The following is a guest post from Gary Schwartz, author and director of the Location-Based Marketing Association.
I recall having coffee with Asif Khan, the founder of the Location Based Marketing Association in 2014, when he explained how location was soon going to become the "new browser cookie."
"Your location tells us more about your intent to take action than any other single data point," Khan said.
Over the past few years, retailers, brands and services have designed their apps around location data sent to them from the always-on mobile consumer. The consumer's latitude and longitude is used to optimize advertising, drive loyalty, inform communication and determine media attribution.
Foursquare proved that we could influence behavior of consumers based on location rewards when scavenger hunts meet coupon clipping. Although Foursquare badges incentivized behavior, by 2014 it lost momentum. Why? Foursquare isn't simply a technology. It needed to demonstrate that it had momentum to drive adoption and sustain engagement.
Foursquare's Social Graph required a mass network effect. For this reason, leviathans like Google and Facebook were able to co-opt Foursquare's marketplace.
In this post, I take a look at the potential of decentralized location-based marketing networks and question whether blockchain architecture could be a new tool for brands and retailers outside of traditional online strategies offered by centralized advertising platforms like Google and Facebook.
The rise of location marketing
In the late 2010s, it became clear that location was a differentiating data point for the ad networks. We know where the consumer was in the world, and we also know the consumer is mobile and on a journey that can be interrupted and influenced.
But location had more value than an additional data point.
Location allows brands and retailers to build a bridge between the virtual world and the physical world. This is an invaluable tool in a market where offline to online (O2O) shopping is becoming a challenge for every retailer on main street. However, the question is: With foot traffic down, how can retailers capitalize on proximity? Network scale becomes crucial to the success of any location-based marketing platform.
Back in the '80s, Robert Metcalfe showed that combining many communication devices allows for a network effect. Networks like the internet and social networking both demonstrate that any network is the square of the number of connected users in the system.
Where can retailers look for new network audiences to drive engagement?
The distributed network
What's exciting about blockchain tech is that there exists a global, distributed and trustless network of captive users. Harness this community and we'll see an explosion of use cases that the earlier Foursquare and Pokémon Go communities couldn't imagine.
The combination of location services on a transactional network that allows for the free flow of value is an exciting opportunity.
We saw some initial (not location-based) mania around CryptoKittie, a game that let users purchase, collect, breed and sell virtual cats. In December 2017, the CryptoKittie game congested the Ethereum blockchain network, causing it to reach an all-time high in transactions and slow down significantly.
Pokémon Go had previously showed the success of combining location and augmented reality (AR). Pokémon Go captured the imagination of consumers by elegantly blending fantasy with the real world. The game's algorithm used climate, vegetation and time of day to select character. Hunt in the evening, and users found nocturnal Clefairy. Hunt in the canoe in a lake, and users found a Seadra Seahorse. Interactions were targeted and rewarding.
Can the blockchain, plus a location-based marketing bridge into the real world, drive this level of engagement and move consumers effectively? What models could drive network effect and engagement in 2019? The blockchain network, combined with location and AR enables a new economy of consumer-friendly services.
- Geon.network is an interesting model as it's creating a virtual economy that users can locate, fund and mine for coins.
- Verses.io is creating a blockchain AR digital twin that uses interact with to game or as commercial pay services.
Google, Amazon, Facebook and Apple's dominance is primarily driven by the network effects of big data and artificial intelligence. They play the middlemen, and we pay the middlemen.
GEON.Network and Verses.io's model drives efficiencies and eliminates this costly custodial layer. For companies that rely on brokering data insights and brokering payment fees, this new network architecture is difficult to absorb into their legacy business.
As these new networks optimize distributed design for the new blockchain consumer, their communities will grow. As they leverage blockchain to create consumer-centric solutions, they may become an interesting option for retailers and brands.
Here is a short list of location-based marketing milestones:
- Pre-internet: We had postal code and clumsy direct marketing list management.
- Late '90s: With internet and the unique mapping of IP addresses, marketers began digitally buckshot targeting areas the size of a postal area.
- 2000s: With a phone in the consumer's pocket, we began to target the owner and their digital behavior.
- Late 2000s: As smart devices entered the market with GPS capability, satellite positioning allowed for geofencing.
- In 2009, Foursquare took the mobile world by storm, driving consumers into retail locations using GPS to promote loyalty services.
- Early 2010s: Accuracy and indoor navigation was solved by combining smart Wi-Fi services to power better consumer targeting and engagement in browsers, while cost-effective Bluetooth beacons provided the same hyper local (within one meter) targeting for mobile apps.
- Mid-2015: We saw a boom in proximity marketing in sport stadiums and malls.
- 2016: Location went social with Pokémon Go.
- 2018: Companies like GEON.Network and Verses.io begin to create new platforms combining location, AR and cryptocurrency to drive engagement and network value on the blockchain.