Apple launched its microtargeting technology iBeacon into its US stores last week, while a raft of brands are experimenting with tracking techniques that could change the way people shop.
The term iBeacon will not mean much to the average shopper but for brands it is a cause for excitement, especially in the run-up to Christmas. Last Friday (6 December) Apple launched the micro-location smartphone targeting system into its 254 US stores, holding the promise of engaging consumers like never before.
IBeacons will enable retailers to target people within a closer location range than is possible with technologies such as GPS, so when a person is close to or in a store, the system can alert the retailer to their presence in order to target them accordingly. While it is hard to quantify the influence of this kind of targeting, UK retail sales via mobile devices reached £7.5bn last year according to IMRG statistics, and Forrester says there is a massive opportunity for growth.
Several retailers and agencies are testing the technology for their own stores, as Marketing Week reported last month (mwlinks.co.uk/ iBeacon). It is hoped that iBeacons will help combat the ‘showrooming trend’ where shoppers view goods in-store but purchase them from another supplier online.
Meanwhile, other companies are making the most of this trend. Weve, the joint venture set up by EE, O2 and Vodafone, is already seeing a three- to four-fold increase in spend for the last quarter of this year from brands using its mobile targeting service to reach consumers, compared with the beginning of the year.
“We’re getting big campaigns booked from clients which in the first half of this year were just dipping their toes in the water with smaller budgets,” says Weve commercial director Nigel Clarkson. “Because we have delivered good click-through rates and response rates, some of those brands are now spending three or four times as much because they’re confident with what we are delivering.”
Retailers could potentially use iBeacons to send content to shoppers’ phones that will guide them through the retail setting and alert them to promotions within 30 yards of their location. The tech works on all Bluetooth 4.0 enabled phones, including iPhones and Android devices, and the beacons can be transmitted from devices running iOS 7.
However, the true value of iBeacons is far from clear. The technology launched on a limited basis in two Macy’s stores in the US last month ahead of a roll-out to other retailers. In the UK, a number of retailers are working with WPP agencies such as Joule, Kinetic and Mindshare with a view to launching iBeacons in their stores next year, though they are tight-lipped on the details.
The iBeacon trials are timely given that retailers are working hard to attract shoppers during the busy festive season. Although Apple’s new technology is at an early stage of development in the UK, there are plenty of other location tools at their disposable, many of which are growing in sophistication. These target consumers using different technologies including GPS, Wi-Fi signals and 3G or 4G mobile networks.
Last month, for example, Tesco ran a mobile campaign in which it sent messages to people within the vicinity of its stores to remind them to order their turkey early for Christmas. The supermarket chain works with Weve to run geo- targeted campaigns.
The data and insight you get when a customer pays on a mobile device is much greater than when they walk into a store and you don’t know anything about them
Weve has a database of more than 20 million mobile users across its three shareholder networks who have opted to receive targeted marketing communications via SMS or MMS. Its location services include creating ‘geo-fences’ in which it triangulates a particular location within the mobile network and sends marketing communications to opted-in users who enter that location.
Weve overlays this with demographic data, browsing data and customer preference data to further refine the targeting behind its communications (see Decca Records case study). For another Tesco campaign earlier this year, Weve sent a £5 discount offer to women aged 25 to 54 living in a Tesco catchment area. Nearly 40,000 women clicked on the message to redeem the coupon in one day.
Tesco mobile marketing manager Mark Cody says that geo-targeting allows marketers to react quickly and with a high degree of flexibility to alert consumers to different promotions. In addition to offering mobile coupons to passers- by, Tesco has worked with Weve to inform people about new store openings within a specific radius.
“With TV and more traditional marketing channels, the lead times are very long,” he says. “The point with mobile is that if you’re smart with how you do it, you can turn it on and off when you want to. Given the size of Weve’s data set and the fact that people have opted in, we know that the quality of the communication is going to be high.”
Weve is also keen to put this view across, claiming that it provides “the gold standard” for the mobile marketing industry thanks to the sheer amount of data it holds across its three shareholder networks. The company, which plans to launch a display advertising proposition early next year, reports that around half of its campaigns now have a location element.
Having relevant messages that are aimed at the right audience is clearly an important determinant of success in location-based campaigns. This is reflected in the attitude of Joule, one of the mobile agencies working on the iBeacons trials in the UK, which warns that brands must tread carefully when targeting consumers according to their location.
Joule chief executive Daniel Rosen says that because of its simplicity and accuracy, iBeacons has the potential to bring location-based services to a mass market in a way that near field communication (NFC) technology has so far failed to do. By working through apps, retailers and restaurants could easily use iBeacons to target people as they pass by or enter stores.
However, he warns that brands must seek to offer consumers valuable content, rather than simply bombarding them with offers in different areas of a store. This could involve using the personal information that brands hold about users in their apps to determine which messages they should receive in which locations.
“We are at a crossroads where if this type of technology is abused or is too sales specific, it will turn consumers off,” he says. “With the trials we are looking at what people will respond to – for example, when people are queueing to pay, there could be a digital check-out facility for them.”
A recent study claims that people feel spooked by the idea of being targeted based on their location. The IT Risk/Reward Barometer shows that while 69 per cent of UK consumers would be happy to receive a coupon on their mobile phone, 47 per cent would be unhappy if a shop assistant whom they did not know greeted them by name.
