Are We Ready for Location Based Marketing?

How cool would it be to walk into a hardware store and see advertisements and coupons for exactly the plumbing fixture we’re seeking?

Well, it could be cool. Sort of.

The technology for location-based marketing is here, and it isn’t all about Foursquare: Facebook’s Places and Google’s Latitude let you tell your friends where you are. Facebook has plans to let local businesses market to consumers who come into their establishments; one of Google’s most promising businesses at present is location-based advertising. As Google’s director of mobile advertising has been quoted, “Location will be one of the cornerstones of mobile advertising. Merging local businesses with mobile [advertising] is very, very important for us.”

Still, location-based marketing has as yet received only a lukewarm response from American consumers. According to one survey, “more than 60% of active smartphone users don’t use location-based services; among those non-users, 70% aren’t aware of the apps or don’t fully understand what they do.”  The Pew Research Center has found that only 4% of adult Internet users use a location-based service like Foursquare. Globally, there’s more adoption: One survey found that “’nearly one-quarter of mobile users say they are getting comfortable with ads. Even better, more than one-third of consumers (38 percent) say mobile ads serve ‘an important purpose,’” with personalized content (including potentially location-based messaging) most appealing to consumers.

One big concern of American consumers seems to be privacy. In recent months, privacy issues have cast a shadow over the online world as a whole, including location-based services.   Google was recently assessed a fine of 100,000 Euros for improperly collecting and keeping data as part of its Street View offering. A study by The Wall Street Journal recently showed that mobile apps were leaking large amounts of information without consumers’ knowledge. The courts are currently considering whether law enforcement agencies require warrants to obtain location-based records on individuals, and the question that has generated scary headlines in the media; as the Pittsburgh Post-Gazette recently informed readers, “Big Brother Has Access to Devices That Knows Where You Are.”  All of this and more has led the Obama administration to call for a “Privacy Bill of Rights” covering online consumers, including provisions for location-based services.

It’s worth noting that not all Americans are equally concerned about privacy issues. Recent polling of Americans found that more feel they are losing control over their data, yet only a portion of the population feels concerned about that. A little over a third said they “cared less about privacy than five years ago,” and about the same said they care more.  Participation in social media explains this divergence: “Among active social network users, 58 percent said privacy was less important and only 14 percent said its importance was growing. Non-social media users were almost a mirror image in reverse, with 53 percent saying privacy is more important to them, but only 20 percent saying it was less so.”

As an editorialist in the Denver Post has written, “Location-based services will grow in popularity as people become more comfortable with them. We hope users will be savvy about something as sensitive as one’s physical location, just as they ought to be with other personal information.” We should add that companies and firms are well advised to think carefully about the privacy implications of their marketing tactics, both as a matter of principle and to obtain the best result.

Lines between the marketing disciplines have eroded more than ever before, and public relations firms are finding themselves on the forefront of technology. Increasingly, we are gaining access to consumer data, a development that allows us to fine-tune our messaging better and offer more  consumer value. But what about consumer comfort and trust with the brands? Just because we have technological capability doesn’t mean we should use it in a haphazard manner. In our position as leaders in technology, we need to think through vexing privacy issues right now, proactively, before public policy imperatives are forced onto us by a nervous populace.

It’s not just consumers that must be ready for location-based marketing. We need to be, too.

5 Responses to “Are We Ready for Location Based Marketing?”

  1. kelley chunn said on March 30, 2011 at 3:06 pm

    to underscore the key point…for people of a certain
    age…especially…it’s about privacy. Do we want to trust
    users of location marketing to be sensitive about
    our physical location?

  2. George Stenitzer said on March 30, 2011 at 3:30 pm

    The key to the privacy issue is whether the user can opt in or opt out of location-based marketing. When I use Foursquare and other location apps, my iPhone offers a choice each time, whether or not to share my location through an app. Being able to choose each time provides sufficient privacy protection.

  3. Lisa Grimm said on March 31, 2011 at 2:19 am

    Thanks for the post. I’ve been meaning to write something about the LBS space lately. I think points about privacy are very valid, but I also think that the percentage of people with smartphones that allow this kind of connectivity, paired with education about these services and WHY they matter to the people who use them is the bigger issue. People would be willing to give up their location if we (as brands or people using these tools as a marketing tactic) gave them good reason to and educated them, or walked through the process with them. Your closing point about marketers needing to be ready as well is key because the reality is that most people using these tools for marketing think about it just like that – as marketers. Not as an experience, or building a relationship with a niche and loyal user base checking in somewhere. If used as a marketing tool, it should be well thought out and executed as part of a broader strategy. Again, thanks for the post. I think we create the ‘ready’ factor as responsible and talented marketing communications professionals. A lot of opportunity here:-)

  4. Adam said on March 31, 2011 at 1:51 pm

    Great article, and good point about the exchange between consumers privacy and location-based deals. As George mentions, most check-in services offer the choice of sharing your location, as opposed to automatically checking you in.

    In regards to user adoption, it is still very early in the life-cycle of location-based marketing. However, we’re seeing very fast growth, with Foursquare adding nearly a million new users a month.

  5. Kathy Cripps said on March 31, 2011 at 8:23 pm

    Thanks for your comments. To the point made above about the ability to opt out, the WSJ carried a related article today about “Do-Not-Track” technology in conjunction with web browsers. These conversations will no doubt continue as the tracking technology continues to advance.

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