Kevin Nakao is VP of Mobile & Business Search for WhitePages, a Top 40 Web and Mobile Publisher. You can find him on Twitter, and on the Whitepages Blog where he writes about mobile, local, and social media.
While last year’s SXSW seemed to serve as the “coming out” party for location-based services (LBS), maybe this year’s conference signifies the migration of these platforms into mainstream culture. And perhaps the only real “new” concept to emerge this year is the idea that there is finally a real opportunity to make money via “location.”
Here are five things that companies should consider as they look to utilize location-based services (LBS) as part their mobile strategy.
1. Location Shouldn’t be the Only Goal
From finding the nearest ski slope on REI’s Ski and Snow Report to a nearby movie on Flixter, there are plenty of Top iPhone applications that have incorporated a “lead with the offer, not the capability” philosophy into their mobile product offering to provide a better service. Build the best service first, then add the bells and whistles.
With all the hoopla surrounding location, it is easy to lose sight of the fact that location’s real appeal to advertisers is the fact that with this functionality, you can reach the on-the-go user, who is ready to buy and consume. Just because Twitter and Facebook offer location doesn’t make that valuable or new to advertisers. Location-targeting via IP address has been around a while. For the same reason radio is a great advertising channel for retailers, LBS advertising is also valuable: because it can reach the consumer near the point of sale.
2. The “Long Tail” for User Adoption
Foursquare has clearly emerged as the location darling. Consider the fact that after only one year, they’ve reached 500,000 active users (Foursquare recently tweeted they added 100,000 users in 10 days).
However, if you apply any city’s share of the total U.S. population, the results show some pretty low estimates of Foursquare users in individual localities. What emerges is a very “long tail” – a steep, narrow graph – of local user adoption. This shows why it is important to achieve scale if you hope to see return on investment in the location marketing space.
For example, using these rough estimates of a city’s proportional share of the U.S. population, if a local pet supply store wanted to target people in San Francisco, the estimated reach would be 1,310 Foursquare users. Even if you double this audience estimate, the number is fairly small for even a local marketer. We had to hit around 4 million downloads of the Whitepages iPhone app to achieve the minimum scale needed for advertiser geo-targeting. Today, 80% of our campaigns from major brands are geo-targeted.
Editor’s Note: It’s important to remember that these are just rough estimates. Because Foursquare was initially only available in a handful of major metro areas, the geographic distribution of users may not precisely follow the geographic distribution of the population.
3. Mobile Battery Life is Key
Battery life is the single biggest threat to location. With GPS on, the phone is asking the network where it is, and this chatter can drain battery life – anyone with an iPhone knows what I am referring to. Thus, phone manufacturers will play a critical role in the future of LBS. RIM, the manufacturer of BlackBerry devices, faced this problem early on with the energy-tax of e-mail polling, and as a result, their devices now have some of the best battery life.
Foursquare has helped us move forward here as well. “Check-ins” help to address the issue as they offer efficient geo-triggers without having to keep battery-draining GPS features on at all times.
4. Location Will Be the Battleground of the Mobile OS
Looking forward, I predict the mobile platform wars will be fought with location and maps. This is an important feature that a platform can use as a point of differentiation for consumers and developers.
In anticipation of that battle, Apple purchased mapping company Placebase, and Google is starting to provide unique mapping features like turn-by-turn navigation on its Android devices. The only hope I see for Windows Mobile is if they do something completely revolutionary on the mobile location front. A development like this was alluded to at the recent TED conference with its augmented reality layering of geo-tagged Flickr photos and real-time video integration.
5. Location Pays
At WhitePages, we monetize our mobile services through a mix of premium, national display, and sponsored links for local business. Our effective CPM (revenue per thousand ad impressions) for sponsored local links is $30-$50 – double the effective CPM (eCPM) rate we see for premium display ad campaigns from national brands. The eCPM multiple of local targeted ads over ad network rates is a staggering 10x.
Location-based inventory will also become scarce as Apple recently announced that iPhone apps will not be permitted to access GPS capabilities for advertising alone. There now needs to be some consumer benefit and functionality in order to access a user’s location. Geo-targeted inventory on mobile will continue to be at a high premium with no excess supply or ad networks to drive it down.
Conclusion
It is my hope that by this time next year, SXSW — the festival of “emerging” music and technology — will have finally moved on from location. It’s clearly happening now, and if integrated wisely, location will be making companies too much money to be called the “cool kid on the block” any longer
More location-based resources from Mashable:
- 9 Killer Tips for Location-Based Marketing
– 10 Foursquare Apps You Can Use Right Now
– 6 Foursquare Apps We’d Love to See
– 6 Tips for Getting the Most out of Foursquare
– Foursquare vs. Gowalla: Location-Based Throwdown
– Location, Location, Location: 5 Big Predictions for 2010
