Proximity Based Marketing and LBS is a Growth Opportunity

I’ve mentioned in previous blogs that traditional forms of Advertising are shrinking. There are many statistics backing this up. There are many statistics backing this up and in Asia Pacific, Carat, for example have forecast a 5.8% decline in ad spend for this year. Obviously the economy is a factor in this result, but it also signals a change in advertising behaviour as people are paying less attention to traditional forms of advertising. Many people now have products such as MySky and Tivo is almost here. These products make it very simple for people to avoid watching TVC’s because the can fast forward their recorded TV programmes. TVNZ announced that they were laying off 90 people as a consequence of a $25 million reduction in advertising revenue. The same applies with radio where many people are now opting for their iPods to listen to their favourite music instead of tuning in and being forced to listen to radio ads.

In my opinion, this doesn’t mean that people want to avoid advertising, specials and promotions altogether. They want them to be more relevant. ZenithOptimedia have forecast far greater drops in Ad expenditure, 11% drop in magazines, 10% in radio, 5.5 in TV, but around a 10% increase in Internet Advertising. So traditional forms of advertising decline, but Internet advertising is on the rise.

Why would that be? People are using the Internet far more these days, which takes them away from traditional media, but the key element to me is relevance. In the World Wide Web, it is far easier to ensure that advertising is relevant to the search or type of site that people are visiting. It also offers a great opportunity for call to action with Click Through, which is of course where Google makes the bulk of its income.

The ability to have people opt in to various services that are relevant to their interests and needs, their current time and place means that the offers will be welcomed and will have a far greater sales conversion rate than with traditional means of advertising and promotion. This is where the opportunity arises with Location Based Services (LBS) and Proximity Based Marketing.

The issue isn’t that people hate ads, specials, good deals and information. The relevance needs to be around space and time. I would welcome a Speight’s Mates Happy Hour electronic coupon, when I am walking past a bar, with a 2 for 1 offer on a Friday evening after work. But I probably wouldn’t even see a printed coupon in a magazine.

I’m sure tourists would take advantage of a special offer to a half price jet boat ride when they are on holiday in Queenstown, when they are within a kilometre of the boat on a sunny morning, than if they read an ad in the plane on their way to New Zealand. The tour operator gets a full boat and all the passengers have more fun. It’s timely, its based on their immediate location and its relevant to their current situation.

Many people think that the technology isn’t ready, but according to a story in ITWire, compound growth of GPS in mobile phones is over 49% and one of the major drivers in the proliferation of SmartPhones. According to Mobile Marketing Magazine, despite the economy, the penetration of SmartPhones grew by 33% to February this year. The traditional definition of a SmartPhone comes from Operating Systems such as Palm, Symbian and Windows Mobile, but if you look around today, many of the mobile apps in those phones such as Contacts, Diary, Email, Still and Video Camera are now standard in pretty much every phone and with the low cost of GPS, that is now being added at great speed.

With Software Development Kits being made freely available for the popular brands and models of phone, this is a perfect opportunity to become familiar with the web services and API’s available from GeoSmart and outlined in previous blogs. All you need is a good idea and a little market research. Of course GeoSmart can offer you a Developer Agreement which gives you free access to any tools you need during the development process.

You can find more information on the Developer Page at www.geosmart.co.nz or email info@geosmart.co.nz

What does LBS have to do with advertising media?

The world of information technology and communications (ITC) is changing at a rapid pace and some of the changes have been subtle and unexpected. Some things take a long time for people to get their heads around, but sometimes they just start doing things and take them for granted. Social networking is a classic example that businesses are now trying to understand how they can get involved.

Technology is changing the way we live, the way we interact with each other and the way we interact with the businesses and services we enjoy.

Last week there was a news story, saying that TVNZ is planning to lay off 90 staff, as it moves to save $25 million. In it,  Chief Executive Rick Ellis was quted as saying that the layoffs represent approximately 25% of the costs reductions needed due to falling advertising revenue. I don’t recall who it was but someone recently was telling me that they never watch TV advertising but one evening he and his wife decided that the would watch the TVC’s. The next morning he asked his wife what brands were represented in the TVC’s they watched the previous night, she couldn’t name one.

People can avoid TV commercials by recording their programs with MySky and now of course Tivo has also launched in New Zealand. I don’t know if it works in New Zealand, but in the US I believe that you can program your Tivo to not even record advertisements at all as there is an encoded message that tells it when advertising starts and ends.

Around the world there are newspapers closing down, going out of business because not enough people are buyig them any more, which means they can’t sell enough advertising to keep them going and people are choosing other media such as the Internet to find their news.

Huge numbers of people are favouring their iPods and other MP3 players instead of listening to the radio. People are buying less music CD’s because they have access to other media such as iTunes, YouTube and MySpace to mention a few legal ways they can access their entertainment.

Then of course there is mobile and virtually everyone has a mobile phone and sometimes two.  The days that your phone was only for voice and SMS are long gone. Today on our mobiles we can check email, take photos and post them onto websites such as Facebook, read or watch the news, Instant Message, check our social networking applications and more.

Then there is the location component. A couple of weeks ago I was able to show my location using Google Lattitude on my mobile to my friends. I was able to monitor my pace and calorie burn on Allsport GPS and post photos that I took on my phone straight to my Facebook page while I was running.

