Lots of Sloppy Thinking around LBS

Folks like AdAge and TechCrunch, among others, are increasingly devoting their ink to LBS and location. Given the rise of mobile they suddenly recognize the long-standing connections between the Internet and offline purchase behavior — how consumers use the Internet to guide decisions in the real world.

Last night in my stupor upon returning from Boston I ran across this article: “Forget Foursquare: Why Location Marketing Is New Point-of-Purchase“:

It’s the ad served while you are reading the news in the morning on an e-reader that knows you’re at home and three blocks from a Starbucks. It’s a loyalty program on your phone that, through a hotel-room sensor, sets the lights and thermostat and turns the TV to CNN when you walk in the door. It’s finding a restaurant in a strange city on a Tuesday night, discovering that a store nearby stocks the TV you’re looking for, or that a certain grocery on the way home has the cut of meat you need.

Forget Foursquare or Gowalla: Soon every website and service will be able to tell where you are, opening up the floodgates for location-based marketing and blurring the budget lines for advertisers.

At a very high level this is correct: more location awareness all around will create new opportunities for marketers (especially in mobile). But all of that will have to be thought about and executed carefully — and it may not play out in the ways being commonly predicted.

Some of the relatively superficial predictions on display in that article will just not come true. It won’t be the case that marketers will simply shift budgets in recognition of the new targeting opportunities. Local/LBS is still very much a complex, fragmented and little-understood world, especially by brands and national marketers. And inertia in some ways is as bad or worse at the national level vs. the SMB local-local level.

It will take efforts like Interpublic’s Geomentum to educate and execute campaigns for marketers to bring the power of all this targeting to them in a simplified way.

As an aside, here’s an interesting datapoint from the AdAge article: “Paul Feng, Google’s mobile-ads group product manager, said about one-third of mobile searches have local intent.” Don’t take this as gospel, Microsoft offered a 50% or higher number at the SMX West conference. And much larger numbers of smartphone users have searched for local information on their handsets. But the Google data cited here — 33% (ish) of mobile searches on an ongoing basis are local — is interesting and useful in helping frame and quantify the opportunity.

If we slice the queries into commercial and non-commercial, the number of commercial queries with a local intent would go way up. And this discussion of search on mobile devices doesn’t fully capture all the location-intent behavior going on (i.e., Apps) on mobile devices.

Yes, location based advertising on mobile devices is going to be significant, but it probably won’t generate ad revenues like we see online for at least three or four years, if then. (There’s a big disconnect between consumers and advertisers; consumers are leaving advertisers in the dust.)

You should also consider that some of the money going into mobile won’t show up as “advertising.” Rather it will appear in the form, for example, of SMS marketing initiatives such as 1020 Placecast’s “geo-fencing” ShopAlerts. There will also be an “accounting” challenge; when online ads get distribution or appear in the context of mobile lookups (e.g., CityGrid, YP, etc.) is that mobile ad revenue or online?

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As an aside, if you don’t know about Geomentum you should check out what they’re doing. It’s literally radical.


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