Location-based ads coming to your smartphone
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TORONTO - When Aidan Nguyen was visiting Chicago last month he got 25 per cent off a meal simply by using the app Foursquare to "check-in" at a restaurant on his smartphone.
The self-described shopaholic said he's always looking for a good deal when he's out and often posts his location on his social networks.
Available for years in the United States and England, location-based mobile marketing is moving into Canada. This month, customers with Rogers Communications can sign up for text messages that will alert them to deals when they are near specific retailers.
Nguyen said he's willing to share his location in return for a deal.
"When you're walking around, then why not?" asked the 24-year-old Toronto public relations consultant. "If the offer is fitting for what I'm looking for, and it's a good promotion, I'll check it out."
Rogers said a few thousand people have already signed up for the option, which offers discounts at six national retailers including Rogers Wireless, Sears Canada (TSX:SCC), A&W Restaurants (TSX:AW.UN), The Second Cup Ltd. (TSX:SCU), Future Shop and Pizza Hut.
"We are living in a world where you are always connected to the Internet and you're very reliant on a mobile device," said Nyla Ahmad, vice-president of local digital at Rogers (TSX:RCI.B).
"It's not a big leap to understand how that mobile device will work for you by knowing your location and very intelligently delivering you communications that are useful and relevant to you."
The program limits the offers to four per week. Retailers pay for each text message that is sent out, with Rogers monitoring how subscribers respond.
Ahmad said the potential for using wireless "geofences" — virtual zones around specific locations — is limitless for targeted marketing.
In San Francisco, outdoor clothing retailer The North Face uses the technology to send weather reports to subscribers when they enter geofenced areas on highways that lead to areas such as ski hills or bike trails.
Grant Packard likened it to being handed a flyer from someone standing outside a business: you may not want the flyer, you agree you'll take a look at it, but there's no guarantee you'll buy anything.
"It's a start, but what marketers really want is that relevance at the point of the mobile device," said Packard, a professor at the School of Business and Economics at Wilfrid Laurier University.
"What geotargetting is starting to get is context. Where you are matters, but what marketers really want is intent. What are you thinking about at that moment? What do you want at that moment? What is your goal?"
Packard, who previously led digital marketing strategies at Indigo Books and Music Inc. (TSX:IDG), said the leading player at the moment is Google, because it is able to target its ads with the help of a users' search history.
Eventually, retailers want to be able to harness information about how long a shopper has been in a store, what they looked at, and if they purchased anything, to connect and lure them back.
There's no doubt that using more tailored data such as age, sex, interests and shopping preferences, is where target-based marketing is headed, said Lori Bieda of SAS Americas, an international analytics software company.
In July, the company released a study that found 58 per cent of Canadians surveyed said they'd be interested in receiving personalized promotions when shopping and 47 per cent of smartphone users said they were more likely to return to a retailer if they received one of these deals.
"It's kind of having an electronic personal shopper," said Bieda, executive lead for customer intelligence for SAS Americas.
"If you're able to connect data that they have with consumers, and power it with analytics... a retailer will have a wealth of information of what a consumer may purchase."
But Packard notes that although consumers love getting deals, they may soon be asking themselves why they aren't getting a discount on their cellphone bills to look at the advertising.
"Now I'm in a position where I'm paying them revenue and letting them market to me much more obtrusively," he said. "Do I like that? I think that's the risk."