Window shopping for technology

Will the resurgence in location-based marketing technology such as beacons and wearable gadgets make the tactic more effective? Morag Cuddeford-Jones finds out.

A few years ago, location-based marketing looked to be the great new hope for marketers. Bluetooth- and GPS-enabled smartphones were becoming the norm, which, combined with a surge in the popularity of voucher codes and discounts, created an apparently fertile hunting ground for brands seeking to target shoppers in real-time.

Although the concept seemed sound, in practice the first wave of location-based marketing – which has generally relied on enticing customers with deals when in the locality of a shop – has done little to add value, increase loyalty or generate immediate sales uplifts. There are many examples of unsuccessful experiments, such as Facebook’s ‘check-in deals’ that enabled consumers to access offers at nearby businesses by checking in on the Facebook mobile app, but which was quickly abandoned in the UK.

And last year, a pilot project using so-called ‘smart bins’ that detected nearby handsets to analyse footfall on the streets in the City of London was unceremoniously ended, owing to fears that mobile users’ data was being covertly tracked. The idea that Big Brother was watching made consumers skittish.

However, in recent months a second phase of location-based marketing has begun, with brands such as WHSmith and shopping centre group Ellandi getting involved. Mobile World Congress, which took place earlier this month, showcased new products based on ‘beacons’ that are expected to move location marketing forward. Trials using these approaches have been taking place in the first quarter of 2014, such as Apple’s iBeacons and the Pouch loyalty app from Weve, which is being tested at food chain Eat. Vodafone, meanwhile, is pioneering new ways of using location-specific data that is already available.

Sean O’Connell, director of product development at Weve, which is a joint venture between O2, Vodafone and EE, explains that the introduction of beacons in-store brings geographical targeting to a more specific level than was previously possible. Beacons use Bluetooth to pinpoint a mobile phone’s location more accurately than GPS, but only when in close proximity to the sensor.

Topman is using augmented reality as a means of targeting marketing in stores

“The range of the beacon is 15 to 20 metres. The customer is either past the door or, if you play around with the signal, in a very defined area of the store. A grocer can determine if they are in the cheese or the wine aisle,” says O’Connell.

But it is not only new technology that heralds ‘location 2.0’. It is also a new attitude among marketers towards how consumers should be targeted. As O’Connell makes clear, it is possible to identify whether consumers are actively considering a brand or have intent to purchase.

In location marketing’s first incarnation, the excitement that the consumer could be geographically targeted should perhaps have been tempered by the fact that a smartphone GPS could be relied upon only to locate the device within a radius of around 250 metres. In a busy shopping centre or high street, it is difficult to infer from this whether the consumer is considering using one of the numerous nearby brands, and therefore where location marketing might swing the decision.

Another facet of marketers’ new location- based tactics is a better understanding of the balance between consumers’ active and passive interest in brands. This is most in evidence in the integration of beacon technology into loyalty apps.

“In a number of our shopping centres, the loyalty cards are very low-tech,” notes Mark Robinson, investment director at Ellandi shopping centre group, which controls 11 centres across the UK. “These cards do work, but they’re very passive. We don’t get a lot of value from it in terms of customer information or the ability to target and influence customer behaviour.”

The company employed app maker TagPoints to create mobile loyalty app Smart Rewards for its Swan Shopping Centre in Eastleigh, Hampshire. Robinson believes that the difference between a loyalty app and loyalty card is that phone rewards must be earned by more than just shopping. “Psychologically, someone will value something they have earned more than something they are given for free. It helps engagement.”

The Smart Rewards app enables customers to earn loyalty points in two ways. First, they can check in to the centre and the company tries to link those check-ins to individual shops using beacons. “We can influence where people go,” Robinson claims. “We can suggest that if they go to TK Maxx today, they will earn 80 points. They don’t have to buy anything. It’s all about just being there.”

Shopping centre group Ellandi is using beacon technology for its Smart Rewards loyalty app

The second way is for customers to share details of what they have bought with their points on social media, thereby generating word of mouth. “We get our loyal customers to do our marketing for us,” says Robinson.

Within the shopping centre, retailers claim the technology is delivering distinct sales uplift. “It has already driven shoppers into store and we see it becoming more successful as targeting gets more accurate,” says Sue Hillyer, store manager at WHSmith in the Swan Centre.

The technology has also benefited independent retailers. Tim Burn, marketing director at Boswells Cafe, claims: “We have had 130 redemptions in the first month and all of those customers have increased spend beyond the initial reward value, which we were delighted to see. One of the check-in points is next to our location, so this also helps to drive footfall.”

With 1,000 downloads since launch and 30 per cent of those being active users, Ellandi’s Robinson says the TagPoints system is exceeding his expectations. The next stage is to act on the insights provided by the data generated, in order to recoup some of the centre’s £50,000 campaign budget. “We are collecting data in order to track shopping behaviour and monitor which shops are visited. The means of developing this and getting it to pay its way is to offer a targeted marketing service to our retailers.”

Weve’s Pouch app aims to offer multiple loyalty schemes in one place, with the ultimate goal of delivering compelling rewards that will encourage active use, rather than risking beacon-based spam. Holly Lee, Eat’s group marketing manager, told Marketing Week at the launch of its trial of Pouch in February that the company would be able to access more information about customer behaviour and how it could be influenced. The trial will include a variety of marketing messages to determine customer acceptance but insisted that “this is about added value”, hinting that a race to the bottom in terms of discounting was not the aim.

Owen Geddes, who has assisted Weve’s loyalty app development as well as running the Appflare network of beacons, points out just how nascent the technology is. “There are currently only certain devices that can ‘see’ beacons – the iPhone 4S, iPad 2 and Android 4.3 and above. That is the minority of Android phones, but we expect that to grow a lot this year. The other restriction is cellular coverage – 20 per cent of phones have connectivity issues in stores.”

