The location-based opportunities are much more exciting and closer to realization than most people realize. Steve Wozniak was once asked how an entrepreneur could create a tech company that could have the potential to become as big as Apple. He replied that a certain condition had to be met, which was knowing “that a market is about to explode”. This certainly seems to be the case for location-based services(LBS).
The timing seems to be perfect for LBS start-ups. With the recent success of players such as Foursquare, Gowalla, and Loopt, we can attribute their fortune to three key factors. 1) Increased number of smart mobile devices on the market 2) High speed 3G mobile networks 3) Large online social graphs to tap into.
If you read a lot about current geo-based startups, you’ll know they are all still trying to figure out the best way to acquire more users. Currently, it is still a high concern for most people to have their location displayed- but this most likely won’t be the case for long. These privacy concerns have been shrugged off in the past. For example, 8 years ago it would have been considered unsafe to share your name, picture, address, and personal information on the World Wide Web. Today, social networking sites such as Facebook have about 400 million users around the globe. They tend to over-share because the value of sharing now outweighs the fear. Within a few years, we can expect a similar result for LBS when the value of sharing your location exceeds the fear.
But what value does LBS have? Well the real story behind this LBS craze isn’t just badges and check-ins. The market opportunity comes the consumers’ demand for higher valued deals, and the producers’ ability to engage in hyper-local advertising opportunities (which is what really matters) for both loyal customers and those customers that pass by your store every day.
Imagine if a location-based app knew which route you take to go to work. It would be very easy to create a user profile around this route (a sort of geo-based cookie). Marketing teams could then determine the percentage of people who walk past store X but don’t actually walk in (geo-based click-through rate).
This enables brick-and-mortars to use these geo-based apps to provide appealing offers to potential customers in a very engaging way. Now integrate profile information and also allow users to customize the types of deals they are looking for, and you have an interesting new platform for direct geo-based marketing.
With start-ups like Foursquare, Gowalla, and Loopt experiencing recent rapid user growth, and the movement of bigger players like Facebook, Google, and even Twitter trying to implement their own location features, it is clear that location will be one of the next battlefields in the mobile space. We are entering an era where consumers will no longer fear sharing their location but instead will soon depend on it to find friends, places, and products.