Tag Archives: FourSquare

Getting Mobile Advertising Right: You Have One Opportunity

Mobile Advertising is more like classic Direct Response Marketing than Web Advertising: you have one opportunity for the perfect pitch: for each person, based on who he is and what his is doing—right NOW.

Mobile Advertising is NOTHING Like Web Advertising

Facebook’s IPO, and the myriad analyst remarks on its challenges in the mobile space, has brought the discussion about how to make mobile advertising work back into the limelight. Many have argued that mobile advertising, especially mobile advertising in non-Search apps, has much lower likelihood of success because customers are not in the process of “seeking to buy something”. These arguments are based on the assumption that mobile advertising is like web advertising. This assumption is wrong.

Web advertising (in-text or display ads) offers you the opportunity to present many advertisements to a customer at once on a screen. You can leave these ads up for the duration of the customer’s perusal of the screen or rotate new ads in place over time. In addition, if the customer is logged in (or you have really good cookies) you have high certainty of his or her identity.

Mobile advertising is entirely different. The screen real estate only provides the opportunity for one advertisement. Even worse, you only have a small amount of time (less than two seconds) as your advertisement is “getting in the way” of the customer’s attempt to do something on their smartphone. What you do have in your favor is near certainty of the customer’s identity.

The Approach Needed Solve Mobile Advertising Has ALREADY Been Developed

This is not a new challenge. It is the same situation faced for years when cross-selling products and services to customers from the call center. They had: 100% accurate customer identification, lots demographic and account information on the specific customer, and only a few seconds to offer one compelling promotion before ending the call.

The trick to solving this challenge was to figure out the one ideal promotion to present to each customer based on who he is, what he is currently doing, and the current time-of-year, day-of-week, and time-of-day. Just as important is using the feedback on each to calibrate future promotions to the same customer (to avoid turning advertising into a nuisance), making this more of a Recommendation Engine challenge than an Advertising Engine one. The rewards are enormous: bounty payments for accepted promotions are frequently 100x greater than those for clicked-on ads.

The Technology Exists to Scale This to Mobile

A decade ago, we scaled this model from the 10-transaction-per-second world of call centers to the 10,000-transaction-per-second world of the Internet, generating billions of dollars of value per year. Now is the time to scale this to 1,000,000-transaction-per-second world of mobile to capture tens of billions of dollars in value (luckily we can now grab Big Data technologies off-the-shelf to do this, in the past we had to invent new technologies to scale 100- and 1,000-fold). Mobile, with its “Perfect combination” of validated identity, addressable application data, location awareness and real-time notification services offers an amazing opportunity to take this to the next level.

The Results Would Be Incredible

Imagine this mobile Yelp-like example:

Barney has smartphone and is in the Financial District in Manhattan, Monday through Friday each week. When he installs your app, you get his email and mobile phone that lets you (via sources such as Flurry and PRIZM codes) guess he is likely an affluent male in his mid-thirties. Based on this you may want to advertise local bar Happy Hour promotions when he opens your App between 12pm and 6pm ET on Thursdays. Clicking on the promotion provides a bar code, QR code or confirmation number for redemption with the ad buyer. You can adjust future advertising by tracking redemption rates and controlling for mobile location, day-of-week and time-of-day.

Adding social data to mobile makes this scenario even more valuable. Imagine this mobile Facebook-like example:

Barney has entered lots of information about himself in your App: he is single, he is interested in women, he works at Goliath National Bank (GNB), etc. You can now get incredibly targeted. You can offer a promotion that gives Barney more savings if he brings co-workers from GNB with him. You can now track his response against others based on location, day-of-week, time-of-day and a slew of confirmed individual demographic data (gender, employer, age, etc.) to plan and refine future promotions.

