LBS and Mobile Marketing and Business Development

Wilson Kerr

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Have I Got A Deal For YOU: The Rise Of Personalized Shopping

Wilson Kerr (@WLLK) is a former Tele Atlas exec who started Boston-based Location Based Strategy, LLC in 2007. You can reach him directly at [email protected].

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The promise of location-based mobile advertising has been painfully slow to materialize. It seems the last five years have all been declared “the year”, with the usual cliché examples flogged. Most brands and their agencies still pace the sidelines, waiting and watching. If they do add mobile to their spend, they tend to replicate the click-though web advertising approach, and miss the full potential.

In this post I will explore the rush of start-ups seeking to perform an end-around on the mobile advertising blockage, by betting that personalized, actionable, tracked, direct to consumer sales promotions that are location-based will finally unlock the true potential of mobile. In past posts I have discussed incremental, tracked sales revenue “lift” and the importance of remembering that brands make money by selling more products through authorized retailers, not by exposing their brand or driving people to a corporate informational website.

Driving Boots In The Door Is Key

The difference between an ad and a personalized location-based special offer is subtle, but important to understand, as we consider why “personalized shopping” start-ups are springing up so fast (and attracting so much VC attention). Mobile marketing, when linked to a call to action based on real-time proximity to a retail location (and honed by a personal preference profile) can finally show ROI by linking itself to proven in-the-door foot traffic (and converted sales). Thankfully, the platforms are now there to allow this to happen.

Discounts and special “limited time offers” are not new and have been around since the first baker made a double batch of bread by mistake and needed to sell the excess before it went moldy. By dropping the price, he increased sales volume and attracted new customers to his bakery. By selling more, he discovered he got a better wholesale volume price on the flour. So, even though he grossed less per loaf, his net profit per loaf held up, and he sold more bread and made more money. Simple math.

I have an admission. I check-in on Gowalla,  tweet on Twitter, post Facebook updates based on where I am, scan QR codes, use apps to find business addresses, and see a lot of contextual mobile ads, yet, after almost 3 years as a full-time mobile LBS consultant, I have never actually bought anything as a result of a location-based offer. That streak ended last Tuesday.

$25 For $50 Gift Certificate Prompted My First Location-Based Purchase!

I spent $25 on a location-based offer from Living Social, for a $50 gift certificate at a nearby restaurant called The Fireplace. (My wife is a “foodie” and enjoys dining out the same way I enjoy a day on a trout stream). How could I not? What is really amazing is that, in the 2 days the deal was offered, 925 other people also bought it, generating $23,150 in tracked, incremental revenue, all tied to a single, specific marketing message. Obviously Living Social takes a %, so The Fireplace does not take all this in, but the real value to them is the opportunity to win over repeat customers when they come in the door and sit down for a meal. What traditional ad or coupon or campaign could they possibly run that offers this sort of (tracked) response?

My First Purchase Based On A Location-Based Special Offer!

I checked Living Social competitor Groupon as I was writing this up, and they were offering a nearly identical deal from The Fireplace as well! (Groupon is a volume-”triggered”, limited time, personalized, local discount offer platform). I thought I was misreading the numbers…but over 4,500 people paid $20 for a $50 gift certificate, so far. Wow…that’s over $90,000 generated from a single deal, and counting. When is Groupon going public?! Are they hiring!? Check out the numbers on these deals. Remarkable.

Volume "Triggered" Discounts

Living Social and Groupon are but two such companies harnessing the power of delivering opt-in deals based on location and, I believe, they are on the leading edge of a “personalized shopping” craze that is about to sweep the mobile industry. Groupon, by the way, is not even 2 years old and is valued at least 1.2 Billion (yes, Billion). If they can sell 4,500+ visits to a single restaurant in a few days, what else can they do?

