Place 2014, the leading industry event produced by Opus Research and held July 22 in New York City, brought together a range of developments and ideas: indoor location, online-to-offline tracking, and proximity-based mobile marketing. The agenda and presentations below reflect the what’s next for indoor location with perspectives and expertise from brands, retailers, agencies, technology providers, regulators, and investors.
9:00 AM - 9:15 AM
The Place-Based Moment - Opus Research senior analyst Greg Sterling will present new data and original research on in-store consumer behavior, the “privacy paradox” as well as merchant demand for offline analytics and in-store marketing.
Speaker: Greg Sterling, Senior Analyst, Opus Research
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9:15 AM - 9:45 AM
The Agency Perspective - Michael Lieberman is Co-President of Joule US, where he oversees the expansion of Joule’s East Coast business. Based in New York, Michael heads up teams responsible for delivering mobile strategy, media and creative services that produce effective mobile campaigns for world-famous brands including AT&T, Dell, Colgate, and Ikea.
Michael Lieberman, Co-President, Joule US
9:45 AM - 10:25 AM
The Indoor Technology All-Stars - Google’s Don Dodge will lead a discussion with companies representing the full range of indoor location technologies, from WiFi to BLE beacons and LED lighting. From cost, accuracy and analytics perspectives, which technologies are “must haves” and which ones are “nice to haves”?
Nathan Pettyjohn, Founder & CEO, aisle411
Chris Goodall, Founder & CEO, Trusted Positioning
Dan Ryan, Co-Founder & CEO, ByteLight
Steve Cheney, SVP of Business and Operations, Estimote
Don Dodge, Developer Advocate, Google (Moderator)
10:45 AM - 11:15 AM
Ahead of the Curve: Alex and Ani - Alex and Ani’s Digital Strategy VP Ryan Bonifacino discusses the insights and opportunity that led the jewelry retailer to test and then rapidly deploy indoor location to all its stores across the U.S. – well ahead of its retail peers.
11:15 AM - 11:30 AM
Indoor Atlas and Magnetic Positioning
Wibe Wagemans, President, IndoorAtlas
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11:30 AM - 12:10 PM
Connecting the Dots: How Location and Offline Analytics Will Transform Digital Marketing - Offline location data and analytics will deliver huge dividends to retailers, ad networks and marketers in general. They will enable better visibility into campaign effectiveness and permit new levels of personalization and targeting. What will this new world of integrated data look like and how will it change digital and traditional marketing?
Juha Mattsson, VP, Marketing & Sales, Walkbase
Anne Marie Stephen, VP of Sales, iInside
Maria Fernandez Guajardo, VP of Products, RetailNext
Luke Edson, VP, Sales, YP
Greg Sterling, Senior Analyst, Opus Research (moderator)
12:10 PM - 12:25 PM
Case Study: SK Telecom - John Kim, Senior Business Development Manager with SK Telecom, will discuss multiple deployments of indoor location technology in the South Korean market.
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1:30 PM - 2:00 PM
Featured Speaker: Facebook - Doug Stotland is in charge of local solutions for both small and large businesses marketing on Facebook. Prior to his current role, Stotland worked on marketing science, pricing and building Facebook’s teams across Asia and the Pacific. Stotland will discuss Facebook's varied and creative efforts to track and measure the offline and in-store impact of Facebook advertising.
2:00 PM - 2:15 PM
Beacon Location Security & Encryption
Jimmy Buchheim, CEO, StickNFind
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2:15 PM - 2:55 PM
Indoor Location & Privacy: Steering Clear of the ‘Creepy Line’ - Jules Polonetsky, Executive Director and Co-chair of the Future of Privacy Forum, will guide a diverse panel of industry observers, marketers and experts through treacherous waters: how to drive engagement without crossing the “creepy line.” What are the issues and emerging best practices? And will the “surveillance” backlash derail merchant adoption of indoor location?
Maya Mikhailov, EVP and Co-Founder, GPShopper
Amanda Koulousias, Attorney, Federal Trade Commission
Kate Kaye, Writer, Advertising Age
Eloïse Gratton, National Co-chair, Privacy Practice Group, McMillan LLP
Jules Polonetsky, Executive Director, Future of Privacy Forum (Moderator)
2:55 PM - 3:10 PM
Hillshire Brands, inMarket and iBeacon - Agency BPN will present a new case study showcasing how beacons and geofencing are driving purchase intent, brand awareness and sales for Hillshire Brands.
Chris Hiland, Chief Strategy Officer, BPN
Todd Dipaola, CEO & Founder, inMarket
Presentation coming soon
3:25 PM - 3:40 PM
Best Practices for Consumer Push Notifications
Scott Townsend, Director of Agency Programs, Urban Airship
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3:40 PM - 4:20 PM
Street, Store or Shelf: Rightsizing the Consumer Experience - Indoor location and proximity marketing allow retailers, networks and brands to put marketing messages in front of consumers at strategic points in stores, malls and other venues. But just because it can happen doesn’t mean it should. What’s most effective in geo-fencing and proximity targeting? When is it best to engage consumers and how do we avoid creating more ad clutter and noise?
