By Etienne Bruchet
Picture this scenario: you’re in a packed nightclub one Saturday evening, wondering whether anybody you know is partying here or nearby. Here’s another scenario: you’re shopping on Bloor Street in Toronto, spending most of your time searching for bargains or discounts within the high-end stores. Here’s one more: you want to indulge a craving for an iced cappuccino, and want to know where the closest Tim Horton’s outlet is.
Not long ago, you may have needed to make a little effort to get what you want. Whether it’s calling each and every one of your close friends for a heads-up, or a possibly tedious slog in and out of every store you pass, or maybe passing several minutes of walking or driving around till you see the familiar red logo of Canada’s favourite coffee joint. Nowadays however, a quick look on your mobile phone can give you the answers for all these ‘questions’.
Say hello to location-based advertising (LBA), a phenomenon largely born of the recent development of mobile phones with Internet and GPS capabilities. Users can access the Internet wherever they are, and that the phone itself can determine its (and by extension, the user’s) physical location.
Craving Italian food? Do a search on your phone for the nearest Italian restaurant. You can also read reviews of the place by other users, or get informed about any ongoing deals or promotions for its menu items.
Consequently, a number of online platforms have been launched in the last few years offering these services. Several of these platforms, such as Foursquare and Gowalla, allow users to “check in” at their location and receive any relevant alerts about the place. Facebook similarly allow users to reveal their current location to their friends, through its recently launched Facebook Places application.
Navteq, a Nokia subsidiary, believes that location-based services will be a $7 billion industry by 2013; Borrell Associates, an online advertising research agency, forecasts that location-based mobile spending will reach $4 billion in 2015, 11 times the amount spent in 2009.
Despite these predictions, many current and potential issues may hamper the proliferation of LBA. One issue is market size. According to the Economist, the largest mobile social networks have only a few million members (Foursquare hit 3 million in August 2010), with only about 4% of users have used location-based services, with 1% regularly letting others know their current location.
For now, merchants and major firms alike are still trying to figure out how to properly utilise LBA for their purposes, and many are yet to be convinced of its potential value for their business. Additionally, providers and platforms will have to address the concerns potential customers have with the services.
Chief among these concerns are privacy and security, as revealing your current location to the public can have very worrisome and unintentional side-effects (such as letting a stalker or would-be mugger know where you are). These concerns (along with the fact that most users have little to no incentive to use location-based services beyond the novelty value) have held back LBA from being viewed as a successful trend, despite its admitted potential.
For now, LBA is still being experimented with by a number of firms. Convincing businesses of its ability to create value for them, and reassuring individuals of its confidentiality and relevancy, remain the biggest obstacles to LBA’s growth and proliferation. Nevertheless, with decreases in the use of traditional and print media by consumers, as well as increases in smartphone use, LBA can offer merchants a new path to their target market, as their old paths begin to fade.
Etienne Bruchet is a University of Toronto student in the Communications, Culture and Information Technology program. He is currently completing his Specialist major in Digital Enterprise Management. He works as a Webmaster and Marketing & Communications intern at the RIC Centre.
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