"O location based mobile advertising, where art thou?"
As the mobile mavens huddle in Madrid this week discussing the limitless possibilities of a Christmas yet to be, I ask a simple question: O location based mobile advertising, where art thou?
Industry pundits for years have been extolling the virtues of the always on, location aware marketing paradigm that smartphones represent. Yet, something curious happened on the road to marketing nirvana. What is it, you ask? Well, nothing. Mobile comprises a scant 1% of total ad spending today.
How is it that 3+ years into this paradigm shift we still don’t have effective, sustainable models for location based mobile advertising?
Before I get into my hypothesis as to why it hasn’t happened yet, let’s restate the case for location based mobile advertising. All mobile devices are location aware. Most people carry their devices with them at all times (even to bed). The penetration rate (no pun intended) for smartphones is proceeding as projected and in fact, might be a little ahead of schedule. The requisite ad networks with the requisite ad serving technology have been formed/built and for the most part acquired by the appropriate industry leaders. Agencies have been educated on the efficacy and the relevant metrics. Media clutter is getting worse. Ditto for media fragmentations. This would lead you to believe that a more effective solution would begin to exert itself. I can go on but I think we can all agree that at least in theory, sunny days await us.
So again, O location based mobile advertising, where art thou?
Here’s my guess to why it hasn’t happened…yet.
First, there’s the inevitable transition period that takes way longer than one would think. The reason for this is baked into the human DNA. We resist change even when there is clearly a better alternative waiting in the wings.
Second, the financial crisis hit about the same time the mobile advertising revolution started to take hold. In times of crisis, experimental budgets are the first to get whacked. Mobile was/is no different this time around.
Third, and I believe this is a crucial one, people aren’t quite ready for this new extreme level of targeting. The younger, hipper generation may accept creepy as the new cool but us older folks (Gen X and beyond) are still living under the illusion that we keep some modicum of privacy. So what do we get? A bifurcated testing environment. On one hand, there are the failed check-in advertising campaigns that failed because too few people actually use the underlying service; and on the other hand, there are generally targeted mobile campaigns that are largely ignored because the ads lack context and relevance.
Is 2011 the year mobile breaks through? Beats me. All of these issues will eventually resolve themselves but “eventually” can be a very long time.
Games vs. Gamefication
There’s been a lot of talk lately about “gamefication” which, for those of you who don’t click reload every 10 seconds on techcrunch.com, means integrating game elements into your __FILL IN THE BLANK_ (web site, mobile app, electric toothbrush, dishwasher, assembly line position, etc…) to increase the end-user’s enjoyment of the product or service. Gamefication is far different than playing an actual game. The former is a reward structure bolted on to a task or utility while the latter is a standalone experience designed to entertain.
So I guess the question is, does gamefication work or is this just another faddish rabbit hole beckoning the wary app developer? A false prophet of profits if you will…
Having spent the better part of ten years studying loyalty programs, in my opinion most of these gamefication strategies are nothing more than gimmicks that ultimately collapse under their own weight as soon as the novelty wears off.
What evidence do I have to support this hypothesis? Well, at a very high level you can see it in the participation numbers. Take, for example, Foursquare, a location based check-in service and the darling of the social media technorati. Launched some 22 months ago, the application has been downloaded more 6 Million times. Impressive but it pales in comparison to Angry Birds, a simple, mobile casual game. Angry Birds has been downloaded over 60 Million times in 12 months and generates 200 Million+ player from 36 Million handsets every day. Clearly, the people have spoken and they prefer games.
Additionally, gamefication fails because at some juncture the game elements become boring. Sorry to pick on Foursquare again but earning mayorships and badges may seem cool at first but quickly morph into something far less interesting, dare I say silly. It gets even worse when lots of sites start gamefiying…it’s standardizes the experience so you don’t even get the novelty lift. I guess that’s why Foursquare et al are evolving to become location-based recommendation or serendipity engines.
Well, what about loyalty points or cash back programs? Hmmnnn…No. Most businesses don’t have the cost structure that allows for adequate, meaningful incentive programs that can truly shape consumer behavior. Moreover, even the successful programs like a casino player loyalty club, quickly turns into a perceived entitlement program.
I’m not saying that “gamefication” is a horrible idea. If you want to give it a go, have at it. I just don’t think it’s a magic bullet that will drive user engagement. Please set your expectations accordingly.