Rosen notes that Apple is likely to keep a close check on how brands use iBeacons to prevent abuses. Apple is trialling iBeacons in the US through Shopkick, a location-based app that works with US retailers to provide mobile users with rewards and offers when they walk into a store. The integration with iBeacons simply means that these offers can be targeted with more accuracy to specific parts of the store.
Apple is also working with Major League Baseball to demonstrate the value of iBeacons within event venues. The two sides have developed an upgraded version of the league’s At the Ballpark app that displays welcome messages, exclusive content, maps and coupons according to fans’ locations within a particular stadium and the positioning of the beacons. Previously the app could not target messages with the same level of precision.
“Wi-Fi and GPS give an enormous amount of ubiquity but not a high level of precision,” says Forrester Research analyst Tony Costa. “You can register the fact that somebody is in a store or venue but you can’t tell where they are accurately. IBeacons provides high precision so you can see that a person is standing next to a specific display or is in a specific area.”
Research by the Internet Advertising Bureau (IAB) confirms that most consumers understand the benefits of location-based targeting but that relevance is a key concern. Around 60 per cent of people were either happy or indifferent about receiving location-based ads, according to the survey of more than 2,000 UK smartphone users.
When asked why they liked them the top answer was to ‘receive relevant discounts and offers’. The study shows that people are twice as likely to find irrelevant mobile ads annoying compared to relevant ads. IAB director of mobile Jon Mew says: “People like location ads not only for the benefits but also because it makes advertising more relevant.”
Mobile advertising technology company BlisMedia claims it achieved a 23 per cent uplift on the industry average click- through rate (CTR) for mobile banners by running a highly targeted location-based campaign for a new protein drink brand. Blis works with Wi-Fi providers, mobile sites and apps to gather location and demographic data and deliver targeted ads via its Infinity+ real-time bidding platform.
The campaign, which ran in October, supported the launch of Upbeat protein drinks in Tesco and Waitrose stores outside of London. Potential customers were targeted via their location within a 500 metre radius around Upbeat stockists. The campaign, run in partnership with media planner the7stars, also targeted locations where health conscious people usually dwell, such as gyms, health food stores, juice shops and sports arenas.
According to Blis, some locations saw a 63 per cent uplift on the average CTR for mobile ads.
In addition to targeted ads and messages, location is being used to provide new payment services (see PayPal case study) and consumer insights. Mobile network EE, for example, recently entered into a partnership with outdoor advertising agency Posterscope to identify ‘hotspots’ of mobile usage near poster sites.
By analysing its network data the company has built a picture of which geographic areas have higher mobile internet usage in certain categories of behaviour such as commerce, film or music. These insights are then used to target outdoor advertising campaigns more effectively.
“Location-based analytics is certainly an emerging area of analytics that is becoming increasingly important as we develop powerful applications for brands and advertising agencies,” says Chris Gobby, head of mData at EE.
Digital outdoor screens also present opportunities for advertisers to adjust their campaigns in real-time according to location. Property search website Zoopla, for example, is running a location-based campaign that utilises external LED advertising screens on the roofs of some London black taxis.
Knowing that a person is near one of our stores when we send the message increases the likelihood of them acting on it
Geo-targeting technology changes the data displayed on the screen, including the number of properties to rent or buy in a particular area, according to the postcode location as the taxi cabs move around London. Zoopla predicts the campaign will deliver over 3 million separate ad plays in the run-up to Christmas.
“This is more of a branding and innovation exercise initially,” explains Charlotte Harper, marketing director at Zoopla. “But we are getting feedback from consumers that this is a unique campaign and we are proud to be the first property site to have tested geo-targeted data delivery.”
While location-based campaigns remain experimental, they are also helping brands to reach out to consumers in new ways. Tesco’s Cody believes that geo-targeting is an effective way of stimulating customer activity and expects retailers will continue to explore new ways of using location as a marketing tool, particularly as people become more accustomed to the practice.
“One of the challenges with digital in general is reaching people at the right place and at the right time,” he says. “Knowing that a person is near one of our stores when we send the message increases the likelihood of them acting on it and means that we can be more relevant to customers.”
Location campaigns in the news
Starbucks has signed up to a UK pilot scheme run by location-based social network Foursquare. The pilot enables the coffee shop chain to target people near its outlets by using geo-location technology within the Foursquare app.
Ads are served to people based on both their location and their earlier check-in behaviour in the app. Foursquare charges brands only when users have clicked through on an ad or checked in to an advertised venue within 72 hours of being served with the ad.
Fast food chain Subway plans to introduce an opt-in service to its app early next year so that users can receive geo-targeted messages and in-app notifications about its latest offers and campaigns.
The feature is part of a series of recent upgrades to the chain’s mobile loyalty app that aims to increase customer frequency and promote lesser-known food products such as its breakfast range. Subway is currently running tests with the revamped amp, including measuring the frequency of messages that diners feel comfortable with.
On-demand streaming service Netflix recently ran a location-based outdoor advertising campaign targeting students across the UK.
Working with outdoor agency Grand Visual, the campaign encouraged students to interact by posing regular questions about different film genres and popular TV series. Students were asked to reply using university-specific Twitter hashtags and the localised responses were shown on digital screens across 36 universities.