Location-based mobile applications, also now being called “check-in services” to differentiate themselves from other geo-aware apps like Google Maps, are the hottest new social applications on the mobile scene today. The lineup includes game-based applications like Foursquare and MyTown, which each provide points, credits and/or badges for “checking in” (registering your physical presence) with a particular venue. There are also dedicated shopping-related check-in services like Shopkick, which rewards retail customers with discounts and deals for patronizing select establishments.
But almost all of the check-in apps integrate some form of mobile advertising. After months of experimentation with various formats, marketers are starting to discover what strategies actually work.
Despite the media craze for apps like these, some analysts are rationally advising caution to marketers who are tempted to jump on this latest bandwagon – after all, only 4% of U.S. adults have ever used location-based check-in services and only 1% out of those that use them do so more than once per week. But businesses, hopeful of reaching their most engaged customers, see check-in apps as a big opportunity for marketing initiatives, not to mention a rich resource of consumer data ripe for mining.
Case in point: analyst firm ABI Research has just released a new study that finds businesses are primed to spend $1.8 billion on location-based ads in 2015, a somewhat surprising number given the small crowd of early adopters currently using check-in apps.
According to ABI Research’s Neil Strother, check-in apps may raise privacy concerns among some users today, but those issues can be overcome by offering consumers deals, discounts and rewards. The “value-exchange” of receiving these rewards will be high enough that consumers won’t mind giving up privacy in order to take advantage of the benefits. “If you care about getting discounts or being rewarded for shopping,” he explains, “you’ll accept having your whereabouts known.”
So What Sort of Benefits Actually Work?
Marketing news site Clickz has uncovered strategies that have, so far, proved successful for location-based advertising, both on mobile and elsewhere.
On mobile platforms, they agree with ABI, the clear winner is the reward system.
Specifically, they find that activity-based advertising, which rewards consumers for taking specific actions, has done well. Although Clickz cites examples that have been proven successful on the iPhone, they could easily be successful on other platforms as well, we think, there just haven’t been as many mobile applications with which to test this strategy.
Clickz specifically cited two examples of reward-based systems, the first being TV network Bravo’s Foursquare promotion which awarded badges to Foursquare users who checked in to venues associated with the network’s shows. The other example was wireless charging company Powermat’s MyTown promotion involving a sweepstakes. Users could enter to win a Powermat by interacting with the product in the store.
ABI’s research report analyzes even more cases studies including clothing company H&M’s virtual goods in MyTown, Chili’s Foursquare promotion, Sharpie’s badges on Brightkite and more.
We’ve reported on several other such initiatives ourselves, including Shopkick’s incentive program, SCVNGR’s partnership with shoe company Journeys, NYC-based hyperlocal location/group-buying startup, GroupTabs, travel rewards for frequent travelers from TopGuest, white-labeled geofenced text messasaging service ShopAlerts and many, many others.
Now that app makers and marketers know rewards are the key to success, it’s a great time for companies and advertisers alike to experiment with various reward systems, promotions and deals to figure out what types of incentives actually work.
