The big news at the recent O’Reilly Where 2.0 and GPS-Wireless conferences, both located in the San Francisco Bay Area, may be continued industry fallout from Google’s decision to start charging higher volume users. Location-based services may have jumped the shark, as one Nokia executive said at GPS-Wireless, but such deals as Foursquare’s partnership with American Express can only help grow consumer awareness and drive mobile purchases. Indoor positioning and connected vehicles continued to be a hot topic at both Where 2.0 and GPS-Wireless. Yet, at least one executive at GPS-Wireless said that “the year of LBS has come and gone — and nobody noticed it.”
SAN FRANCISCO — A few companies in the location industry have decided to change mapping vendors in the wake of Google’s decision to start charging companies when their sites averaged 25,000 map views per day. Around the time of the recent 2012 Mobile World Congress, Foursquare said it would move from using Google Maps to user-contributed map service OpenStreetMap. The company said Google’s recent price increases prompted the change.
Foursquare did not change mapping vendors because of the quality of the maps, said Holger Luedorf, Foursquare vice president and head of business development. “Google Maps are a great product. We are big fans of openness, but it was not the lack of quality why we switched,” he said at GPS-Wireless 2012.
But while some companies are heading to other places because of the Google charging policy, the company says it is still doing well. “We did announce that Google was going to start charging for 25,000 or more [map hits]. In terms of usage, we have actually gone up since the announcement,” said Jay Akkad, Google product manager, mobile local ads, also at GPS-Wireless conference.
One of the big topics at GPS-Wireless is the idea that the term location-based services has “jumped the shark” in terms of consumer awareness and acceptance. “What the hell is LBS? It is an enabling technology,” said Duncan McCall, PlaceIQ co-founder and CEO. “The mythical Starbucks LBS deal does not make me care. We now have advertisers who have a particular [return on investment] they are looking for.”
At least one speaker, on a venture capital panel, said that the expression “LBS” hasn’t been useful in defining the market in at least eight years. “The huge opportunity is not location — there are tons of 100K-a-year-guys staying at the Red Roof Inn and not the Four Seasons. The huge opportunity is how people shape their habits — and location is one way,” said Prioleau Advisors’ Marc Prioleau. “Banner ads push to consumers, but the objective is loyalty. It’s the ‘we know where you are and where you go’ model.”
In all of the talk about LBS, the usual “who pays for it” was a hot topic at GPS-Wireless. “With 150,000 ads on a platform, [the consumer] doesn’t have to pay for it,” Luedorf said.
For the navigation piece of LBS, it still is the one area consumers know about and want, panel members said.
“Navigation still is hot. More than half of our users choose to use carrier-branded navigation,” said Brian Salisbury, TCS director of business development. “Consumers will start marginalizing a [paid for] service when it stops producing for them. The value for the consumer is if it is bundled with other services—sometimes that bundle is subsidized.”
People still are paying for navigation, despite attendees saying that a freemium model is the future, said Kris Kolodziej, Verizon Wireless associate director of cloud and location services. “Consumers are always going to find options. Maybe they will be looking at premium traffic [in the future],” he said.
Groupon, which presented at GPS-Wireless, announced at the recent 2012 Mobile World Congress in Barcelona that one quarter of its users purchased vouchers through a mobile service, a triple increase to more than 9 million deals. The company also said that LBS and proximity-based sales will increase because it plans to roll out mobile service in more than 30 countries soon. Currently, the company has its daily-deal service, online, in 48 countries.
“The core foundation of our company is the daily deal. Groupon Now goes into the core of location — where we are expanding into 30 markets — so location doesn’t get more specific,” said Andreas Lieber, Groupon director of mobile partnerships. “We recently released our mobile numbers and are seeing 25 percent growth — this is a really significant revenue stream.”
Mobile searches and deals will continue to grow, Google’s Akkad said. “Mobile searches have grown four times since 2010, according to our user surveys. This is a huge opportunity for developers,” he said. “One area we have noticed is the ability to close the loop in the location business. Businesses have to identify who is coming into their stores — that’s why hyper local ads are important — because of the proximity signal that tends to be a strong signal.”
The big location market still is evolving, but Foursquare’s deal last summer with American Express doesn’t hurt consumer awareness. “The deal with American Express drives users to Foursquare. No one knows how it is going to play out, but we are seeing an uplift as people are spending money,” Luedorf said. “[Location is] not monetizing heavily right now — companies need scale. But it actually is selling. We believe it’s through an ad model we can build, but not a premium service. Facebook and Twitter are trying to monetize — we will see.”
While the deal with American Express is a nationwide one where cardholders check in with Foursquare on their mobile devices at certain shops and restaurants for deals, check-ins may not be the emphasis the company wants in the future. “We are seeing more people consuming the data — not just checking in. They want to see what’s local in terms of tips for eating out and drinking and other entertainment,” Luedorf said.
Overhyped Expressions in the Location Industry
One of this editor’s pet peeves is the use of the word “experience” as in “consumer experience” when a company official describes a market, product or service. In a new technology and markets panel, moderator Clay Babcock of Rand McNally asked his panel what is an overhyped expression in the location industry. Kanwar Chadha of CSR said, “GNSS triangulation, TV or otherwise.”
Nick Brachet, CTO of Skyhook Wireless said, “near field communications.” Babcock chimed in with “augmented reality,” the expression “gadget play.” David Allen, CTO of Locaid said “anything to do with beacons.” Ankit Agarwal, Micello CEO, “any Starbucks story, especially something about a coupon.” One person said, in a conference filled with this story line, “indoor positioning is overhyped.”
At Where 2.0, the expression “SoLoMoCo” is destined to be one of those types of overhyped monikers. SoLoMoCo stands for a busy mix of social, local, mobile and commerce.