There are two themes running through most of the coverage of indoor location: gee-whiz technology and NSA-style "surveillance." While both approaches have generally been good for the sector, which has gained visibility accordingly, the "surveillance meme" is both unfair and largely inaccurate.
In the general debate over consumer behavior tracking and data-centric targeting the "offline world" has largely been ignored. The practices and data-mining in use there are longer-established, more aggressive and much more shadowy than the online/digital media world. Yet the media devote almost zero attention to that arena because we have lived with it for so long.
By the same token video cameras have been watching people in retail (and other) environments in the US something like 40 years. That fact is rarely if ever "remembered" or raised in the public discussion of indoor positioning and location. Why, because we're all "used to it"?
A recent Bloomberg article about location-analytics provider Placed is a case-in-point. The headline emphasizes the more sensational aspects of what the company does (for impact) and the lede ties the project to the NSA scandal: "Tracking Every Move You Make—for a $5 Gift Card . . . Here’s something the National Security Agency might try to ease resistance to surveillance: gift cards."
I certainly understand the journalistic "logic" behind these choices but they're misleading. Placed has what amounts to a triple opt-in process. Its users, who are offered incentives to share their location, are very clear on what they're doing. It's totally voluntary. But the article only mentions that in passing, "Placed asks users for permission and scrubs personally identifying information before companies see the data." It's more concerned with the data and inferences Placed can discern and deliver.
That's all fine. But in neglecting to fully describe the opt-in enrollment process, the article fails to adequately represent what's going on with consumers.
The implication still is that people don't fully understand what's happening or what information is being compiled about their behavior. The article suggests, with its lead, that Placed users, despite their voluntary participation, are still being somehow duped: they're giving up their sensitive behavioral and location information for "a five dollar gift card."
Why it matters is because people will voluntarily participate in these systems and services when they understand the benefits and how their data are being used. It goes to questions of transparency and consent. Many articles operate under the deeply held assumption that if people understood truly what was happening with their information they would never share it with companies. (That's certainly true in many of the "offline" cases.)
But when it comes to location and indoor location specifically people will trade their information for tangible benefits or a better experience. This has been shown repeatedly and Placed's panel is just one more example.
Writing about the mechanics of disclosure and opting-in gets tedius and boring. So does the idea that people will willingly share location for improved in-store experiences or incentives. That's why we're likely to continue to see these "us vs. them" articles for the foresseable future.
Make no mistake consumer privacy is a critical issue. Indoor location providers, retailers and others need to be highly respectful of that. And there are some who want to make the default consumer experience of indoor location opt-out. But most of the entrepreneurs and companies I've spoken to are very sensitive to and respectful of privacy.
The questions going forward should concern what sorts of experiences and disclosures must be presented to consumers to engage and educate them and gain their informed consent. Indeed, we'll be having this very discussion in much more nuanced and concrete detail at the next Place conference in New York in a panel lead by Jules Polonetsky.
Bluetooth iBeacons are definitely the indoor positioning technology with the buzz and momentum (though it's only part of the indoor location story). Today jewelry and accessories retailer Alex and Ani announced that it's deploying iBeacons in all its 40 US retail locations in partnership with Swirl.
Previously American Eagle announced it would also introduce iBeacons into its stores with ShopKick. However the Alex and Ani rollout is already complete.
Swirl offers a consumer-facing app that adapts or changes depending on the store the customer visits. Swirl is also working with Timberland and Kenneth Cole. Alex and Ani doesn't yet have its own app but later plans to develop one using the Swirl SDK. Swirl installed the hardware in all the Alex and Ani stores.
I was able to speak yesterday with Ryan Bonifacino, vice president of digital strategy for Alex and Ani. He comes from a venture capital background and is very focused on innovation and data usage. While most retailers and venue owners are still sniffing around the edges of indoor location Bonifacino said that Alex and Ani began testing iBeacons with Swirl in Q1 of last year in its New York and Boston stores.
That's well before most people had heard of iBeacon.
The data and insights the company gained during its two-store trial convinced Bonifacino that a full rollout was justified. Bonifacino said he was pleased with Swirl's ability to drive new customers into the company's stores, especially at times when regular foot traffic was generally lower.
He explained that the new Swirl-driven customers actually spent more time in the store but purchased at levels that were comparable to Alex and Ani's regular customers. Indoor location was also able to provide greater visibility into who these new customers were.