Companies like Facebook, Twitter, Groupon, FourSquare, Yelp and many others have assembled a “treasure trove” of data on customers. Today’s technologies make it easier for companies to parse this data for recommendation and promotion than ever before. Apple and Google make it easy to reach over a billion people worldwide through in-App ads, alerts and notifications. The next step is to map traditional cross-sell models into the mobile space (rather than force-fitting web advertising models).

The simple feature needed to take location-based services mainstream

Location-based services offer amazing future possibilities. Restaurants can offer just-in-time discounts to people nearby fill empty tables. Similarly, People can pick a restaurant where their friends are currently enjoying “Happy Hour”. Stores can offer targeted coupons to browsing customers based on their buying habits. Meanwhile, I can find a nearby store that has that hot Christmas gift in stock while I am shopping.

The success of companies like FourSquare demonstrates the potential of these possibilities. However, right now early adopters are the primary users of location-based services. Many mainstream consumers refuse to use them. Why? Because they do not trust location-based services (yet).

Why many still fear location-based services

What is the cause of this mistrust? Fear of losing control of offline privacy. Most of us now accept that information they post to the Internet could likely be publicly available (how much Generation Y cares about this vs. the Baby Boomer generation is an entirely different debate). However, very few want their offline activities (which stores they visit, where they are driving, etc.) to be readily available as well. minority-report-monitoring_280px-sqThis is an understandable fear as this information could be exploited for a variety of very bad purposes: from thieves breaking into your house while you are away to the scary advertising future depicted in the movie Minority Report.

This fear and mistrust will only increase as many new players enter the location-based services market. Some will only use your location services when you explicitly approve this; others will “store your approval” using your information without explicit notice (you can see this already in many location-based apps). Some will carefully protect it; others will have data breaches that disclose months of data on what you were doing, when, and where. Some will even sell your data to third parties (perhaps not initially, but when new sources of revenue are needed, after “notifying you of changes to their Terms of Service”). The consequences of these disclosures on privacy are enormous.

A simple way to address these fears

There are many ways to address these fears: industry (or legal) standards for use of location information, creation of registry of trusted location-based applications, etc. However, these means of protection are complicated (wherever there is complexity, there are many sources for unexpected outcomes). They also require consumers to trust location-based service providers to do the right thing, without error.

smartphone_switch_180pxHowever, there is a simple way to give back consumers assured control over when their smartphones are sharing location information with apps: the physical on/off switch. Give people an easy way, with the flick of a switch, to turn off sharing of location data with any applications. Let them check whether they are sharing or not with a simple, binary glance. Don’t make people navigate through multiple menus. Make it as simple as a light switch.

There is a well-known precedent for this: the silent/vibrate button. When mobile phone came out, people needed to make them silent when they went into meetings, movies and restaurants. Those mobile phones that made this simple were loved; those who didn’t were not. The love of the physical toggle switch reared its head again a few months ago when Apple removed the ability to lock iPad rotation with it’s physical switch (they restored the feature after much uproar in the next point-release).

This is NOT a placebo

I know, many of you are saying this is a simple placebo. Mobile phones already broadcast your location to your telecomm provider. However, the sharing and management of this location information is different than that used by location-based service application. It is not broadcast over the Internet (“Jim just check-in to…”); it is only attainable via search warrant or similar legal procedure. In addition, it is approximate (Verizon knows my location, plus or minus X meters; I do not positively confirm which store I am in); location-based app data is tagged with metadata that makes it much more exploitable.

Instead it will let location-based services “Cross the Chasm

Putting a location services on/off toggle switch into the next major release of smartphones will make it far less scary for mainstream consumers to adopt location-based service. Having this physically in smartphones will create infrastructure from which application developers and consumers will all benefit. The first mobile provider who does this will definitely gain an advantage, especially if it does so in partnership with an App Store-delivered application provider. Will it happen first on Android (due to its openness) or it will happen first on iOS (as part of Apple’s holistic user experience)? Or will Nokia’s sufficiently influence Microsoft to provide this (Finland is known for its strong privacy protection)?