Location-aware services: Are they worth the effort?

If you're on Facebook or Twitter, you might have seen posts from friends using a service called Foursquare telling you that they're at a particular bar or restaurant, or catching a hockey game. And you might have thought, "I bet these places just love the free advertising."

It's just one of a number of "location-aware" services for smartphone users that offers potential marketing opportunities for savvy businesses.

Foursquare is a game and social network where users "check in" to a location using a smartphone app to let people know where they are and what they're doing. Depending on your privacy settings, your check-ins could be seen by anything from a small group of friends to everyone on the internet.

If you're the person with the most check-ins at a certain location, you become its "mayor." Foursquare also offers badges for completing certain tasks — checking in a certain number of times in one night or checking in from a boat, for example. These badges appear on a user's Foursquare profile.

"It's a social network, so you're 'narrowcasting' this location-based information to your friends, your network," said Sidneyeve Matrix, a media professor at Queen's University who specializes in digital culture and marketing.

Foursquare is the most popular geo-social network, but there are others. Gowalla offers "pins" instead of badges and allows users to collect virtual gifts dropped off at various locations. Twitter allows users to add location data to its posts. Facebook recently launched its Places feature in Canada.

Of course, businesses big and small are already trying to take advantage of these location-based services to promote their products. Starbucks offers the "Barista" badge on Foursquare for checking in to five different Starbucks locations. Starbucks also partnered with Foursquare last spring to offer the mayor of certain Starbucks locations a dollar off a frappuccino frozen drink.

"The mobile phone is the new loyalty card," said Matrix.

There are growing pains

Unfortunately, attempts to market using geo-social networks do face growing pains, and they can backfire if not done properly. The staff at Matrix's local Starbucks in Kingston, Ont., for example, had never heard of the Barista badge promotion — or Foursquare, for that matter — and refused her the dollar off. Matrix says she was accused of faking the coupon.

Matrix described the refusal as "humiliating" and said it "certainly killed the joy and the novelty of the digital coupon." She took to Twitter and her blog to complain about the refusal and to write about Starbucks' social marketing "fail."

Within an hour of Matrix's tweet, the official Starbucks account on Twitter replied to try to make things right. The loss of reputation to Starbucks was worth more than the dollar coupon Matrix was trying to redeem, she said. "What is the value of the word of mouth promotion Starbucks just lost?" Matrix wrote on her blog.

"The take-home lesson is if you're going to do something innovative, you have to make should that you communicate that right down to the shop floor," said Matrix.

Communication with customers is key, too. The Gap partnered with Facebook to give away 10,000 pairs of jeans at its U.S. locations to people who "checked in" to a Gap store using Facebook Places.

While Fast Company deemed the promotion a "huge success," tech news site GigaOM found that many Facebook users were confused about how the promotion worked, some of them just writing "Checking in" on The Gap's Facebook wall.

Different uses for Foursquare

Other companies are using Foursquare in different ways. Clothing retailer Lululemon has a series of tips on its Foursquare page, directing customers to local yoga studios and gyms, places where they could wear their products.

"Lululemon is encouraging check-ins among staff and clients," said Matrix.

The idea here is to promote a business through a person's network of Twitter followers and Facebook friends.

Small businesses can also use the "events" feature of Foursquare, said Matrix, following the lead of the NHL, which partnered with Foursquare to promote the league's opening day in October.

"If you're having an event, if you're having a sale, people can check in and access additional information about the [event] that's going on at the location," said Matrix.

The NHL also added tips for each of its venues, posting hockey trivia or helpful hints for each arena.

"There's lots of scaffolding on the Foursquare site for small businesses that want to set up local promotions right away. You can do it in an hour," said Matrix.

Realistic goals needed

Businesses must also have realistic goals for geo-social network marketing projects. Foursquare is the most popular geo-social network but it still doesn't have as many active users as other more established social media sites like Facebook, for example, so businesses expecting a quick payoff could end up feeling frustrated.

"Geo-social networking is certainly not your first activity if you're looking for social media marketing, because very few people are actually using it," she said.

"It depends whether you want those early adopters — if you think that that's your target market, that they're going to be the ones that will amplify your message to the right people because they're true influencers," said Matrix.

"It's not quite the experiment that works for a small, little business like us," said Tony Sabhewal of the Magic Oven, an organic pizza restaurant with five locations in Toronto.

"My experience is that you're rewarding the people that are anyways coming to you," he added. "We're not quite an everyman's pizza place so we're not looking for every guy walking across the street to make a beeline just because he gets a free beverage or a free desert. I experimented with it, but it didn't quite go the way I like it to.

"My experience has been average, at best, in terms of bringing in new people."

On the other hand, Sabhewal says the company's presence on Facebook has been valuable to him. "I really think that it's a very worthwhile presence. I get feedback from that presence that is much more valuable than any other emails I get."

Building mobile marketing apps

A small business doesn't have to develop a presence on Foursquare to take advantage of the opportunities that location-aware smartphones provide. Many established companies and tech startups are building mobile marketing apps that allow mainstream social media users to search for deals and promotions close to their current location.

Even Google has said its strategy in mobile computing is focusing on location-based advertising and coupons. There are Canadian startups in this new field, too, including Geotoko in Vancouver and Clip Mobile in Toronto.

Clip Mobile has created a "location-based mobile coupon network," said its founder, Dave Offierski. The app, available for free on iPhone, Android and Blackberry, "uses the GPS in the phone … to find where the user is and does a 10-kilometre search based on their location to reveal merchants or locations with offers, deals, promotions, coupons, discounts," he said.

Unlike Foursquare, the app doesn't require users to check in or make their location public. Clip Mobile is basically an alternative to direct mail, the traditional medium for getting deals to consumers.

"It's actually quite specialized. It has a very defined purpose: 'Where am I, what's around me and … where can I get a deal?'" said Offierski.

"Why are we wasting all this energy and these resources to cut down trees, to print, to deliver to mailboxes with a redemption rate of about two to five per cent?" he adds.

Offierski says his service allows merchants to track how many people look at the offers and how many actually redeem them, which allows a company to fine-tune its marketing message.

Future of geo-marketing

Ever since phones with GPS were introduced, marketers have speculated about a person walking down the street and receiving a text message from the store they just walked past, advertising a special deal — a scenario Offierski called "the holy grail."

The trouble is, says Offierski, technology — and consumers — haven't caught up to that marketer's dream.

Many smartphones don't allow an app to run in the background, Offierski pointed out, so keeping a location-aware app running while you're walking down the street hasn't been practical.

And his research suggests that consumers perhaps don't want to have deals "pushed" to their phones in this way.

"At this point, we haven't seen that consumers want to be pushed things based on their proximity," said Offierski.

"Simply, proximity is a great way to sort or profile information that I'm looking for, not to trigger alerts."

"Yet," he said.