Location-Based Services and the Indelible Importance of Awesomeness

The growth of the web over the last decade-and-a-half has been a mixed blessing for brick-and-mortar retailers. While it's created a vast array of new customer touchpoints, it's also introduced the pernicious problem of maintaining those touchpoints across channels. The challenge is much the same today as it was in the days of the first digital wave: How do you ensure that your online efforts are actually bringing consumers into your stores, and how do you measure that impact?

A fresh-faced set of players on the digital stage would very much like to answer that question for you. They're part of a new wave of digital marketing opportunities spawned by the growth of mobile computing. As smartphone usage in the U.S. rapidly approaches critical mass — it's expected to top 50 percent of the U.S. population by the end of 2011 — location-based services (LBS) have garnered tremendous interest among retailers, marketers and analysts as a potential means of breaching that age-old digital divide.

All About LBS
While the main LBS players differ widely in their mechanics and market niches, their core appeal to consumers and retailers is very simple: they offer consumers some means of connecting with friends and places while on the go. LBS offer retailers some means of making their physical locations a prominent part of those connections. Most LBS programs encourage retailers to offer coupons or other forms of discounting to lure in consumers. Because consumers earn incentives on their phone and redeem them in-store, the effectiveness of the effort is unmistakably measurable.

At first blush, LBS looks like the sought after missing link in the digital-to-physical equation. Successful marketing is increasingly a matter of pinpoint relevance, and location is a very powerful form of relevance. What brick-and-mortar retailer wouldn't rather connect with a consumer while they're strolling the shopping district than when they're hunched over their home computer?

But as with all emerging technologies and attendant marketing opportunities, consumer behavior turns out to be the wild card. Although LBS services like Foursquare and Facebook Places have enjoyed exponential growth and enviable buzz over the last two years, it's not at all clear that these services (at least in their current incarnations) have what it takes to reach critical mass of usage outside of smartphone early adopters. It's even less clear whether the primary 
marketing opportunities they provide are aligned with the ways consumers prefer to engage 
with brands.