02 May Social-Loco 2016: The Future of Location Part I
Since I wasn’t invited to speak at Social-Loco 2011, I’m submitting my 2016 presentation for consideration.
I’m attending the Social-Loco conference this week in San Francisco. Though I won’t be presenting, organizer Mark Evans was kind enough to have me as his guest.
Last year’s Geo-Loco event was excellent in terms of content and networking. It marked the start of my new venture, MomentFeed, and facilitated many new connections in the location-based marketing world. This year’s event is shaping up to be even better. We’ll hear from Google, Groupon, Foursquare, and others about the nexus of social, mobile, and commerce. In other words, the trends that will dominate technology and marketing for the next decade.
We’re at the dawn of what will be known as the post-PC era, an era to be defined by smartphones and ubiquitous connectivity. As I like to say, smartphones haven’t changed much, but they will change everything. What’s happened so far is not all that interesting. If this were the PC era, it would be the early ’90s. All of the growth and opportunity lay ahead of us. That’s where I looked when conceiving the MomentFeed vision, and it’s where I continue to look in guiding my daily decisions.
When Mark (hopefully) invites me to speak at Social-Loco 2016, this will be Part I of my presentation. I’ll post others over the next couple days. As for 2011, my hope is that this perspective on the future provides fuel for the conversation.
The LBS Landscape, 2016
The location-based services (LBS) landscape has fully matured. Over the past five years, smartphone adoption grew from 36% in the US to near global ubiquity. This is where many investors and analysts missed the boat.
In 2010/2011, LBS was already gaining significant traction, despite being hamstrung by the fact that a vast majority of consumers (64%) could not even participate. It was like putting an Outback Steakhouse in a community where two-thirds of the residents were vegan. Yet it worked because the 36% of meat eaters were such passionate and loyal customers. It was also inevitable that the vegans would come around (not the best analogy, but you get the point).
Likewise, the past five years have witnessed dramatic growth in the marketing and CRM channel known as location-based engagement (LBE). Now that the market and underlying technologies have caught up to the potential of LBE, I’d like to present some stats from a (theoretical) client that has been monitoring LBS traffic via the MomentFeed platform.
During this period of maturation, a number of uniquely positioned companies have secured market share. Many analysts believed the space would gravitate toward one or two big winners. While this was the case with online social networks, the dynamics of mobile and location are such that it is difficult or impossible for any single company to dominate. The advantages of online scale do not translate to mobile or LBS. As such, the space has grown into a tapestry of large players with hundreds of mid-sized players and thousands of small ones.
The following slide shows LBS traffic by source to all Starbucks locations in the US on May 4, 2016, as measured by MomentFeed. I should note that more than 50% of Starbucks customers engage in some way when they visit a store, and 70% of those engage more than once per visit.
What we started observing in 2011 was that new players, such as Facebook and Google, were not stealing users from Foursquare or Gowalla. Instead, the total size of the pie was getting bigger. Those who engaged (checked-in) on Facebook represented a largely distinct group from those who engaged on Foursquare or Google. Consumers chose their LBS platform and stuck with it.
Shortly thereafter, both Groupon and LivingSocial expanded from daily deals via email to the LBE space and claimed their own slices of the pie. Twitter advanced its Places product to become one of the dominant players, and hundreds of other apps such as Color, SCVNGR, and Foodspotting served more specific LBE needs.
The above slide is typical of a national brand with locations equally distributed throughout the US. If we filter by state, however, it shows a slightly different scenario:
In New York, Foursquare remains the dominant platform. The company was founded in New York City and gained a significant footing there early in the LBS game. In fact, this distribution of traffic follows for much of the Northeast. Foursquare was able to get and hold an early advantage in this region, introducing many to the social gesture of LBE for the first time.
This has proved the key to securing market share for each company. Since only 36% of consumers had smartphones in 2011, each company had plenty of opportunity to be the first to introduce consumers to the value of LBE and to establish loyalty.
We see this same phenomenon in California, where both Facebook and Google were able to leverage their local resources to gain an advantage. Again, the dynamics of location are such that having physical resources in a geographic area yields a measurable advantage.
However, LBS is a global phenomenon and Starbucks is a global brand. In 2011, Facebook, Foursquare, and Twitter were all blocked in China, which created opportunities for local rivals to establish themselves. The next slide shows LBS traffic by source for all Starbucks locations in China for the same day. Weibo and JiePang are the clear market leaders.
The key takeaway for brands is that consumers have been engaging with their locations through a broad number of apps and platforms for many years. For a global brand, the depth and value of these engagements varies from app to app and region to region. Given that these engagements take place at the point of sale, it’s incumbent on brands to maximize each and every one. Brands have an obligation to meet their customers where they are. Due to the fragmented nature of both geography and LBS, customer engagements are equally fragmented. This is why companies use MomentFeed.