Proximity and indoor positioning will grow as technology gets better — and consumers value its benefits. Attendees at the recent Place conference in New York had the opportunity to hear from companies who advocated Bluetooth, Wi-Fi and even magnetic positioning technology. In addition, several advertising agencies and retailers attended, showing that the nascent proximity/indoor location niche could be a major market in the next few years.
NEW YORK — The potential for indoor positioning and proximity marketing is huge if even a fraction of overall retail sales are attributed to the information the technology gives to retailers, said panel members at the July 22 Place conference here.
The indoor opportunity is huge as studies have shown that 70 percent to 89 percent of consumers use smartphones in stores to compare prices and shop for coupons, said Greg Sterling, Opus Research senior analyst. “About $20 to $50 billion of purchases were influenced at point-of-sale in stores. $500 billion of retail sales came without any premeditated product selections,” he said. “Even if a small fraction shifts to mobile devices, that’s an enormous amount of money.”
Sterling said that despite consumers’ ambivalence to privacy issues, if they are guaranteed some sort of benefits to being tracked, they will opt-in. “72 percent said they don’t want tracking [without benefits]. That number goes up to 66.4 percent who say ‘yes’ if there are specific benefits — rewards and discounts,” he said. “It is about educating consumers [as to benefits of location-based advertising].”
Technology improvements and retailer awareness in the last two years have made such mobile advertising agencies as Joule interesting in location as a data point beyond geofencing, said Michael Lieberman, company co-president.
“I am biased as we are mobile agency, so for us, most of our clients are using location to identify buyers. Ideally, we see a device in multiple locations, we understand consumers’ behavior,” Lieberman said. “If I see you every morning at a Starbucks, you are a coffee drinker and I should target you that way. However, if you are trying to use location as a national campaign you will only get a percentage of accuracy — you are missing out on other information.”
Right now, retailers have little idea how and why a consumer makes a purchase, Lieberman said. “The [important] point is in [indoor location’s] measurement — what happens in the store environment. You walk in store, make a purchase, right now we have no idea what they did to buy a product,” he said. “We are losing that piece — and it is a big gap in thinking. Everything about consumer path in that store determines a purchase. What’s valuable is the in-store data that gives you the most actionable information.”
Location today is used for targeting, but not for the total consumer measurement that Facebook requires, said Doug Stotland, Facebook product marketing director. “IKEA recently ran a campaign in a local radius, they wanted to see who showed up in their parking lot,” Stotland said. “It’s really compelling when you look at the methodology — you want to see if people actually showed up at the store. The home run is how to tie it to what they actually buy.”
Stotland said Facebook uses location information for targeting, but basically users tell the company where they live and that’s it. “We can do better than that — there is definitely a big opportunity there. The great thing about Facebook is that I am always logged in — there is no value for targeting if I am not.”
In a case study session at Place, Korean telecom provider SK Telecom has been making inroads in indoor positioning markets for several years, said John Kim, SK Telecom senior business development manager. “While we are the number one mobile operator in Korea, like other companies, we were hitting saturation levels,” Kim said. “We found that location-based services for telecos are a key service, basing this on earlier tracking, navigation and security markets.”
SK Telecom ran indoor positioning tests at Seoul National University Hospital, which has 1,360 beds, making it hard to find patients. Kim said younger indoor positioning users liked the service and found it easy to use. “We also found that it was difficult for active marketing — what does a hospital use to promote it? Two-for-one x-rays?” Kim said. “The service was also difficult for remote maintenance and support.
Kim said that SK Telecom is installing the product as a test in a Seoul sports stadium and at the L’Oreal Madrid flagship store. “We are also partnering with [Herndon, Va.-based] APX to work in their Google Glass product to provide location information.”
Overall, the upside of indoor location is huge, said Don Dodge, Google developer advocate. “Imagine if you can look at phone to know exactly what stores your family members are in at the mall. At CES, you have no idea where 15 to 20 of your friends are,” he said. “If my wife gives me a list of groceries, I can find them in certain areas and know what price they are. First responders, fire departments, can find their way around in a burning building — and find a safe way out.”
Privacy: The Attack on Opt-In
In a privacy panel, members put a dark cloud over the ubiquitous answer by many companies that consumer opt-in alleviates all concerns for the location industry.
Amanda Koulousias, a Federal Trade Commission attorney, said Section Five of the FTC Act, which has been expanded to cover tracking users over a certain time, prohibits deceptive practices that are likely to mislead people acting reasonably.
Privacy seems to be a hot topic for reporters. Kate Kaye, a panel member who is a reporter with Advertising Age, said that security issues around beacons and leakages is a story. She also said that the Associated Press recently ran a story critical of the new Verizon rewards program. “The story typifies the balance a lot of marketers are trying to straddle — how much information can we gather, and how do we not [anger] consumers. Verizon Wireless prompts you to join their loyalty rewards program, but you have to opt-in to their location data program,” she said.
Privacy panel moderator Jules Polonetsky, Future of Privacy Forum executive director, said a way some companies get consumers to opt in to being tracked is just to say “download this app.”
The location industry’s privacy issues are not going away — and the path for resolution isn’t clear, said Greg Turetsky, principal engineer in Intel’s wireless communications group. “The privacy issue is so complex legally, economically and socially, that I expect it will not be resolved any time soon,” he said.
In other Place conference news:
- Opus Research, the organizer of the conference, published a report on magnetic positioning, which has a unique footprint. The company contends that magnetic positioning, which can be complimented by other technologies, offers six-foot accuracy with 90 percent precision. In comparison, Bluetooth offers proximity, but not the blue dot solution magnetic positioning currently has. In addition, Opus believes that Wi-Fi positioning, which has 40-foot accuracy, needs too much support and is expensive.