One of the things that Bonifacino is looking forward to most is the ability to collect data about in-store behavior and to test and optimize merchandising and displays. Beyond this, Bonifacino wants to provide a better in-store customer experience and believes that indoor location can help accomplish this.
We spoke at some length about Alex and Ani's use of data in its marketing efforts and how data captured in stores would contribute to improving or refining those efforts. Bonifacino, however, was quick to say that the company is highly respectful of privacy and looking only at aggregate customer behavior.
Alex and Ani also sells its jewelry and accessories through major retailers such as Bloomingdales and Nordstrom. Even though those retailers are separately examining indoor location Alex and Ani is helping educate them, says Bonifacino. The company hopes to use indoor location to promote its products and attract customers to its displays in those larger retail partner stores later this year.
Live Webcast: Tuesday, February 25, 2014 - 1:00pm ET / 10:00 am PT
There’s a great deal of hype surrounding iBeacon right now. But that technology is just one part of a much larger story about indoor location.
Using a range of technologies, major retailers, malls, airports and others are testing or rolling out indoor location in their venues and stores. We’ve come a great distance since last year when few people understood the benefits of indoor positioning and real-world analytics.
Join aisle411, iInside and Opus Research’s Greg Sterling for a webinar and discussion about the current state of indoor location. The webinar will feature existing, in-market B2B and B2C case studies.
What you’ll learn:
Square announced a deal with Whole Foods Markets that involves Square Register and Square Wallet. Some outlets are reporting this as another big enterprise deal for Square, after Starbucks. And it is. But what's more interesting is the consumer experience that it will enable in stores.
Square will power payments for in-store food venues, such as the deli counter:
These in-store venues -- including sandwich counters, juice and coffee bars, pizzerias, and beer and wine bars -- will use Square Register and Square Stand, Square’s suite of simple and affordable software and hardware tools for businesses. By bridging the digital and in-store retail spaces at these venues, Whole Foods Market shoppers can skip the main checkout lines, reducing wait times for all customers.
In other words, consumers with Square Wallet (with a stored credit card) will not have to stand in line to pay for their purchases. This will both create a more convenient experience for consumers and greater efficiency for in-store staff. (Ultimately mobile payments will reduce the number of cashier jobs across the US but that's another discussion.)
Whole Foods will gain additional customer data (purchase histories). That in turn will likely enable new promotions and marketing opportunities for Whole Foods.
The companies also said, "Several Whole Foods Market locations will serve as 'lab stores,' testing additional innovations designed to enhance customer service and cater to the changing needs of shoppers," before those services are rolled out more broadly.
Earlier today I wrote that mobile payments can become a competitive advantage, promoting consumer convenience and loyalty and differentiating a product or service experience. Whole Foods has a very strong and generally differentiated brand already.
This development will further contribute to that brand strength and may generate additional shopper frequency at those in-store food venues that are mobile-payment enabled. It will probably also lead to more adoption for Square Wallet.
I have been arguing for the past two years that despite security concerns and an apparent lack of interest in mobile payments at the "national" level, consumers immediately "get it" when they find mobile payments embedded in a context whose value is self-evident. One such context is transportation.
There's been a great deal written about the disruptive impact of services such as Uber and Lyft on traditional taxis and transportation. The cheaper Uber X service, utilizing part-time drivers, is on average less expensive than conventional cabs. But I had an interesting experience recently that clearly reflected the power and value of mobile payments (convenience rather than cost) as a competitive differentiator.
The other day I got off a train from San Francisco to the East Bay where I live. At the bottom of the escalators were three taxis lined up and waiting for fares. I could have taken one immediately. Instead I pulled out my phone and called Uber X -- because I knew I wouldn't have to pay with cash or do a credit card transaction when I got out of the cab. (Uber stores credit card information and provides receipts via email.) I also appreciate the fact that I don't have to calculate and include an additional amount for a tip with Uber X.
The convience of not having to engage in a payment transaction was the consideration that made me wait five minutes rather than just get in a cab at the station. My own experience showed me the power of mobile payments as a differentiator and loyalty feature. The same will likely prove true for OpenTable as it rolls out mobile payments, giving consumers an additional reason to use the service, along with loyalty points and online reservations.
