributor’s eyes. They have also planned to create digital editions of Wired, Vanity Fair and a number of other titles.

When considering the outcome, you have to imagine that a number of people who might download single issues of a publication, could, most likely be, already not a subscriber. And if you charge $3 for that one download, think of 100,00+ people taking that same idea and applying it to their app collection – that will all start to add up.

Also, Zinio, which has been selling digitized copies of its magazines for display on computer screens for years, recently created a free iPhone app that optimizes digital editions of its publications for the iPhone. Within the first few weeks of release and 20,000 downloads later, it surpassed the New York Times app as the No. 1 News application.

It’s also interesting to see how a number of publishers are not just “unlocking the safe” of web content to a mobile application, but actually releasing specialized apps that draw in related information, but still sell and monetize the brand at the same time. Rodale, best known for its Men’s Health and Women’s Health publications, offer apps that range from 99 cents for a Men’s Health Ultimate Fat Burning app to $4.99 for their Eat This, Not That! Diet app. All of this is not just timely craze being built in branded modules that will live for just a period of time. Advertiser’s see the potential behind these types of apps and the ability to reach more targeted users outside of something like a Facebook or Web widgets were every marketer’s obsession years ago.

E-readers & Tablets…And the iPad!

This isn’t just all hype – there is something very serious brewing behind the potential of advanced e-readers and tablets, most notably, and always setting off the first alarm when they announce anything new, Apple’s iPad and other similar devices, are going to be a new source of potential income for newspapers, magazines and other print publications looking to make a big push.

E-readers and tablets are going to become effective content distributors for content publishers, and in no doubt will grow in terms of advertising revenue and further branded distribution. According to a Mashable article from February 18, Director for Digital Publishing at the Donald W. Reynolds Journalism Institute at the University of Missouri, Roger Fidler, said major news companies such as the New York Times, USA Today, and The Washington Post will be focused on creating customized content standards for e-readers and tablets. He also predicted that within 10 years time, a majority of subscribers to newspapers and magazines will be reading digital editions delivered to mobile reading devices.

As of February 10, there were 99 newspapers from around the world already available on Amazon’s Kindle – and this current Kindle model is subscription-based without advertising. Newspapers get about 30% revenue from having their content on the Kindle, something likely to change because publishers have some leverage because e-reader vendors must have content to succeed and newspapers will have the ability to do more rich presentations – content will evolve in the end game.

With that being said, that rushes the issue of staying competitive and enters the first question – “who can hit the ball out of the park to start?,” so to speak. For example, the iPad’s rumored debut turned official last month when Apple announced a March launch date and featured a full-color device with touchscreen; something the Kindle falls well short of at the moment. However, it is being predicted that Amazon will introduce a similar color device before the end of 2010.

iPad Will Reign…for now

With the pending launch of Apple’s new device, Wired Magazine has been planning, for more than 6 months already, to launch an iPad-only edition of the publication this summer that includes rich media content. Wired’s Editor-in-Chief Chris Anderson showcased a demo of the Wired Reader app at TED recently. The publisher of Wired, Conde Nast, also plans on launching iPad versions of GQ and Vanity Fair as well.

From a marketing and advertising standpoint, users that gravitate toward the e-reader subscriptions are looking for similar experiences they draw from the print publication. Those who will want to get even more out of that experience will be more attracted to the iPad. That being said, I see more of a harmonious relationship between the two, rather then one trumpeting over another – and this good news based on what experts reveal could be separate advertising models on each device.

New Medium = New Content

With the advancement of the iPad and many competitive devices, similar in functionality coming soon, media companies won’t simply be able to re-purpose content. According to Alan Mutter, an independent media analyst, who spoke to Mashable.com in a recent article, said content needs to be richer, offer more user control and interaction, and has to let the user manipulate it in a way that it becomes highly individualized.

Sport’s Illustrated recently created an iPad demo prototype on how that capability could be leveraged:

Mutter said that although he has reasons to be encouraged, it will take time before a mass amount of publishers go running to this new platform and spend a healthy investment to create these new formats. That will not happen until proof is made that they can generate significant revenue and ultimately become a clear marketing and advertising channel.

What is success here? Mutter said that when a number of around 100,000 subscribers are reached through e-readers and tablets alone per publication; then media companies will consider them successful tools to gain additional advertising revenue.

It’s All Dollars and Cents

In the end however, these are all cutting-edge devices that are clearly going to shake the content distribution channels at their very core. The hope is to generate not only additional advertising revenue, but also separate subscriptions, and potential syndication from other websites – all could be included in a new model of “charging for service.”

Mutter said, for example, CNN charges $3 for their iPhone app and the New York Times just gives it away for free.

A recent report from Gawker.com said that a New York Times source said that an iPad model of the NYT could run a user up to $20-$30 per month. Why such a high price…they are scared! Even more, they are worried that an advanced device like the iPad would have print subscribers cancelling pretty quickly, and running for the hills with their iPads in hand.

In the end however, it is about two pieces to this paradigm: The idea of having content optimized for the platform (whether it is an iPad, e-reader, tablet, iPhone, Android, other mobile device, even a gaming device), and then most importantly - coming up with the model that people will pay for.

I guess we’ll just close our eyes and see what happens in the next few months…