James Smith, Chief Revenue Officer, Verve
John Dempsey, Head of Mobile and Video, Datalogix
Catherine Lindner,Chief Merchant Officer, Shelfbucks
Asif Khan, Founder & President, LBMA (Moderator)
4:20 PM - 4:35 PM
Comparing Indoor Location Technologies - GISi Indoors will discuss the company’s real-world comparisons of multiple indoor location technologies, its findings, implementation experiences, when and when not to use it and conclusions.
Michael Healander, General Manager, GISi Indoors
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4:35 PM - 5:15 PM
Whither Geofencing: What Is the Future of Mobile Location? - Location is now often used for mobile audience discovery and profiling rather than for real-time location targeting. In some percentage of cases, location thus “disappears” into the background and becomes a proxy for behavioral and demographic information. How far will this trend go? What role will “geo” play in the future of mobile marketing and advertising? The panel will explore these and other provocative questions about the future of location and place-based marketing.
David Shim, CEO & Co-Founder, Placed
Eli Portnoy, President & General Manager, Thinknear
David Staas, President, NinthDecimal
Sarah Ohle, Director of Marketing Intelligence, xAd
Bill Michels, SVP of Product & Partnerships, Factual
Greg Sterling, Senior Analyst, Opus Research (Moderator)
The largest iBeacon retail rollout to date is the one announced earlier this year by American Eagle Outfitters. The company said it will put iBeacons in all 100 stores across the US. However it's not clear where that stands at the moment. Walgreens, Safeway, Alex and Ani and several other retailers have also deployed Bluetooth beacons to varying degrees in their stores.
This morning Hudson's Bay Company said it joing the club. The retailer, which also owns the Lord & Taylor and Saks Fifth Avenue chains, said it will roll out beacons (with Swirl) in selected stores in Boston and Toronto:
HBC Department Store Group is deploying the Swirl in-store beacon marketing platform to deliver digital experiences to consumers’ smartphones while they shop in the company’s department stores in Canada and the US. Using beacons installed in merchandising areas throughout its stores, Hudson’s Bay and Lord & Taylor will automatically deliver branded content and personalized offers to in-store shoppers through an array of company-owned and third party mobile apps.
The stores will deliver messages via their own mobile apps through Swirl. Though Swirl still has limited visibility among most consumers, it's clear that retailers must pursue a multi-pronged strategy with smartphone shoppers. They need a combination of their own apps and some third party distribution or marketing to build in-store smartphone audiences.
One related development that's very promising for retailers, which generally don't see high app-penetration rates, is the prospect of GPS-enabled mobile browser-based notifications. I wrote about this development earlier today. A company called Roost has developed push notifications for the web and will soon roll them out to mobile browsers.
This would enable retailers (and others) to get users on the PC to opt-in to notifications, which could potentially later be sent to nearby and in-store customers through the browser, even though those users don't have the retailers' apps on their phones. While this isn't yet available it's a potentially big deal for retailers.
My understanding is that BLE beacon signals wouldn't be receivable by these non-app browser users. Nonetheless, browser-based notifications could be used as a "fall back" or alternative way to message in-store consumers for those who don't have the retailers' apps.
A new survey about digital wallet usage from Thrive Analytics also contains findings about why consumers download and use merchant apps. While nearly 90% of time with mobile is spent "in apps," most consumers don't have many (or any) retailer apps on their phones.
This is something of a paradox and a major gating factor for indoor location and marketing. Unlike mobile wallet usage, foundational consumer behavior for indoor marketing is already well established: between 70% and nearly 90% of smartphone owners use their devices in stores already.
However to leverage indoor location and improve the in-store experience, using mobile, apps are required. That's the challenge for retailers.
The chart below reflects what the Thrive survey (n=2,038 US adults) found about the reasons that smartphone owners use merchant apps:
Source: Thrive Analytics, July 2014 (n=2,038)
To some degree this list reflects what's possible in retail apps today. I believe however that merchants must make their apps much more utilitarian in terms of the in-store experience than they currently are. Using indoor location retailer apps can recognize that consumers are in a store and transform from an e-commerce centric experience to one that focuses on common consumer needs in the store.
This includes offering more in-store product information, maps and the ability to pay using an app. To the extent that retailers can further develop their apps as in-store assistants and incorporate payments they will give users much more reason to download and retain them.
Before we can truly discuss the outlook for wearables we need to see Apple's iWatch and how much it costs. There are already a dozen or so smartwatches in the market, chief among them the Pebble and Samsung devices. Most of them have already failed.
The Pebble is a qualified success. However, there is really only one truly desirable smartwatch coming to market so far -- and we don't yet know the pricing. That's the Moto 360.
The Samsung and LG watches ($199 and $229 respectively) shown off at the Google developer conference this week seem like decent but not great devices. As fashion items they leave much to be desired. I haven't yet used them so I can't comment on the experience. I have the Samsung Galaxy Gear Live (Android Wear).