Eventually mobile payments in the form of stored credit cards will make their way into most apps -- especially if Apple enables "pay with iTunes." For now, developers and publishers that integrate early will reap competitive advantages over those that do not.
Datalogix has acquired retail and grocery analytics firm Spire Marketing for an undisclosed amount according to a report in AdAge. According to the Spire website, the company has "one of the largest multi-retailer grocery panels in the United States with transaction data from 24 Grocery banners, 2,100+ stores, over 30 million households, and billions of annual transactions."
Spire began as a shopper loyalty marketing platform. That's very similar to Datalogix, which captures loyalty card data at the point of sale.
Datalogix also provides consumer purchase history data for digital ad-targeting purposes (like Catalina) to third parties. The company has struck high-profile partnerships with both Facebook and Twitter to help show ROI and offline sales impact from exposure to online ads on social media sites.
This "two-way" online-offline paradigm will soon become the norm. Offline activities and in-store behavior will increasingly be factored into online advertising and email targeting. For example, both xAd and Verve are coordinating with out-of-home companies to provide analytics and mobile targeting capabilities based on exposure to billboards and other outdoor ads.
Furthermore, online-to-offline ad tracking to the store and point of sale will equally gain momentum. This is one of the key trends that we explored at Place 2013 and will be taking up again this July at Place 2014.
OpenTable has begun rolling out mobile payments in a test with selected restaurants in the San Francisco Bay Area. The intention to introduce mobile payments in OpenTable was first reported in July of last year.
The official announcement came in a blog post earlier today:
OpenTable mobile payments are currently being tested by diners at select restaurants in San Francisco. Over the next few weeks, we will be adding more diners to the test program and will provide you a way to request access.
Mobile payments will continue to gain momentum in "vertical" or specialized contexts such as this or Starbucks, Uber, AirBnB and a host of others. Many of these, including OpenTable, are explicitly or essentially "vertical marketplaces" where payments are increasingly integrated. The difference between these apps and something like Amazon, which has your credit card on file, is that you're paying for services in the real world.
We're bullish, as they say, on the outlook for payments through vertical-mobile apps. By contrast, "horizontal" payment apps such as Google Wallet, ISIS and even PayPal (for offline services) have little or no traction because consumers don't see the point in the abstract. However the benefits of paying through the OpenTable app are fairly obvious: no more waiting for the check; no more waiting for the card to come back to the table. It should meaningfully compress the time it takes to pay and leave a restaurant. (It will also reduce credit card theft by restaurant personnel.)
Eventually consumers will warm to the broader mobile wallets, after they've had sufficient exposure and experience with mobile payments a specific context -- such as OpenTable. Very concrete use cases with obvious benefits will help train consumers to trust and adopt mobile wallets/payments, which will eventually pave the way for services such as ISIS or Google Wallet. Apple may be an exception to the idea that consumers aren't ready for a single mobile wallet to substitute for conventional card payments. The company appears to be gearing up to offer a "pay with iTunes" capability.
Transaction data yielded by payments also offer a next level of intelligence, personalization and marketing capabilities to those providers that integrate them.
Before payments, OpenTable knew if you reserved a table and actually showed up (or were a "no show"). Now the company will potentially know what you've ordered too. That can be shared with the restaurant for diner insights and loyalty purposes (see also, Swipely) and/or used by OpenTable in several ways to more precisely segment and market to restaurant-goers as well.
Related: OpenTable also announced that it had acquired restaurant recommendations site/app Ness (sometimes also characterized as an intelligent assistant) for just over $17 million.
Yesterday Twitter, Yelp, AOL and Pandora released quarterly earnings. AOL said that mobile was one of several drivers of 50% ad revenue growth. Yet it didn't break out any mobile numbers. The other three did, illustrating the degree to which each is or has become a mobile-centric company.
Below are the mobile highlights . . .
Twitter beat financial analysts’ expectations with $243 million in Q4 2013 revenue ($220 million in ad revenue). However that strong revenue growth was undermined by weak user growth. The company said it had 241 million monthly active users and nearly as many (184 million) mobile users.
Amazingly, 75% of the company's ad revenue for Q4 came from mobile. In real dollar terms that represented $165 million for the quarter.
Yelp reported just under $71 million in Q4 revenue. There were 53 million mobile users (120 million total users). Yelp also reported that 30% of new reviews were coming from mobile devices, since it started allowing reviews to be written via mobile.
