New mobile tools could boost brand owners

02 August 2010

NEW YORK: Brand owners that exploit location-based services on mobile phones could benefit from a substantial first-mover advantage among a small but highly influential audience.

According to a poll by Forrester, a total of 4% of American adults have used platforms like Foursquare, Gowalla and Loopt, which reward shoppers for "checking in" at specific sites such as restaurants and retail outlets.

"The market is quite nascent, with only a few million consumers using geo-location apps monthly," Forrester's study said.

Just 1% of its panel accessed these services – which have attracted companies like Pepsi, Starbucks and Campbell's Soup – on a weekly basis.

While 84% of respondents had not even heard of the applications, some statistics may prove enticing.

Nearly 80% of members are male, and 70% are aged between 19 and 35 years old, and a similar number boasting a college background.

As this group are also 38% more likely than the norm to discuss potential purchases with friends and family, and conduct product research on their phone 20% more frequently than the average, they are often highly influential.

"Bold, male-targeted marketers [should] start testing, but that most marketers should wait until they can get a bigger bang for their buck, when adoption rates increase and established players emerge from the fray," Forrester concluded.

In reply, Tristan Walker, head of business development at Foursquare, argued early adopters stood to enhance their reputation with its 2.3 million members.

"It may be a fair comment on how there needs to be more education around what geo-location can mean in general," he said.

"But here's an opportunity for marketers to lead – to take a burgeoning space and do some really exciting things with it."

This demographic typically houses individuals willing to interact with corporations, as has been demonstrated on social media portals, added Walker.

"Services like Twitter and Facebook have shown that brands can engage with consumers in really interesting ways online," he said.

"Foursquare is well poised to take all that engagement offline, providing brands with tools to lead their consumers to do things, as opposed to just suggest."

Starbucks, the coffee chain, is one of the major companies that has officially partnered with Foursquare, allowing regular visitors to gain privileges by becoming "mayors" of its stores.

On a recent conference call, Howard Schultz, Starbucks' ceo, outlined how this approach fitted in with its overall strategy.

"Our research shows that both Starbucks and our customers are uniquely well suited to benefit from rapidly-advancing mobile payment and mobile gifting technologies," he said.

"Offering mobile payment and mobile gifting capabilities will result in a more efficient in-store experience, and provide us with significant competitive advantages, and further differentiate Starbucks from competitors."

Google is also aiming to tap in to location-based advertising by delivering targeted banner ads to wireless handsets depending on the exact whereabouts of shoppers.

It will enable the featured firms to add contact details and a map to these executions, which expand if subscribers to devices such as the iPhone and Nexus One click to find out this kind of information.

Although this will not be an opt-in system, Surojit Chatterjee, senior product manager for mobile ads at Google, said data would be drawn from WiFi networks and other "non-intrusive" techniques.

"We try to do our best to get the location as good as possible," he stated. "We're trying to infer it from indirect means as best we can."

Data sourced from AdAge/Seeking Alpha/AdWeek/Fast Company; additional content by Warc staff