Nielsen reported yesterday that it tracked a "surge" in wearables adoption (fitness trackers and smartwatches) and usage between September 2013 and February 2014. The company added that "these wearable owners used their devices an average of 14 times during the month." The measurement firm also observed that smartwatch owners log a lot of time monthly accessing the internet and content on those wrist devices:
There's a question about whether the time is additive to existing mobile device usage or whether it cannibalizes some of that time. Regardless, the data above are very interesting, suggesting that with the right devices (mix of fashion + function + price) wearables could become a mainstream reality with fairly high engagement and diverse use cases.
The next obvious question about wearables surrounds marketing and monetization. Ad exchange TapSense announced earlier this week that it would be supporting delivery of ads to smartwatches. Those ads will likely follow the same pattern as early mobile display advertising: lackluster or perfunctory ad creative and weak or awkward overall experiences.
Most companies won't build anything like landing pages optimized for wearables. And most of these early ads will probably be for other app downloads.
More likely to be effective are app-based notifications. For a long time SMS marketing held promise as a loyalty and location-based notifications tool. Today that promise has largely faded. However wearables may offer another go at that opportunity.
Consumers could, for example, opt-in to receive location-based notifications -- including indoor alerts -- that might contain marketing content (awareness or DR calls to action). This approach is probably going to be more effective and less awkward than ads within tiny apps on your wrist.
Paradoxically apps with ads that are too small to be noticed won't be effective and ads that are too large are likely to annoy. As "personal" as the smartphone is a watch is going to be even more personal in some respects -- and thus people may be less tolerant of conventional advertising on these devices.
Search content/ads may be an exception. Still you can't show many ads on a 2.5 inch screen.
A new report from eMarketer argues that Google is leaking mobile search revenue to apps. The forecast in the document says that US mobile advertising in total will reach $17.73 billion this year and search revenue will constitute just over $9 billion of that total.
Last year the IAB reported $7.1 billion in US mobile ad revenue, roughly double the year before. If mobile ad spending were to double again it would reach between $14 and $15 billion. Getting to nearly $18 billion is a stretch. However eMarketer casts a very broad net around mobile advertising, including email and services like "site optimization" that don't involve any media spending.
Regardless of definitions, the consumer tendency to use apps rather than the mobile web is apparently taking a toll on Google’s mobile ad dominance. According to the forecast, Google's mobile search ad share was 83% in 2012, dropping to 68.5% last year. These numbers are somewhat deceptive because Google's mobile revenues are still growing and the company continues to have the largest individual share of global mobile ad spending.
What's happened, however, is that more money is flowing into mobile generally (and mobile search advertising) and some of that money is being spread around to places other than Google. Among them, YP and Yelp are called out in the report.
YP has been one of the (surprise) top five mobile ad companies in the US. However eMarketer projects that YP will lose share (though potentially grow overall revenue), going from 7.6% of total US mobile search revenues in 2013 to 4.1% in 2016. By comparison Yelp will grow from 1% in 2013 to 1.9% of search ad revenue in 2016.
Traditional retailers express anxiety and concern about so-called "showrooming," whereby smartphone owners shop for products in physical stores and then buy online for lower prices. We've shown multiple times that this is a real phenomenon; however it's generally a minority use case.
In a sort of contrarian finding, Consumer Intelligence Research Partners said a few months ago that the large majority of Amazon shoppers are loyal to that site and not opportunistically buying online based on price. The financial research firm used consumer survey data to argue, "rather than looking for items at a physical store, then buying them online, most Amazon.com customers [80%] started shopping at the Amazon.com website."
In our own survey data we have documented that roughly half (52%) of mobile users have (at some point) decided not to buy something based on information discovered on a smartphone while in the store. It's safe to say is that consumer in-store behavior is now more complex and smartphones are arming them with more information to help make purchase decisions -- online and off.
Multiple surveys, including ours, have shown a range (66% to 90%) of in-store smartphone usage.
But what about the opposite of showrooming -- "webrooming" (a very awkward term I hope doesn't stick). According to an article in AdWeek, Merchant Warehouse found that "69% of people with smartphones in the 18-36 demo have webroomed, while only 50 percent have showroomed. Among 37-48 year olds, 71 percent have webroomed versus 53 percent who have showroomed."
This is being presented as some new behavior or novel phenomenon. But it's just traditional retail buying.
Well over 90% of all retail buying happens locally. But most internet users now do some form of online research before buying offline (depends on category/consideration). The bigger the ticket the more online "pre-shopping."
I've previously estimated that when retail spending and local services are combined you've got a $9 to $10 trillion annual market in the US. Roughly $2 trillion or approximately 20% (or so) of that is being influenced by "online research." That figure will only grow as more people use smartphones as shopping assistants.
The bottom line, literally and figuratively, is that consumer shopping behavior is now multi-platform and more complex. But whether you call it "local shopping" or "webrooming," the overwhelming majority of buying (90%+) continues to happen offline.
