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The power of ‘location sharing’ and how businesses can harness it

The power of ‘location sharing’ and how businesses can harness it

Monday, January 30, 2017

Last year, the Pokémon Go phenomenon persuaded millions of mobile gamers to opt-in to GPS location sharing. While there were some privacy concerns at the time, the game (which is the most downloaded iOS game in history) was able to tangibly build a bridge between the digital and physical worlds, which many would agree has been the holy grail of location-based ad targeting, for quite some time.

The challenge for businesses, and app creators, is to provide enough of an incentive, and a justifiable value exchange, for consumers to part with their location data. Increasingly this motivation will have nothing to do with the function or purpose of the actual app, which creates an even bigger obstacle for businesses to overcome. With Pokémon Go, the trade-off is being able to play and capture virtual creatures (location sharing is a basic feature of the game), but few businesses will have the opportunity to build such a convincing case.

Location-based ad play is predicted to grow from $9.8 billion in 2015 to $29.5 billion by 2020, according to BIA/Kelsey’s latest local media forecast. That equates to 39% of overall mobile ad revenues, growing to 41% by 2020. Key drivers for this growth include mobile local intent, and advertiser evolution to follow that usage, so now is the time for businesses to begin building location sharing into their media strategy.

One trailblazing company to watch and learn from is ride-hailing app Uber. Through the nature of its business it knows where its customers are going and the places they’ve visited (it recently moved to track location more pervasively via forced opt-in), so it’s very well placed to be a forerunner in location sharing. For very good reason, Uber has been reluctant to bombard passengers with location-based ads and in-car digital displays etc, at the risk of diminishing the user experience and jeopardising its primary revenue stream, in exchange for a small ad return. So instead it has begun to lay the foundations for an enhanced, content-rich in-ride experience, delivered through a combination of social-local targeted data.

A few new features launched within Uber’s UI update towards the end of last year, hinting at what’s to come. For example it rolled out a new location feature which lets passenger navigate to a person rather than place, which also requires the second person’s location to be tracked. This is a great example of the power of sharing, as it has the capacity to use behavioural profiles based on all the places a passenger has gone and their contacts to create extremely personalised and precisely targeted and content.

Uber’s attention is clearly focused repositioning its app as a portal to exclusive, branded content, which might otherwise be paid for, and is well tailored to the journey time. Once it has the customer ‘hooked’, it seems almost certain that at some point in the future, this which will grow to incorporate an ad model and a new revenue stream, steering customers towards nearby featured businesses, for example. This is already starting to happen to a degree with its new restaurant guide which highlights top destinations in its most popular cities.

Businesses like Uber are undoubtedly going to make customers more comfortable with sharing their location data, and help them to see the value in it. Thanks to mobile, there are more ways than ever to capture real-time location data and communicate with customers on the move, and now’s the time for businesses to begin thinking creatively about how users can be enticed to share their location.

Research by Aimia and Columbia Business School, which surveyed 8,000 consumers from five countries, found that individuals are willing to share their location data, if there’s a worthwhile trade-off. Key findings were:

  • 80% would share data for rewards from a company
  • 79% would share data for cash back
  • 77% would share data for coupons
  • 69% would share data for location-based discounts

The bottom line is that businesses need to be clear about what they are offering to customers in return for their location data. Beyond this, it’s critical to make sure they are honouring their side of the bargain, using the information to engage with individuals at a granular level, in a hyper-personalised and targeted way.

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