Commerce Weekly: The do’s and don’ts of geo marketing

The evolution of geofences, Google Wallet's departures, and mobile carriers vs Facebook.

Here’s what caught my eye in the commerce space this week.

Placecast’s CEO on the secret to successful targeted offers

PlacecastLast August, I wrote about Placecast, which has been working to deliver coupons and offers on behalf of its retail clients to opted-in customers when they hit geofenced areas. Placecast’s platform allows merchants to set up a ring around their locations (or other locations, as described below) and then trigger an SMS to customers who have opted in to receive them. Placecast works with mobile carriers to deliver large tranches of opted-in customers to its merchant clients. This week at O’Reilly’s Where Conference, Placecast CEO Alistair Goodman talked about the right and wrong way to deliver ads to a geofenced audience, based on the learning curve they have climbed over the past few years.

Some of these are obvious, like the need to link data about the customers’ preferences with the location — the richer the data, the more relevant the message, and the more likely it is to hit home. Goodman explained this as a sort of stack, with positioning data (mostly from GPS, but supplemented with Wi-Fi and other data) at the lowest level. Just above that, a layer on context: What type of place is the user at (mall? stadium? park?) and what’s the weather like? Atop that level, demographics and psychographics — who are the users and what do users in their consumer categories tend to go for? Atop that layer, the users’ preferences: What do they want to be notified about, when, and how often? And finally, at the top of the stack, the offer itself: What is it the retailer is promoting?

A second key point is the need to find relevant locations — not just the retailer’s store, which is obvious, but other places where the customer is likely to be receptive to the offers. For example, you might promote dog food or pet stores at a dog park, or a promo for a sports drink around a gym, or the sponsor of a concert around an arena. Interestingly, Goodman said that while merchants often ask Placecast to geofence around a competitor’s store, he advises them that isn’t a particularly effective marketing strategy: “If a customer is already headed into a certain store, a message urging them to visit a different location isn’t likely to be very effective. A more effective way is to promote the message from a relevant public space.” (I noticed the audience received this wisdom in total silence; you could almost hear the wheels of doubt spinning.)

Finally, Goodman said customers react better to offers when they believe it comes to them through this channel with some level of exclusivity. “Customers like it when they feel they’re getting an offer that others aren’t getting.” So the coupons or other offers can’t be the same as what’s posted on the window of the store.

Goodman said the platform can deliver offers through a variety of channels, but most are delivered as SMS text messages, which remain tremendously effective. And they seem to be working: Goodman said that their research finds that 49% of store visits that occurred after receiving a Placecast ShopAlert were unplanned before the alert, while another 19% served as reminders to visit the store. In these cases, you might say those texts delivered twice.

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Jumping ship at Google Wallet?

Google WalletThe departure of Google Wallet co-founding engineer Rob von Behren to join payments startup Square aroused suspicion that Square might be looking to incorporate NFC in its system. Dan Balaban’s article in NFC Times puts von Behren’s departure in the context of a swath of high profile talent exits from a project that appears to be struggling to find partners and users. Balaban quotes a mobile commerce analyst who believes von Behren’s joining Square almost certainly means a move by Square to support NFC. “Else, it would be like hiring Michael Jordan to get advice on golf,” the analyst said.

In the past, Square’s COO Keith Rabois has questioned the value of NFC, calling it, at last September’s GigaOM Mobile Conference, “a technology in search of a value proposition.” But as more mobile phones ship this year with the short-range wireless technology, it seems natural that Square would want to tap into it to facilitate its “Pay with Square” (formerly Card Case) system that allows customers to pay at merchants with their Square accounts.

Meanwhile, Balaban’s article raises questions about the viability of the Google Wallet project. In addition to von Behren, fellow founding engineer Jonathan Wall and product lead Marc Freed-Finnegan left to start their own mobile-commerce startup, Tappmo, in March. Andrew Zaeske, former director of engineering for Wallet, is also said to have left the project. Speculation centers around disagreements between Wallet chief Osama Bedier (who joined Google from PayPal in February 2011) and other leaders of the team over the project’s direction. It can’t help that the refusal last autumn of Verizon to allow Google Wallet into its phones, and Verizon, AT&T, and T-Mobile’s plans to launch their own mobile wallet under the Isis brand, cast into doubt whether Wallet will ever be able to expand beyond the Sprint network.

Will carriers like Facebook’s post-IPO status?

Mobile carriers run the risk of losing text revenue from Facebook, as more of the service’s users access it from mobile devices and use it as their primary communication channel. That’s the view of Victor Basta, managing director of London-based Magister Advisors, which advises companies on acquisitions and public offerings. Basta told Bloomberg BusinessWeek that “Facebook’s IPO is about the worst thing that could happen to network operators” since the pressure to demonstrate strong earnings to investors will make it harder for Facebook to share revenue with the carriers. Facebook’s “over-the-top” service rides on the mobile networks, failing to share any of the revenue from advertising delivered over it and increasingly taking away from the carriers’ SMS text earnings, as users send free Facebook messages instead.

“The fundamental challenge for network operators will be finding a way of becoming part of the Facebook ecosystem rather than simply external enablers,” Basta said.

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