New survey data from PriceGrabber reaffirm that consumers will share private information -- this survey didn't specifically ask about location -- in exchange for rewards from retailers and e-commerce sellers. The survey was conducted in March among nearly 3,500 US consumers.
The survey asked about consumers' willingness to share "personal information" online or in-stores: "personal information included age, gender, email, clothing/shoe size, and credit card number among others." Generally shoppers were more inclined to share information online (56%) than in-store though nearly half (48%) said they would do so in the latter context.
The survey also tested various reward scenarios: price discounts vs. "percent off" choices. Most preferred percent-off to dollars-off or gift card reward options.
Several other consumer surveys, including one conducted last year by Opus Research, indicate that consumers will share personal data and location information if they get a sufficient reward for doing so. There are numerous others that show consumers remain quite concerned about privacy and data collection. This seeming paradox might be described as consumer sharing ambivalence.
In addition to discounts and coupons consumers have also indicated a willingness to share personal or location data in exchange for a better or more personalized shopping experience.
Google is updating its search app for Android devices. As part of that update Google Now, its predictive search/intelligent assistant feature, is offering new content and capabilities. These new features do not yet extend to Google Search/Now on iOS devices.
The feature that got considerable coverage earlier today is a parking-locator card. Google records the location of your vehicle on the street or in a parking lot. It will show you a Google Now card with a map of the vehicle's location and point you in the right direction to get back to your car.
I haven't used it so I don't know if it works at all. But it's potentially very useful.
Google Now will also now work when your wireless network or internet connection doesn't. In other words, the Now cards will remain on the phone and not disappear.
Of particular relevance to our discussion of Place-based marketing, Google Now will also show indoor maps of selected malls. I suspect later it will show indoor maps of stores that it has already captured. Google has maps of roughly 50 malls and a number of retail chains such as Home Dept, Macy's, Sports Authority, Ikea and others. Coverage is uneven however.
Most intriguing of all, Google Now will remind users about products they've searched for previously when those users are near stores that carry the same items. If you've been looking for a particular type of running shoe, for example, and a nearby store typically carries that product Google Now will indicate you're near a store that offers it.
This capability doesn't extend to real-time inventory however. That's up to the user to check or confirm.
In addition, it's not clear how large the geofence is. Will it be a mile, 3, miles, 5 miles? I suspect Google will see how users interact with this feature and adjust the geofence radius accordingly.
In a very obvious way this "product-alert" capability could quickly become a feature of Google's PLAs and a potentially powerful marketing vehicle for retailers and brands. Today users must themselves invoke Google Now (swipe up). To be really effective and helpful, however, Google Needs to turn some of these things into push notifications.
It's very interesting that three out of four of these new features and capabilities pertain to location and two specifically to shopping and indoor location.
This morning I received a message in my in-box with the subject line: "Mobile commerce has really arrived." In the associated article a range of data were cited to argue that consumers were doing more and more e-commerce on their smartphones.
While it's true that e-commerce over tablets and smartphones is growing we should be clear about what's really going on out in the real world. Smartphones are widely used by consumers as part of their shopping and purchase research -- between 60% and 80% (or more) use them in stores for product and price lookups.
Marketers routinely undervalue and misunderstand the now critical role of mobile in consumer purchase activity. Part of the reason is tracking/attribution: smartphone owners overwhelmingly convert offline (or on PCs) and much of that behavior is simply not captured.
New research from comScore, Neustar and 15 Miles reinforces this basic point. The data are based on a December survey and behavioral observation of users. The sample size was just under 5,000 US adults.
Source: comScore, Neustar Localeze, 15 Miles
The study found that 78% of local searches conducted on smartphones resulted in a purchase vs. 64% on tablets and 61% on PCs.
The majority of those purchases (76%) happened the same day and most within "a few hours" of the lookup. This reflects the immediacy of the mobile search user's need. But here's the critical point: Almost 90 percent of those purchases happened offline, in a physical store (73 percent) or on the phone (16 percent). Eleven percent were e-commerce transactions.
Actual transaction data (as opposed to self-reported survey data) from e-commerce software provider ShopVisible found that 85% of e-commerce transactions in 2013 were PC based, only 4% came from smartphones.
Marketers need to recognize that most smartphone users are going to consult their mobile devices throughout the purchase cycle but largely aren't going to complete a transaction on that device. If they don't understand this behavior and account for it they're going to fundamentally misunderstand the role of mobile and undervalue it significantly.
This is partly why online-to-offline analytics/tracking is such an important development -- and one that we'll be exploring in depth at Place 2014.
An article in HBR today discusses what we've known and been writing about for some time now: location analytics is a major "must-do" opportunity for retailers and others (airports, hospitals, casinos, colleges, mall owners, entertainment venues). See also: Report: "Mapping the Indoor Marketing Opportunity."