Another standout to watch, besides Living Social and Groupon, is RueLaLa. They serve up invite-only fashion brand discounts (via daily “boutiques”) to 2.4 Million members! There are hundreds more personalized shopping wannabe’s starting up now, to vie for a slice of the personalized shopping pie. Here is a quick sampling; Eversave.com, Woot.com, DailyDeals.com, DailyDeals.net, SaleCamel.com, FuseDeals.com, DailySteals.com, and DailyCheckout.com.

The ones that will win will use algorithms to learn from real purchases and deliver increasingly personalized and location-based offers that drive (tracked) foot traffic into physical locations.

In-store conversion of foot traffic to sales, fueled by personalized location-based special offers (delivered by smartphone), bridge the gap between the virtual world and the physical world. This (with MPOP as a foundation) is about to become the hottest thing going.

In April of this year, I wrote a post about the significance of validated MPOP (Mobile Proof Of Presence) and maintain that MPOP location validation linked to special offers, not mobile ads for brands, will be the key to finally unlocking the full potential of mobile.

For example, the LBS world was recently rocked by news that a pre-launch application called Shopkick had attracted $20 Million in VC funding. That’s right, the application has not even launched in beta, and the company has attracted what Mashable calls “an obscene amount of investor attention”.

Why, you ask? Because Shopkick intends to validate MPOP in a whole new way (they call it the Shopkick Signal), via installed in-store equipment that eliminates fake checkins and delivers marketing messages based on very tight proximity, within a store and without GPS. This means brand-specific checkins are possible, and they are accurate. According to a recent Techcrunch article, Shopkick co-founder Cyriac Roeding is quoted as saying, “This is all about foot-traffic. So far, no one has nailed a way to entice people to actually come to the store that makes sense to the retailer“, Roeding says. He goes on to say,“This is the physical world equivalent of an online click,”. Hmm.

Attracting "Obscene Investor Attention"

I assume the platform also will learn actual shopping and buying behavior and personalize the offers it serves up based on a powerful cocktail of mobile+retail locations+loyalty rewards+special branded offers+conversion tracking.

The platforms (like Shopkick) that capture metrics generated by opt-in consumer interaction with retail locations (and brands carried within those locations) are going to become very attractive to retailers, brands, and agencies sick of being screaming at by their clients to provide just such a solution. Remember, this is information that consumers ask for, and they are rewarded with savings on products they buy, in stores they visit.

Brands and retailers alike might finally step off the sidelines and onto the field, if they can track ROI and link incremental sales to campaigns, while providing a positive consumer interaction with both the brand and the retail stores authorized to carry it. The era of personalized shopping is upon us and mobile, at long last, could finally starting living up to its potential.

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Wilson Kerr is a LBS Consultant focused on helping companies understand and harness the power of  Mobile Proof Of Presence. He is also wondering  how he will slip the waitress his 50% off Living Social coupon at The Fireplace without his wife noticing.


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Wilson has 11+ years experience in the Mobile and Location Based Services (LBS) space. Recently, he became Director Of Business Development and Sales for Unbound Commerce, a Boston-based mobile commerce solution provider. He has deep expertise in the areas of mobile commerce, social media, branded location integration, branded content licensing, and is knowledgeable in a broad range of navigation technologies. Wilson has worked with top tier brands, content providers, device manufacturers, and application developers, including Nokia, Unbound Commerce, Tele Atlas/TomTom, The Travel Channel, Langenscheidt Publishing, Intellistry, Parking In Motion, GPS-POI-US, and others. Wilson is a blogger on all things location-based, edits the LBS topic page on Ulitzer, teaches a Social Media 101 class, and has served as a panelist and speaker at Mobile LBS conferences and networking events. Wilson has held positions in Business Development, Sales/Marketing, and Digital Licensing at The North Face, Outdoor Intelligence, Fishing Hot Spots Maps, Tele Atlas North America/TomTom and, most-recently, Unbound Commerce. Wilson left Tele Atlas to start Location Based Strategy, LLC in 2007. Company Website: http://www.LBStrategy.com. Twitter: @WLLK