Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Prophet Consulting blog. Retail Prophet Consulting sits as a current member of the advisory board for the Location-Based Marketing Association of Canada.
A recent study by Forrester Research concluded that, while location-based services (LBS) such as Foursquare, Gowalla and Loopt are intriguing, they are still too small for major marketers to spend much time on. While current LBS users are very likely to be influencers within their social circles, they are also largely male and, therefore, better suited to marketers targeting men. Forrester's overall advice to marketers was a resounding "wait-and-see" on LBS.
It's hard, however, to reconcile the Forrester report with a lot of what's happening in the marketplace.
Large players like Starbucks have been experimenting with services like Foursquare since early 2010, giving in-store discounts and rewards to users for checking-in to their stores.
The Gap recently launched a one-day 25 percent off promotion to Foursquare users checking-in at Gap locations.
Recently released LBS applications such as Shopkick tapped by Macy's, Best Buy and American Eagle are making news by taking shopper rewards to entirely new and location-specific levels, literally allowing shoppers to earn rewards simply for moving through various areas of a store.
And in what is perhaps the ultimate sign that LBS has arrived, Facebook recently launched its own homegrown location service, Facebook Places, allowing users to share not only what they're doing but also where they're doing it.
Indeed, Asif Khan, founder and president of the recently-formed Location-Based Marketing Association of Canada, believes that those who "move to embrace LBS early-on will reap enormous rewards from proximity marketing, including attracting more first-time customers, encouraging more repeat business and increasing sales. I also see huge opportunities for cross-brand promotion for companies that have multiple brands like Gap and Old Navy."
He believes the Forrester study failed to recognize the recent explosive growth of such services as Foursquare, the potential of Facebook Places to educate consumers about LBS, as well as exponential smart phone adoption rates.
To that end, he sees the use of LBS reaching critical mass in 18-24 months.
Mr. Khan agreed with the often cited quote from techno-anthropologist Clay Shirky, "Communications tools don't get socially interesting until they get technologically boring."
"I don't think it's about technology at all," said Mr. Khan. "At least, I don't think people care about which app they use. They only care about the size and relevance of the deal. For brands and retailers engaging with these tools, the real measurement of success will not only be ROI, but Return on Relationship (ROR)."
As for the future and the continued evolution of location-based technologies, Mr. Khan suggests that the very context in which we consider the term 'location' will also evolve.
"Today, we think of location as only the physical space," he said. "But I see a time where we will be in virtual spaces and augmented reality where brands and content will live as well."
Discussion Questions: How aggressive should retailers be around investing in location-based services? What do you see as the next evolution of LBS?