The HBR piece discusses various provider-vendors (RetailNext, Placed, Euclid) and retail scenarios (operations, staffing, merchandising) that will benefit from indoor and offline analytics. However one of the major issues in the space is privacy and consumer acceptance. The article neglects to discuss privacy at all, although many of the comments raise the issue.
Location analytics can be done in such a way to avoid any PII collection while giving customers the ability to opt out of any indoor tracking (save closed circuit TV). The Future of Privacy Forum has introduced an opt-out (a kind of do not track indoors) website SmartStorePrivacy.org. This is a voluntary thing at the moment, though with many analytics firms signing on. But it will likely become mandatory at some point in the near future.
Despite ominous portrayals of indoor location by some journalists, it's not a very scary thing when you actually see it in action. Surveys conducted by Opus Research and others have found that most consumers will happily opt-in to location tracking when there's a value exchange that they understand.
Affirming this again, Swirl released some new consumer survey data (n=1,000 US adults) that found:
Whether or not these specific findings are replicated at the same levels by other surveys, their general sentiment is: consumers are receptive to in store promotions and content and happy to share location information with a clear value exchange.
Where indoor location and privacy become potential issues is when there is no consumer experience: if retailers or others are simply collecting data without offering value in return to consumers. Under such circumstances (where opt-out is offered or later required) we might see substantial numbers of consumers opting out of indoor location/tracking.
My belief is that ultimately the FTC will compel explicit disclosures and signage where location analytics and tracking are present giving consumers the ability to opt out. Burying a notification such as "by using our WiFi you agree to let us track you" in terms and conditions isn't going to fly for much longer.
AdGooroo, a division of Kantar Media, last week released data on the top mobile search advertisers in the US, UK and Australian markets. The data represent the month of January 2014 and are based on impressions triggered by the top 50,000 search keywords.
These data are drawn exclusively from Google and Google AdWords. The chart below reflects the top 20 mobile AdWords advertisers.
The list can be seen as a mix of telcos, financial institutions and retailers essentially. Compare the impression gap between Amazon and BestBuy and the rest of the group for that matter.
As part of its analysis AdGooroo compared mobile search rankings on the PC and smartphones. Amazon turns out to be the top paid-search advertiser on both platforms. But there were a number of gaps between PC and mobile rankings/performance. For example, WellsFargo "ranked #9 in Mobile Search, with 11.5 million impressions, but 137 in Desktop/Tablet Search, with 12 million impressions."
There were a few advertisers that saw more mobile than PC search impressions. But equally there were advertisers, such as Wal-Mart and JCPenney, that ranked well on the PC but not as well in mobile search results.
As of last year Google began compelling marketers to buy both PC and mobile search campaigns and set the PC bid as the floor, as a practical matter, for the campaign. Mobile bids can be adjusted up or down, depending on a number of variables including location. In other words marketers can specifiy a premium they're will to pay to get in front of smartphone users within a certain radius from a business location.
Informally this week a Google employee at a conference dropped a bomb, saying that mobile search was projected to exceed PC search traffic by the end of the year. This was a casual remark as I understand it and not necessarily an official Google statement. In addition, I heard it second hand so I don't have more context to share. It's not clear what's included in "mobile search" query volume here (i.e., Maps, mobile web, apps)? It's also unclear whether this is US only or global projection.
At 1pm Eastern/10 Pacific today we'll be hosting a new webinar: Indoor Location - Early Adopter Case Studies and Lessons Learned. It will feature Aisle411 co-founder Matthew Kulig and iInside EVP Jon Rosen. The emphasis is not on theoretical information but on what's actually occurring in the market -- today.
Rosen will be talking about B2B case studies from current in-market deployments. He's going to cover:
Kulig will be discussing B2C cases, including the following:
I'll be offering a general overview of the state of the market and offering attendees a free copy of our recent "Mapping the Indoor Marketing Opportunity" report (only available to real-time attendees).
The webinar will be eye-opening and instructive to indoor neophytes and those with even considerable knowledge of this emerging market. Register now and show up later today.
Very soon thereafter, if not simultaneously with mobile ordering, will come in-app mobile payments. Later we'll have in-store mobile payments as well.
All QSR (and Fast Casual) restaurants will eventually offer mobile ordering and payments. OpenTable is in the process of trialing mobile payments in its fine-dining oriented app. That will represent a radically improved customer experience and improved security as well (unless these databases get hacked).
A mobile ordering and payments-enabled app makes sense for QSR for many reasons. Adoption by chains will be driven in part by competitor rollouts of these capabilities. But another compelling reason will be consumer loyalty. App users will generally become more loyal and frequent customers; app-based ordering and payments will form the core of loyalty promotions. The data can also be used for mobile advertising and retargeting purposes.
A recent report from JiWire showed how mobile (and apps in particular) were more influential than the PC internet in driving consumer purchase decisions in the QSR and fast-casual dining segments.
Within three years we're likely to see the US QSR industry transformed by mobile ordering, payments and mobile loyalty marketing. In general all this will mean a better experience for customers.
