Last December, as part of 2011 Social Business predictions, I had this to say about location based services (LBS):
Game over for LBS businesses based on game mechanics. Facebook Places adoption will rise dramatically as integration with the social graph drives greater positive feedback for users from check-ins. Users tire in their pursuit of badges and digital paraphernalia, opting for engagement with their friends instead.
This week, Read Write Web declared 2011 The Year the Check-in Died. Sam Bennett at GSD&M is Checking Out. What’s going on? It’s not hard to see – users receive little value for their participation.
People who have digital as a large focus of their livelihood should never forget that the only reason consumers do things online are to have some impact on real life. We don’t go online for the sake of online – it all has to tie back to offline at some point. Always. Individuals who forget about the connection end up in tragic situations like this.
LBS will survive, but only as a feature of larger scale social networks. Facebook has changed their status question to “what’s on your mind?” – pairing with the question “where are you thinking about this?” and most importantly published on a network with a huge installed base and ability to monetize status, location, and intent.
Current LBS can only deliver on 1/3 of that value proposition to advertisers. A path to monetization built on a free appetizers for the mayor requires a LOT of check-ins. Related: a friend at a large consumer goods brand tried to strike a deal with a leading service, but the analytics and data exchange capabilities were a mess. These services aren’t ready to activate enterprise-level deals even when businesses are ready to hand over bags of money.
Sooner than you think, we’ll be reminiscing about LBS badges and pins like we used to talk about fat boy laces and parachute pants.
Couldn’t agree more Peter. I think LBS based games/marketing fall into the general tendency I saw described in recent research on gamification, “People play SNGs (social network games, S.D) to create common ground for future social interaction rather than seeking direct social interaction in the game.”
Yes Larry – as the hip hop world would instruct us, don’t hate the player, hate the game.
Peter, have you seen data that suggests that FB Places has killed 4squ? The data I have seen indicates the opposite.
This post is about LBS as standalone, not Places or Foursquare in particular. Would be great to see your data.
Peter, just as I am composing an email to Aaron Strout and Simon Salt about an awesome LBS application for SMB, up pops your post in my reader. It’s almost a little too close to home.
As a matter of efficiency (I have a long task list today), I’ll keep it short and to the point. Should I need to qualify or flesh out my thinking here, let me know and I’ll keep this thread going.
As a “behavior before design proponent,” I’m intentionally remaining platform agnostic.
From the perspective of exchange modeling, LBS is backwards. Two things must happen in order for LBS to be relevant, widely adopted and a sustainable business model/channel. Otherwise, it’s just placating to vanity (and not very well, at that)
1) Enter the exchange from the supply-side.
2) Integrate LBS with the point of sale.
LBS would monetize if the focus was on revenue management not marketing, because from the perspective of the business bringing a product or service to market, revenue management is good marketing. Most businesses have a detrimental reliance on supply-side partners in order to be a viable business, day in and day out. If the opportunity to communicate an expectation or discovery proliferates from the supply-side, exponential, measurable value is created.
This is obvious if you observe your own demand-side behavior: When you pick up someone at the airport, a monitor displays the whereabouts and approximate arrival time of the person you’re picking up; this compels a response from you–on time= good, not on time= bad. Opportunity for more engagement. When you order a product online, the courier has tracking check points in place to approximate/communicate delivery time–on time= good, not on time= bad. Opportunity for more engagement. The examples are countless, pun intended.
LBS integration with the point of sale is the automated, scalable intersection of supply-side/demand-side. Leading with the demand side invariably leads to passive check-ins by people that are rarely engaging with that business. And while som sliver of value can be created by remarketing to that passive check-in, this requires considerable investment of time, money and resource that rarely works in the business’ favor… unless of course it is automated, in which case, it is not very social and often upsets the cost/benefit balance from the perspective of the business and the consumer.
Before closing, social media, LBS included, is not a replacement, but a complement to being human. If a person is regularly engaging with your business and/or buying from you, I would hope to hell you own this insight through something more than mayoral status on foursquare.
Supply-side, POS integrated LBS, FTW.