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.

I attended the 11th Annual MIT VC Conference Saturday, and was able to take a look at some upcoming technologies in a variety of spaces.

I wanted to highlight a company I ran into - as there outlook and technology look very promising:

movolu.

This new advertising network is built for the mobile platform - the application is quite simple. Movolu leverages location information to enhance the mobile experience and connect businesses with customers in their area.

Because many local businesses feel threatened by technology, the ecommerce ends up favoring larger brands and most likely could weaken their own in-store sales. In response, Movolu created a preformance-based advertising campaigns that directly result in sales for local businesses.

In creating interactive applications for smart phones that incorporate location-based information to enhance the user experience - it creates a strong funnel for location based advertising.

The process is simple - an advertiser joins the network, and their ads are distributed through content channels on mobile devices based on your ‘user’ characteristics - operating on an algorithm that utilizes location information, personal preferences, and behavioral patterns. So, if you enjoy eating Upper Crust Pizza in Boston, and you happen to be running an application or go onto a certain website in the network - their ad will flash on your mobile device. You can then click this ad - and take advantage of a ‘digital’ offer right on your cell phone. So, I just clicked this ad and now I have a coupon for a free large salad with the purchase of any pizza @ Upper Crust - and to go beyond the ‘regular’ coupon. This digital coupon is ‘timed’ and I have XXX amount of minutes to place my order and use this coupon - if I don’t use it…it expires, and more so, Upper Crust does not pay for that ‘click’. We all are familiar with the paid search process - normally you are paying for each click - whether a conversion happens or not - on movolu you don’t. You pay for each time the coupon is actually used.

This is a great way for smaller businesses to ‘pay’ for results - without burning money on useless conversions.

Now, for movolu to capitalize - there going to need to target highly populated locations. This system probably won’t do much in Wichita, KS - but could be very effective to start in some place like New York City. And as time goes on and this system grows in popularity - we could start to see this really take on popularity.

The two young guys I met who created this channel have stepped overboard, in terms of going all-in to create this application, and move to NYC to start putting their efforts into ovedrive. The network is set to be active in just about two months time - I wish them the best of luck!

See a demo of Movolu.

Fin.