However, he predicts fast growth in uptake by brands, which in turn will require restraint in their marketing. “By the end of this year or next, we will see multiple apps competing for customer attention off a single beacon. The trick will be to make sure customers don’t get bombarded as in the past.”

But even though the rise of beacons seems inexorable, they have not entirely supplanted GPS for location-based marketing. The latter remains useful, especially for non-retail brands and behind-the-scenes data usage. Vodafone, for example, used the AppNexus advertising platform to incorporate GPS data into a mobile advertising campaign run by Blue Mango. The aim was to increase the use of mobile roaming packages for consumers who wanted to use their phones abroad.

The mobile operator sought to identify users in the Netherlands who were preparing to leave the country on holiday, as well as to discover which users were already abroad. The company used GPS targeting to filter users in and around all civilian airports in the country. The location data was combined with Vodafone’s IP address database in order to identify existing Vodafone customers, so that only they would receive advertising.

In order to be economical, real-time bidding (RTB) – the method used by Vodafone to buy the ad space – requires a scale of campaign that is not usually compatible with location-based targeting. However, being able to choose from all identified Vodafone users provided a sufficiently large audience to make the media buy viable. “We have had deeply targeted mobile campaigns since 2011, but developments in RTB see scale and technology in place to take it to the next level,” says Willem-Albert Bol, manager of media and marketing planning at Vodafone.

Initial results from the company show a 198 per cent higher conversion rate for campaigns targeting Vodafone clients versus campaigns that did not, 23 per cent higher conversion for campaigns targeting only airports versus countrywide, and 63 per cent higher conversion rate for campaigns using GPS versus geo-targeting based only on where the IP address is located.

For most brands, location 2.0 is in the trial phase, and it will be some time before they work out which of the several new forms of marketing being tested will have the power to endure – whether it is apps that interact with beacons, finely honed ‘check-in’ technology used alongside loyalty points, or using multi- brand loyalty schemes such as Pouch (the precursor to Weve’s and Mastercard’s fully fledged mobile wallet, anticipated in 2015).

No matter which of these shows staying power in the future, one thing that is certain is that the goalposts for location-based marketing have moved a long way.


Jason Griffiths
Marketing Director

Marketing Week (MW): How is Topman using augmented reality to target its marketing in stores?

Jason Griffiths (JG): We have been doing our first activity with mobile app developer Blippar to coincide with the launch this month of our ‘Refresh your fit’ campaign, which centres on a new collection of nine T-shirt styles. Customers in the UK and US can ‘Blipp’ a specially designed image on an in-store flyer, which takes them to the dedicated Topman Blippar augmented reality homepage. Here, they can view a gallery of how the t-shirts look on models or interact with the virtual fit guide where each of the nine styles can be scaled to fit against the user’s photo and then shared on Facebook and Twitter. By sharing the picture with the hashtag #refreshyourfit customers are entered into a competition to win a year’s supply of T-shirts.

MW: How did you identify that consumers would want to interact with Topman in this way?

JG: We noticed that our customers are interacting with their phones more in-store, taking selfies and images of the store itself. We wanted to tap into this and offer them an interactive experience with the Topman brand.

MW: What are the main aims of the Blippar campaign?

JG: To raise awareness of the nine new T-shirts and how they fit. This is closely followed by consumer engagement and interaction. By using Blippar we are able to give our customers a new and interactive experience.

MW: How does the location-based campaign give you deeper insight into your customers?

JG: We are using the app as a vehicle for education, understanding and to create awareness of the new T-shirt fits collection. The key pieces for us are the social user- generated interaction and the competition, all of which can be easily measured through the analytics functionality that Blippar offers.

MW: What does the use of location-based targeting such as Blippar add to the value of Topman’s customer interactions, in terms of direct sales or increasing customer engagement?

JG: The benefit is that you can use the app anywhere with an internet connection or 3G. In effect, we are no longer tied to one marketing asset in one location. Instead, consumers can interact at a time and location that suits them. The Topman activity is bringing the traditional in-store fitting room out of the store and to our customers wherever they are. What is more, through the ‘Blippable’ assets, customers can easily identify the closest store to their location.

MWC 2014: Next generation location marketing

Developments on display at the Mobile World Congress that could have implications for location- based marketing fell into three categories.

Wearable technology

For mainstream brands considering location- based marketing, the trend is in favour of smartphone and app interaction. However, MWC saw a surge in wearable technology from watches and dongles to clothing. While it is difficult to see how voucher codes can be delivered to a web-connected jacket, the future of the internet of things could easily see wearable technology communicating with ‘smart’ product packaging equipped with contactless chips of QR codes, for example, and sending notifications to phones with personalised suggestions relevant to the situation.

With the ability of wearable technology to act as secure password holders, loyal customers may see levels of rewards ‘unlocked’ in-store. Both Bionym’s Nymi wristband and the WeON Glasses have the potential to deliver notifications that bypass smartphone interaction.

Advertising on mobile

Intel’s global director of media claimed that content is a better format than banner ads on mobile and that while real-time, location- targeted marketing and media buying is an interesting area, the available advertising space does not support it. However, Vodafone claims to have had great success with a location-based real-time bidding campaign in the Netherlands.

The ‘internet of things’

A host of new product launches at MWC continued to demonstrate how inanimate objects have the potential to begin ‘talking’ to users. While some are home lifestyle products, such as Procter & Gamble’s Oral B toothbrush that monitors not only how long you brush but also how effectively, other apps are taking the internet of things into stores. For example, Blippar’s app can display augmented reality recipes that appear when Heinz tomato sauce bottles are scanned.