European brands are looking with anticipation at the success of
location-based advertising in the US, but consumers in Europe may
be more reluctant to engage.
The technology is there thanks to rising sales of smart phones
with GPS functionality, but EU legislation on privacy and consumer
protection has made brands wary.
The advantages however, are immense; location-based services
have the potential to create new connections between consumers and
brands, boosting positioning, preference and store traffic.
For many brands, a presence in the new consumer mobile
communities is essential for brand positioning. For example, you
can find brands like Levis, H&M and Starbucks on
foursquare.com.
These are all brands that want to be present in the early
adopter space. As location-based communities grow, these brands
will also benefit from being present among more mature and broader
consumer audiences.
Positive word of mouth in the social media space is proven to
build brand preference. Programmes that persuade consumers to share
location - "get a free coffee if you share your present location/
experience with a friend" - will enhance preference building.
Finally, location-based services offer a highly effective way to
increase store traffic and sales. For example, an additional
discount can be offered to loyal customers who have signed in to
your location five times a month.
In the US, take-up of location-based services has been driven by
use of mobile rebate vouchers that encourage consumers to engage.
Advertisers such as Starbucks already encourage consumers to
"check-in" to their Starbucks online community so they can send
mobile vouchers as consumers pass the chain's outlets.
The three biggest location platforms come from a different
heritage and as a result offer a different opportunity for
brands:
Facebook Places comes out of a social network and consumers need
to actively sign in to allow brand communication. Apps, however,
need less permission, and weather apps, petrol station apps and
public transport apps automatically register a consumer's location
in order to provide the local weather, the nearest petrol station
or the timetable for the nearest bus or train station.
Google's search experience is driving its location-based
services. The new click-to-call function on mobile AdWords allows
advertisers to add a phone number to their data and can provide not
only a Google Map but also directions to the closest store. By
searching for Starbucks you have effectively allowed Starbucks to
give you the closest location or a phone number.
Foursquare comes from a gaming heritage. You get points if you
"check in" to Heathrow Airport and show the world that you have now
been at the airport 10 times within the last month. Although it
attracts a highly educated, tech-savvy audience, the numbers are
smaller.
MediaCom expects these location-based services to take off, but
there is strong consumer resistance outside the core younger
market.
Older or less tech-savvy consumers in particular are currently
unwilling to give their location to brands. To overcome this hurdle
familiar brands such as Facebook - where such consumers might
already have a profile - will have to provide serious reassurance
to get them to sign up to Facebook Places.
Facebook's status as a global brand makes its battle for
acceptance easier while the need to actively check-in to "find
local deals" also creates a further sense of security, for
example.
Ten years ago banks in the Nordics started to offer "online
shopping" on their websites. The banks operated as "trusted brands"
and the advertisers who were allowed to sell online on the bank
site were carefully selected by the bank. Ordinary and initially
doubtful consumers effectively became familiar and comfortable with
online shopping via their bank's homepage.
Although banks are no longer the trusted partners they once
were, a similarly upstanding third-party could act as a catalyst
that takes location-based services mass market.
First published on Brand Republic's Think BR.