Location-based marketing is one of the biggest trends, if not shifts the industry has ever experienced. Location-based advertising, or more accurately promotion enables marketers to target customers according to real preferences at the right time, and generate revenues they wouldn’t otherwise bring in.
The bottom line is that location-based marketing is gaining traction and a lot of it, but before we examine this trend’s growth and outlook, we should look back at it roots. One of the first pioneers of this industry was a UK company called ZagMe which started back in 2000. The service, which was eventually shut down because of a number of factors, was advertiser-based and free to users – sounds familiar?
Industry veteran Russell Buckley composed a lengthy report covering every aspect of ZagMe’s rise and fall, and his conclusion was that the company’s business model as well as approach were simply not ripe enough (putting aside the fact it was a mainly offline, SMS and voicemail-based service).
These doubts about the readiness of location-based services (LBS) are still very much alive and kicking today – even about the biggest player of them all. $25 billion worth daily deals behemoth Groupon, which incidentally jumped by $10 billion from estimates published just a weeks ago, declined a $6BN bid by Google – a bullet dodge for the latter, according to some. Groupon is of course one angle to a prospective social media bubble everybody’s been buzzing about, but it also represents the greatest element in location-based marketing – it’s not all about location.
A great deal and probably all the location-based services whose name you’re familiar with stepped up their suitability by including social, search or social search functions in their applications. And, as smartphones and tablets extend their reach to include wider and wider audiences, location-based service providers and fresh out of beta start-ups come up with more original and effective ways target local audiences. This too correlates with location marketing and services’ expansion into other fields, including gamification – which can turn out to be a very effective promotional and customer loyalty tactic – in the case of Foursquare, SCVNGR and others.
The notion of a prospective customer walking in the street and receiving an irresistible ad inviting him to enjoy a 50% off latte half a block away seems to reflect every marketer’s deepest wish, but there are ways to enhance even that. Better targeting means increased efficiency, and while the old concept of location-based marketing was to tap previously unreachable customers, it has now changed to tapping as many customers as you can.
Localized ads are already offering discounts as big as the amount of friends you invite to buy, and this is where mobile’s biggest benefit in this context comes in. As Chicago Convention & Tourism Bureau Digital Marketing & Social Media director Harvey John Morris noted in an interview, users are already using their devices to share their activities. This, according to him makes social sharing and word-to-mouth the biggest opportunities in this space.
In the case of location-based marketing, innovation has managed to generate tremendous revenues, and this growth pattern is expected to last. According to a report by EMX, which contains a number of predictions and official statistics regarding the LSB market as a whole, the UK location-based marketing industry will be worth $4.7 billion this year.
In conclusion, location-based marketing has potential. It has the potential to become of the biggest industries under the title of marketing, but it first has to achieve its sustainably.