"Checking in sucks…There. I said it."
The “look at me I’m here” trend officially jumped the shark on Tuesday when Google began letting smartphone users check into locations. Not that the nascent industry had much momentum to begin with, it was apropos that the King of Un-Social marked its inevitable downfall.
Some of you may deem my remarks as overly harsh, but seriously, the idea of actively checking-in is silly, usually pointless and soon to be technically irrelevant. Social Darwinism being what it is says that trends can’t go on forever therefore, they won’t. RIP.
Whew…I’m glad I got that off my chest.
The problem as I see it is that the current slate of offerings sits somewhere between no man’s land and total irrelevance. Take the perceived 800 pound gorilla in the space, Foursquare, and look at what it offers. First, if you check-in enough at one establishment you get to be its Mayor. Cute, but over time what’s the point? Moreover, if you don’t reside in a heavily populated area and you’re eager enough and willing to put the time in, you can be the Mayor of every place in your ‘hood. Again, what’s the point?
OK. Mayorships are out. What about discounts? Hmmm…not that compelling. Retail has margins and it’s unlikely that any one retailer can incent you enough, often enough to make it worth your while. Additionally, from a retailer’s perspective, why would you discount a customer who is standing in your store? Seems to me, the customer is going to buy anyway. Why take a haircut on the transaction?
So discounting is out, how about rewards? Not likely. Again, margins play a role here. How long does it take for someone to realize they just took a picture of themselves balancing a spoon on their nose to earn a half a penny? Are they going to feel good about it? Doubtful.
So what can be done? Well lots. This is a whole new industry with massive potential. Location based check-in services have to break one of two ways. One solution is to make their service more useful. Contextually relevant tips and recommendations would be great. Tricky to pull off, but if done correctly, people would quickly find the service indispensable, especially for those who travel frequently for work. The other way to crack this nut is to make the service far more entertaining. Storytelling and games come to mind, but I’m sure there are other ways to skin this.
As far as manually checking in, well I suspect that is going the way of the dodo bird. The app and the phone will do that for you. Obviously, there are privacy concerns here and those will get figured out over time, but the point is that technology is going to make life easier and more interesting. And that’s the way it should be.
The King is dead. Long live the King.
Is Creepy the New Cool?
On the surface, location based check-in services seem like a cool idea. Disclose where you are on Foursquare, Gowalla et al and get discounts, badges, points etc… for doing so. Better yet, your friends and family members also get to see where you are and what you’re up to and they too can join in on the fun…What’s not to like? The downside of course is with each check-in you are slowly losing what’s left of your privacy and bit-by-bit you are making your life more and more transparent.
For me, I hate the idea of being tracked online but I’ve come to accept it. The benefits of being tracked have outweighed the negatives (so far). Ask anyone who uses Amazon or a mapping program and I’m willing to bet you’ll get a similar response.
Generation Y has clearly been the biggest users of check-in services so far (males use them more than females but that gap has been closing recently). I started wondering why that is. Is Gen Y just more savvy than the rest of us or is there something else going on with the Gen Y’ers? Are they more willing to give away personal info than other generations and if they are, why?
At first I thought it was strictly a generational thing based on expression. Similar to the way tattoos (which during my formative years were relegated to veterans, convicts and porn stars) emerged as an acceptable form of personal expression. But now I think it is something more fundamental; even elemental. Perhaps Gen Y, having only seen the world through a digital lens, has come to accept the fact that we are all being tracked by one system or another at all times so why fight it? Rather than resisting tracking technology, they are embracing it for what it is because it’s not going away, it’s pretty cool and it can better their lives. I believe they have come to the practical conclusion faster than the rest of us.
Will this attitude persist? Will a privacy incident shake the foundations of this belief structure? Will more and more of today’s society join the fun? Is checking-in fun? Are we at the end of the beginning or the beginning of the end of tracking technology?
So, is creepy the new cool? Beats me but it will be interesting to see how this plays out.
PS – You’re being tracked on this blog! J
That’s right, folks, you heard it here first. The meblurites are on the move. Kendall Square is the destination.
CIC (aka, The Cambridge Innovation Center) was kind enough to take us in (for a small fee) and give us a wonderful place to work and be social.
If you’re ever in the ‘hood, give us a shout. We’d love to hear from you.