The "dark side" of these developments, however, will be the inevitable elimination of thousands or even millions of low-paying cashier jobs. That trend will later come in mainstream retail as well.
According to the US Bureau of Labor Statistics cashiers and retail salespeople constitute just under 6 percent of total US employment. But it's the largest single jobs category. Indeed the "bottom of the market" will be automated in the near future -- largely through smartphone apps. Only legacy software systems and perhaps union resistance will delay the trend.
When customers in QSR restaurants can order or pay more quickly and efficiently through their phones (with stored credit cards) fewer cashiers and related employees will be required. This will also be true in Fast Casual restaurants. Where once you needed four wait staff perhaps now you'll need two or even one person.
There are two themes running through most of the coverage of indoor location: gee-whiz technology and NSA-style "surveillance." While both approaches have generally been good for the sector, which has gained visibility accordingly, the "surveillance meme" is both unfair and largely inaccurate.
In the general debate over consumer behavior tracking and data-centric targeting the "offline world" has largely been ignored. The practices and data-mining in use there are longer-established, more aggressive and much more shadowy than the online/digital media world. Yet the media devote almost zero attention to that arena because we have lived with it for so long.
By the same token video cameras have been watching people in retail (and other) environments in the US something like 40 years. That fact is rarely if ever "remembered" or raised in the public discussion of indoor positioning and location. Why, because we're all "used to it"?
A recent Bloomberg article about location-analytics provider Placed is a case-in-point. The headline emphasizes the more sensational aspects of what the company does (for impact) and the lede ties the project to the NSA scandal: "Tracking Every Move You Make—for a $5 Gift Card . . . Here’s something the National Security Agency might try to ease resistance to surveillance: gift cards."
I certainly understand the journalistic "logic" behind these choices but they're misleading. Placed has what amounts to a triple opt-in process. Its users, who are offered incentives to share their location, are very clear on what they're doing. It's totally voluntary. But the article only mentions that in passing, "Placed asks users for permission and scrubs personally identifying information before companies see the data." It's more concerned with the data and inferences Placed can discern and deliver.
That's all fine. But in neglecting to fully describe the opt-in enrollment process, the article fails to adequately represent what's going on with consumers.
The implication still is that people don't fully understand what's happening or what information is being compiled about their behavior. The article suggests, with its lead, that Placed users, despite their voluntary participation, are still being somehow duped: they're giving up their sensitive behavioral and location information for "a five dollar gift card."
Why it matters is because people will voluntarily participate in these systems and services when they understand the benefits and how their data are being used. It goes to questions of transparency and consent. Many articles operate under the deeply held assumption that if people understood truly what was happening with their information they would never share it with companies. (That's certainly true in many of the "offline" cases.)
But when it comes to location and indoor location specifically people will trade their information for tangible benefits or a better experience. This has been shown repeatedly and Placed's panel is just one more example.
Writing about the mechanics of disclosure and opting-in gets tedius and boring. So does the idea that people will willingly share location for improved in-store experiences or incentives. That's why we're likely to continue to see these "us vs. them" articles for the foresseable future.
Make no mistake consumer privacy is a critical issue. Indoor location providers, retailers and others need to be highly respectful of that. And there are some who want to make the default consumer experience of indoor location opt-out. But most of the entrepreneurs and companies I've spoken to are very sensitive to and respectful of privacy.
The questions going forward should concern what sorts of experiences and disclosures must be presented to consumers to engage and educate them and gain their informed consent. Indeed, we'll be having this very discussion in much more nuanced and concrete detail at the next Place conference in New York in a panel lead by Jules Polonetsky.
Bluetooth iBeacons are definitely the indoor positioning technology with the buzz and momentum (though it's only part of the indoor location story). Today jewelry and accessories retailer Alex and Ani announced that it's deploying iBeacons in all its 40 US retail locations in partnership with Swirl.
Previously American Eagle announced it would also introduce iBeacons into its stores with ShopKick. However the Alex and Ani rollout is already complete.
Swirl offers a consumer-facing app that adapts or changes depending on the store the customer visits. Swirl is also working with Timberland and Kenneth Cole. Alex and Ani doesn't yet have its own app but later plans to develop one using the Swirl SDK. Swirl installed the hardware in all the Alex and Ani stores.
I was able to speak yesterday with Ryan Bonifacino, vice president of digital strategy for Alex and Ani. He comes from a venture capital background and is very focused on innovation and data usage. While most retailers and venue owners are still sniffing around the edges of indoor location Bonifacino said that Alex and Ani began testing iBeacons with Swirl in Q1 of last year in its New York and Boston stores.
That's well before most people had heard of iBeacon.
The data and insights the company gained during its two-store trial convinced Bonifacino that a full rollout was justified. Bonifacino said he was pleased with Swirl's ability to drive new customers into the company's stores, especially at times when regular foot traffic was generally lower.
He explained that the new Swirl-driven customers actually spent more time in the store but purchased at levels that were comparable to Alex and Ani's regular customers. Indoor location was also able to provide greater visibility into who these new customers were.