Yelp added during the earnings call that 59% of search queries were from mobile: 46% from its app vs. 13% from the mobile web. In addition, 47% of ad impressions were served on mobile devices in Q4.
Revenues for the full year were roughly $638 million. Pandora brought in just over $200 million in Q4. Of that, $162 million was ad revenue. Mobile was responsible for 72% of that ad revenue or just under $117 million. The company also said that 80% of Pandora listening happens via mobile devices.
All three companies started on the PC and have evolved into mobile-centric entities in response to user behavior. Indeed, Pandora's iPhone app is largely responsible for the company surviving and going public. Overall for these companies most of the ad growth, revenue and usage is now in mobile.
Both the NFL and Major League Baseball (MLB) will beat most US retailers to the punch when it comes to implementing "indoor location." Many major retailers are testing, piloting and experimenting with indoor location today (or planning to) but have not done any system-wide rollouts. Apple and American Eagle are exceptions in the US.
However these two major sports leagues are already deploying additional WiFi and new BLE beacons in an effort to enhance the fan experience in stadiums and to create new loyalty marketing opportunities.
In a broad article this week discussing iBeacon and some of the privacy concerns about the new location technology, the New York Times explains how the NFL has installed beacons in Times Square and at MetLife Stadium in New Jersey, where the Super Bowl is happening. Smartphone owners with the NFL Mobile app will receive game related alerts and messages tied to location:
A mobile app called N.F.L. Mobile will enable football fans who visit the New York area for the Super Bowl to get pop-up messages on their cellphones, tailored to their exact location. The system uses a series of transmitter beacons scattered through Midtown Manhattan to deliver various messages depending on the cellphone user’s location. The system will also be in use at MetLife Stadium in New Jersey.
MLB has been even more aggressive with its rollout of iBeacon/BLE technology. There will be enhanced WiFi and iBeacon technology at all 30 major US baseball stadiums this year. To participate in the new services, smartphone owners will need MLB's "At the Ballpark" app:
MLB.com At The Ballpark is your favorite mobile companion when visiting your favorite Major League Baseball ballparks. This official MLB ballpark application perfectly complements and personalizes your trip with mobile check-in, social media, offers, rewards and exclusive content. Select MLB ballparks also offer mobile food ordering and seat and experience upgrade components.
In both cases, an improved in-stadium fan experience is the stated, primary motivation for deployment of the technology. In the coming year, we'll get a great deal of information about how consumers respond to the capabilities in these sports contexts and whether they raise significant privacy concerns. Yet both leagues appear very mindful of privacy issues and are taking care (at least initially) to tread lightly.
Yesterday Facebook reported Q4 and full-year earnings figures. The company strongly beat earnings estimates and reported revenues of $7.87 billion for the full year. Facebook said that Q4 2013 revenues were $2.34 billion, which was a nearly 80% increase from the previous year.
Mobile was 53% of total ad revenue for the fourth quarter of 2013, or $1.24 billion. That's roughly what the company earned in total ad revenue in Q4 of 2012. Facebook's revenue growth is accelerating as it emerges as a clear number two alternative advertising platform to Google.
Facebook also reported:
What's striking is that the mobile and PC numbers are getting very close. Facebook has effectively transformed itself into a mobile (marketing) company, where most of its users are largely if not primarily interacting through the site's apps.
Recently Facebook took steps to launch its long-awaited mobile ad network for apps. Assuming that Facebook goes "all in" it would become the second largest or potentially the largest mobile display network in the world. Four years ago we anticipated this.
It also introduced Custom Audiences retargeting for mobile.
In addition, Facebook is pursuing a new strategy: starting to launch a number of stand-alone mobile apps outside of its flagship Facebook app. Those include Instagram (which it acquired), Messenger and now mobile "news" app Paper. This approach will enable Facebook to potentially appeal to different market segments and use cases, as well as create new mobile ad inventory for the company.
Facebook CEO Mark Zuckerberg also said on the Facebook earnings call yesterday that Graph Search would be coming to mobile "pretty soon." That promises to be very interesting and could have significant implications for local-mobile search. Indeed one could imagine a stand-alone local search app from Facebook (to rival Yelp, etc.). To date, its "Nearby" functionality has been buried and not really lived up to its promise.