Location-based Social - Part 1: The Landscape

Imagine the day when your consumers can use their mobile phones to automatically notify you and their friends that they are in a physical location (like your store or event), when you can then confirm it through GPS tracking and reward them accordingly.

That day is today.

So my question to you is - how can you leverage this new capability to drive your business forward? If your answer is "I'm not sure", then continue to read through this blog series and I'll help give you some suggestions on ways to use location-based social networks to leap frog your competition and be the coolest person at your next cocktail party* (*results may vary).

Coming off of SXSW Interactive in Austin, it's obvious that location-based social networks are one of the most intriguing and talked-about topics for 2010 - and for good reason. However, there is a lot of confusion about the space and how it applies to marketers. 

I have decided to write a 3-part blog post on location-based social media to help you 1) understand the landscape 2) identify the key players 3) discuss the opportunities for marketers.

THE LANDSCAPE OF LOCATION-BASED SOCIAL NETWORKS

Location-based social networks (also known as Geosocial networking) are designed to merge the online and offline experience. As wikipedia states, they are social networks with which geographic services and capabilities such as geocoding and geotagging are used to enable additional social dynamics. Which, in our terms, means that they use information about your location to enrich your experience (ex. connect you with people in the same area, share photos or images that others took at that site or share reviews of the restaurant you are about to enter).

These location-based services rely on the GPS capability of smart phones (such as the Apple iPhone, Blackberry, etc.) and allow people to "check in" to physical locations such as restaurants, office buildings, coffee shops using their mobile phone.   According to a report from ABI Research, revenues for these networks could be as high as $3.3 billion by 2013 (this might be aggressive, but the space is certainly hot).  There are many new location-based social networks that combine different elements like reviews, trip planning, collaboration, point collection, and promotions with the location-based targeting capability to enrich the user experience.

This is a relatively new space in social because it is leveraging the GPS capabilities that are only found within the most recent generations of smart phones to determine the location of the individual.  The larger concept of geolocation actually started on the web using IP addresses and hotspot triangulation, but the space only got exciting when you could get more portable and targeted using a GPS-enabled mobile phone.

Big Brother or Big Idea

There is a lot of concern about the potential for location-based services to be seen by consumers as "big brother", which is a legitimate concern.  In a world where privacy is a top topic for lawmakers and service providers, it is fair to evaluate the potential downside of this new emerging space.  We have seen a lot of changes in the larger social space with regards to the level of control individuals have over their personal data and marketing preferences.  You need only look at the changes that Facebook has made over the last year to their privacy management features to get a sense of the way the world is moving. 

However, giving consumers control, does not mean that good services that offer value to the consumer will fail.  Quite the opposite in my opinion.  Putting more control in the hands of consumers, allows you to create location-based services and networks that can require a tremendous amount of personal information, so long as the value exchange makes sense.  It is apparent that today's consumers are more willing than ever before to provide personal information, so long as they understand its use and they see value in the additional capabilities or services they get in return.  As an example, if I know that I can get better deals at local stores or restaurants if I provide my location to a specific social network, those deals might be more than enough to overcome my concerns about disclosing that information.

All that being said, it is important when planning any strategy to take note of the risks.  It is certainly possible that there will be a move in the future away from such overwhelming transparency.  This will be further accelerated, if we start to see these location-based networks abused for criminal or socially unacceptable behaviour (ie. people start to use your location to stalk you or attack you or worse).  Here is hoping that we can find a way to take advantage of the local marketing and collaboration capabilities of location-based services, while avoiding the potential for unintended abuse of such targeted capabilities.

Where Apple goes, so goes mobile

It was recently published that Apple filed a patent in September 2008 around a location-based social networking app.  This patent describes a system where all of the devices in a specific location can automatically become part of a new social network based on their location, which the patent filing refers to as iGroups.  This concept promises all the great current features of social collaboration, reviews, and discussion with the ability to set physical boundaries around those that can participate. 

You can imagine the day when you could get on a social network specific to a concert you are attending.  You can get on your smart phone and instantly interact with other fans in the concert hall, share images, video, sharing information and requesting songs.  It is all driving towards a more integrated online and offline experience.  You can see a more detailed review of the iGroups concept in a great ReadWriteWeb review.

Now that we know the landscape, what's next?

So now that we have an understanding of the landscape, it is time to move on to look at the players in this space.  Stay tuned for my next blog post to get a detailed view of the top players to look out for and my thoughts on who might emerge as the big winners in the years to come.

Comments

[Uri - Pay Per Performance Marketing]

Although the technology is there, I personally do not believe that the end user is...

Just like any software application out there, users are still very much behind in utilizing smart phones to their fullest...

Just thing about how UNDER utilized "Microsoft WORD" is...

In other words, this type of marketing would be beneficial to a certain segment of smart phone users...

Just my two cents.. Great read.. I look forward to part 2.

Maybe we can connect at SMX Toronto.. :-)