One of the things that Bonifacino is looking forward to most is the ability to collect data about in-store behavior and to test and optimize merchandising and displays. Beyond this, Bonifacino wants to provide a better in-store customer experience and believes that indoor location can help accomplish this.
We spoke at some length about Alex and Ani's use of data in its marketing efforts and how data captured in stores would contribute to improving or refining those efforts. Bonifacino, however, was quick to say that the company is highly respectful of privacy and looking only at aggregate customer behavior.
Alex and Ani also sells its jewelry and accessories through major retailers such as Bloomingdales and Nordstrom. Even though those retailers are separately examining indoor location Alex and Ani is helping educate them, says Bonifacino. The company hopes to use indoor location to promote its products and attract customers to its displays in those larger retail partner stores later this year.
I have been arguing for the past two years that despite security concerns and an apparent lack of interest in mobile payments at the "national" level, consumers immediately "get it" when they find mobile payments embedded in a context whose value is self-evident. One such context is transportation.
There's been a great deal written about the disruptive impact of services such as Uber and Lyft on traditional taxis and transportation. The cheaper Uber X service, utilizing part-time drivers, is on average less expensive than conventional cabs. But I had an interesting experience recently that clearly reflected the power and value of mobile payments (convenience rather than cost) as a competitive differentiator.
The other day I got off a train from San Francisco to the East Bay where I live. At the bottom of the escalators were three taxis lined up and waiting for fares. I could have taken one immediately. Instead I pulled out my phone and called Uber X -- because I knew I wouldn't have to pay with cash or do a credit card transaction when I got out of the cab. (Uber stores credit card information and provides receipts via email.) I also appreciate the fact that I don't have to calculate and include an additional amount for a tip with Uber X.
The convience of not having to engage in a payment transaction was the consideration that made me wait five minutes rather than just get in a cab at the station. My own experience showed me the power of mobile payments as a differentiator and loyalty feature. The same will likely prove true for OpenTable as it rolls out mobile payments, giving consumers an additional reason to use the service, along with loyalty points and online reservations.
Eventually mobile payments in the form of stored credit cards will make their way into most apps -- especially if Apple enables "pay with iTunes." For now, developers and publishers that integrate early will reap competitive advantages over those that do not.
OpenTable has begun rolling out mobile payments in a test with selected restaurants in the San Francisco Bay Area. The intention to introduce mobile payments in OpenTable was first reported in July of last year.
The official announcement came in a blog post earlier today:
OpenTable mobile payments are currently being tested by diners at select restaurants in San Francisco. Over the next few weeks, we will be adding more diners to the test program and will provide you a way to request access.
Mobile payments will continue to gain momentum in "vertical" or specialized contexts such as this or Starbucks, Uber, AirBnB and a host of others. Many of these, including OpenTable, are explicitly or essentially "vertical marketplaces" where payments are increasingly integrated. The difference between these apps and something like Amazon, which has your credit card on file, is that you're paying for services in the real world.
We're bullish, as they say, on the outlook for payments through vertical-mobile apps. By contrast, "horizontal" payment apps such as Google Wallet, ISIS and even PayPal (for offline services) have little or no traction because consumers don't see the point in the abstract. However the benefits of paying through the OpenTable app are fairly obvious: no more waiting for the check; no more waiting for the card to come back to the table. It should meaningfully compress the time it takes to pay and leave a restaurant. (It will also reduce credit card theft by restaurant personnel.)
Eventually consumers will warm to the broader mobile wallets, after they've had sufficient exposure and experience with mobile payments a specific context -- such as OpenTable. Very concrete use cases with obvious benefits will help train consumers to trust and adopt mobile wallets/payments, which will eventually pave the way for services such as ISIS or Google Wallet. Apple may be an exception to the idea that consumers aren't ready for a single mobile wallet to substitute for conventional card payments. The company appears to be gearing up to offer a "pay with iTunes" capability.
Transaction data yielded by payments also offer a next level of intelligence, personalization and marketing capabilities to those providers that integrate them.
Before payments, OpenTable knew if you reserved a table and actually showed up (or were a "no show"). Now the company will potentially know what you've ordered too. That can be shared with the restaurant for diner insights and loyalty purposes (see also, Swipely) and/or used by OpenTable in several ways to more precisely segment and market to restaurant-goers as well.
Related: OpenTable also announced that it had acquired restaurant recommendations site/app Ness (sometimes also characterized as an intelligent assistant) for just over $17 million.
Yesterday Twitter, Yelp, AOL and Pandora released quarterly earnings. AOL said that mobile was one of several drivers of 50% ad revenue growth. Yet it didn't break out any mobile numbers. The other three did, illustrating the degree to which each is or has become a mobile-centric company.
Below are the mobile highlights . . .
Twitter beat financial analysts’ expectations with $243 million in Q4 2013 revenue ($220 million in ad revenue). However that strong revenue growth was undermined by weak user growth. The company said it had 241 million monthly active users and nearly as many (184 million) mobile users.