So back to the original topic, what does all that have to do with advertising media. Simple really. If your phone knows where you are and you opt in to services that tell you about things you want to know about, relative to where you are and when you are there, you can be offered all sorts of relevant goods and services that you will want to know about and take advantage of.

This afternoon I was talking to a partner about their participation in a 100km bike race. The bike race would have been sponsored by industry leaders including bike manufacturers, sports drink and supplement brands and other partners. The event and the activity in general takes place on the road, so is very location oriented. If you register for the event, a brand would be very keen to make offers to you. Because you are in the event, they can market very specifically and know that their likely response rate is going to be very high. A LBS application could involve maps and directions, but also relevant Points of Interest. Prior to and after the event they could include where to buy a new bike or bike accessories, or where to get a pre-race service or gear check.

It could include where to stay, where to get healthy food, where to train, where to buy your drinks and supplements, a message as you come near a cycle clothing shop of promotional deals, with an electronic coupon displayed on your mobile phone. It could show you where you can get refreshments on the way or even where to find a public toilet. It can show you where the start points are and a route for the supporters to be able to go from point to point without running into the cyclists. It could help companies or supporters get to a cyclist who has gear damage. Prior to or after the event it could even provide a social network to help you find training partners in different parts of the country, for example if you are away on a business trip and have your bike with you. Sponsorship, brand association can be tied to actual sales promotions, which are triggered by people who have opted in to a service who are close to the store or place where a service is available.

These sorts of service would be opt-in, which means that people sign up to a service and specify when and under what conditions they may be contacted on their mobile. Because the service offers benefits to the user and the user is specifically interested in the sport and active at the time, there is a far greater likely response rate than traditional scattergun media advertising which is traditonally very costly.

GeoSmart of course is able to display maps, provide turn by turn driving directions from anywhere to anywhere in New Zealand. It has a Points of Interest Web Service which can help geocode and display relevant locations like shops, cafes, public toilets etc and the Proximity Tool can assist in identifying relationships between POI which could for example be an alert when a cycle rider is within a kilometer of a bike shop using GPS or other tools to identify the location of the cyclist. This could be combined with a social network, registration for an event, an interest group or perhaps an exclusive service for an event, or the customers of a particular brand, for example you can use this service for free, but only after purchasing an Avanti bike.

If you are interested in concepts like this, please subscribe to this blog, and feel free to leave comments or questions. if you want to talk to someone about any of these ideas, please email info@geosmart.co.nz.

Location Based Services and Agencies

Now that the Awards are over, at least for a few months,  I’m hoping to have a little more time for blogging.

I have been talking to a number of agencies over the last 3-4 years about LBS. I don’t know whether it was me or that the bright lights in this agency space seem to all go offshore, often within the same company before we get to do anything together. Companies like The Hyperfactory have been doing some cool things on the edge of LBS, but it seems that all their cool stories these days are also overseas. It was great to see them enter the awards this year, though and they have a Finalist Award to add to their trophy room which must be bursting at the seams.

The types of LBS applications are very wide and we could have had many more categories in the awards. The thing is that location is simply what it sounds like. It is about where you are and what you are doing wherever you are. It could be about having a pizza delivered to you on the beach, or about catching the bus to Get Somewhere. It could be about going on a treasure hunt or finding a bar or cafe nearby afterwards. Location is ubiquitous, just as your mobile phone is. You are always somewhere. If your phone knows where you are, then it can help you find things, places and people. It can help you be entertained, help you with your sport or hobby, provide you with localised information, the list is infinite.

So back to Agencies. LBS adds another vehicle to incorporate into Marketing and Advertising Campaigns. It gives them the opportunity to come up with fun and compelling ways for brands to interact with consumers and other customers at the time and place that has the most relevance. Traditional forms of advertising are very often scattergun and rely on high levels of repetition to realise a call to action. Traditional Direct Marketing (DM) considers 5-7% response to be a good result. In my book that says that over 90% of the DM spend is wasted. Why is that? Because most people are not open to buy or looking for their products at the time they are ‘exposed’ to the promotion. In addition to that, most people are smart enough to look for what they want, when they want it. They will then either check out their favourite stores or use Google to find the products they want.

The other huge resource that people use is Word of Mouth Marketing, which these days means talking to people close to them, or just as likely today, to use Social Networking sites to ask the opinion of their ‘friends’.

So what can agencies do? They can come up with campaigns or solutions that are relevant to people’s interests at the time and place that is relevant to them. The time and place to tell someone about the great new winter fashion that is in their favourite clothing store, is when they are entering the mall. The time to tell people about the new Stephen King book is when they are near the bookshop.I’m going to talk a lot more about these concepts in the coming days and weeks, so why not subscribe to this blog with your favourite RSS aggregation app  like iGoogle.Just to put things straight, LBS is not something that will replace other forms of marketing, it will augment the campaigns, reinforcing the messages and making them relevant and encourage an immediate call to action. It is an enabler and a tool that will help brands fine tune their target marketing and improve its effectiveness.

I will also explain in future blogs how the tools and data that GeoSmart Maps has, can facilitate the creation of the applications or features of LBS from a laymans persepctive. I’m not a developer, but what I do understand very well is what each tool does and how it can be implemented to achieve the results you want. So if you want to know more, watch this space, bookmark it or get yourself an RSS Reader.

Also, do feel free to comment or ask questions.