The recent entry of social network giant Facebook into the geolocation game has sparked a wave of interest in location-based apps, with digital experts the world over predicting the likes of Facebook Places and Foursquare will soon be mainstream.
Facebook Places launched in Australia on September 29 amid expectations it will soon surpass other geolocation platforms, including current favourite Foursquare.
“Facebook potentially has the power to win over the other platforms, simply because its reach is much stronger, its audience more engaged and because the other location-based platforms don’t have a very strong point of difference,” says Marie Sornin, head of social media at Reprise Media.
Facebook has 8.9 million active users in Australia, according to Nielsen NetView – a figure that is constantly increasing. When a player with such a strong army of supporters enters the geolocation space, it’s a sign of a trend about to take off. But what does this mean for start-ups and small businesses?
Location-based apps explained
Location-based apps, which take the form of apps that are downloaded onto a mobile phone, allow users to announce their location to their friends by “checking in” to a location – a restaurant, shop or even the airport – and seeing which of their friends are nearby.
Better yet, from a business’ perspective, users can receive information about businesses or activities in the area. By listing your location you are exposing your business to more customers, and by offering rewards and incentives you can entice them to buy.
For businesses, small or large, location-based apps provide the opportunity to put themselves on the map, literally. Conducted as part of a larger marketing mix, location-based apps allow you to tailor your marketing message to your target market, gain insight into what makes them tick and enjoy unprecedented return on investment.
Nobody knows how many location-based apps are out there. US research giant Forrester Research provides a loose guide of “dozens, perhaps hundreds” of what it calls location-based social networks, or LBSNs. The most popular ones include Foursquare, Brightkite, Gowalla, MyTown, Loopt, Whrrl and SCVNGR.
While all offer similar check-in features, Foursquare offers users the ability to become “mayor” of a location if they clock up the most days with check-ins in a two-month period, which then allows businesses to offer special mayoral discounts and rewards. Gowalla focuses more on “social gaming” where users compete to earn virtual items, some of which can be redeemed for real-world items. Facebook Places is closest in features to Foursquare, listing nearby businesses and recent check-ins and comments by a user’s friends.
Australian user figures are not currently available, although Nielsen estimates Foursquare users at 80,000. This is certainly a far cry from Facebook’s almost nine million users, and Twitter’s 1.4 million-plus Australian users.
Early adopters
However, as Ashadi Hopper, creative director digital at advertising agency JWT, points out, location-based apps are dominated by social media influencers – early adopters who tend to spread the message. If your business makes an impression, you have a better chance of gaining quick word-of-mouth traction and building a profile. For a start-up, that’s a valuable result.
“Businesses should look at it as a customer acquisition tool,” Hopper says. “You might not be getting critical mass, but you are reaching out to influentials.”
The most common business use of location-based apps is as a means of offering retail discounts and customer rewards. In the US, Gap has been using Loopt to offer a 25% discount to users that check in twice at one of its stores.
Starbucks US, one of the first and most fervent supporters of location-based apps, runs multiple promotions across the various apps, including competitions among customers who post the most check-ins as well as sending messages and special offers to customers who check in at competing coffee outlets.
Bridging the app gap
Sornin thinks location-based apps offer start-ups the same benefits as the big end of town.
“Foursquare offers an interesting solution for retailers to drive traffic in-store by adding promotions to your location,” she says Marie Sornin.
“You don’t need to be Starbucks and have the world’s biggest Facebook community to leverage that – some corner shops are generating dollars by posting daily specials.”
Adam Good, executive director of digital innovation at Clemenger BBDO Group, agrees. “The thing with these apps is that it’s a really low and easy entry point, whether you’re a corner store or Volkswagen,” he says. “The only thing it costs you is time. It’s not a matter of who has the biggest budget or most customers, it’s just about devoting the time. Digital media as a whole levels the playing field between large companies and small players.”
Drawing in customers
The Wine Vault, a three-year-old wine store in Auckland, New Zealand has been luring customers through Foursquare since March 2009. Owner Jayson Bryant says he is enjoying great results, with a growing number of customers taking advantage of targeted offers.
“When you’re a small business, your marketing power is negligible. With Foursquare, it’s only costing me my time,” he says.
Bryant has fine-tuned his geolocation marketing through trial and error. He experimented with both Gowalla and Foursquare, but narrowed his usage to Foursquare as its New Zealand user-base shot ahead of other apps. His store’s most popular Foursquare offer is a 10% discount to customers who check in and show staff their mobile phone.
And like Starbucks in the US, The Wine Vault targets people checking in at nearby restaurants, office blocks and even hairdressers, enticing them with offers to buy in-store or online. Soon, through the power of word-of-mouth, Bryant found customers were driving from the other side of town to check in and claim their offers.
“It’s been fantastic, especially as a small business – you can raise your profile really easily,” he says. “It’s cheaper and more effective than putting an ad in the Yellow Pages. To update these things takes me less than a minute a day. You can spend so much more on advertising and it’s going to get you less of a result.”
Growing numbers
As someone who has enjoyed results, Bryant is not concerned about the relatively small usage numbers of location-based apps. “The number of people using Foursquare is irrelevant provided the people who use it advertise my store. If it’s going on their Facebook profile or Twitter, it’s free advertising for me.”
Perhaps not surprisingly, Bryant, who now consults to other businesses on how to best use location-based apps and social media, thinks start-ups stand to benefit from the use of such tools. “These tools are free, which is a great help considering a small start-up doesn’t have massive marketing budgets.”