Amazingly, 75% of the company's ad revenue for Q4 came from mobile. In real dollar terms that represented $165 million for the quarter.
Yelp reported just under $71 million in Q4 revenue. There were 53 million mobile users (120 million total users). Yelp also reported that 30% of new reviews were coming from mobile devices, since it started allowing reviews to be written via mobile.
Yelp added during the earnings call that 59% of search queries were from mobile: 46% from its app vs. 13% from the mobile web. In addition, 47% of ad impressions were served on mobile devices in Q4.
Revenues for the full year were roughly $638 million. Pandora brought in just over $200 million in Q4. Of that, $162 million was ad revenue. Mobile was responsible for 72% of that ad revenue or just under $117 million. The company also said that 80% of Pandora listening happens via mobile devices.
All three companies started on the PC and have evolved into mobile-centric entities in response to user behavior. Indeed, Pandora's iPhone app is largely responsible for the company surviving and going public. Overall for these companies most of the ad growth, revenue and usage is now in mobile.
Both the NFL and Major League Baseball (MLB) will beat most US retailers to the punch when it comes to implementing "indoor location." Many major retailers are testing, piloting and experimenting with indoor location today (or planning to) but have not done any system-wide rollouts. Apple and American Eagle are exceptions in the US.
However these two major sports leagues are already deploying additional WiFi and new BLE beacons in an effort to enhance the fan experience in stadiums and to create new loyalty marketing opportunities.
In a broad article this week discussing iBeacon and some of the privacy concerns about the new location technology, the New York Times explains how the NFL has installed beacons in Times Square and at MetLife Stadium in New Jersey, where the Super Bowl is happening. Smartphone owners with the NFL Mobile app will receive game related alerts and messages tied to location:
A mobile app called N.F.L. Mobile will enable football fans who visit the New York area for the Super Bowl to get pop-up messages on their cellphones, tailored to their exact location. The system uses a series of transmitter beacons scattered through Midtown Manhattan to deliver various messages depending on the cellphone user’s location. The system will also be in use at MetLife Stadium in New Jersey.
MLB has been even more aggressive with its rollout of iBeacon/BLE technology. There will be enhanced WiFi and iBeacon technology at all 30 major US baseball stadiums this year. To participate in the new services, smartphone owners will need MLB's "At the Ballpark" app:
MLB.com At The Ballpark is your favorite mobile companion when visiting your favorite Major League Baseball ballparks. This official MLB ballpark application perfectly complements and personalizes your trip with mobile check-in, social media, offers, rewards and exclusive content. Select MLB ballparks also offer mobile food ordering and seat and experience upgrade components.
In both cases, an improved in-stadium fan experience is the stated, primary motivation for deployment of the technology. In the coming year, we'll get a great deal of information about how consumers respond to the capabilities in these sports contexts and whether they raise significant privacy concerns. Yet both leagues appear very mindful of privacy issues and are taking care (at least initially) to tread lightly.
A new study from Cars.com and location analytics provider Placed offers some very interesting insights into how car buyers are using smartphones both before and during visits to dealer lots as part of their research process. I wrote generally about the study this past weekend.
At the highest level the report shows that a large majority of new car buyers are activly using smartphones. Indeed many more smartphones than PCs are being used in the process now.
Among the many interesting findings in the report, which is based partly on survey data and partly on behavioral observation, is the fact that smartphone owners are doing almost exactly the same things on dealer lots that they're doing in retail stores: price comparisons, looking up reviews and so on.
Below is the hierarchy of research activities happening on dealer lots, according to the study:
For purposes of this post, I want to focus in on a particular aspect of the study: the role of mobile advertising in influencing these shoppers.
The Cars-Placed report found that 52% of what I'm calling auto-showroomers left the lot they were on to visit another dealer (within 24 hours) based on information discovered on the smartphone. That's a very high percentage; and for 33% of these people mobile ads were a key factor.
Below is the hierarchy of sites and mobile apps used by these auto-showroomers on dealers lots. Vertical sites and apps such as Cars.com and AutoTrader lead the way with 56% of users consluting one or more of these sites. That's followed by carmaker sites, dealer sites, search engines and consumer review websites. Although it's close the mobile web was preferred by a small margin over apps.
It's striking though not surprising that search engines were used by only a minority of these car buyers. Vertical and specialized sites offer more immediate access to information and a better overall experience than Google on a mobile device.
The sites list above is a potential guide for mobile advertising by dealers and automakers. And very likely that's one of the objectives of the report: to suggest where marketers in the automotive space should be spending their mobile ad dollars. However if the data are sound then the implied advertising recommendations are reasonable. Selected mobile ad networks (specializing in location) should probably also be included.
In all smartphone-enabled car buyers are doing more research than others, including on the dealer lot. I would expect sophsiticated auto dealers and even OEMs to start incorporating geofencing and conquesting into their mobile ad strategies and tactics -- if they aren't already.