May 5, 2010

Location Is Where it's at for Next Generation of Apps and Ads


Hostway Team

By Mike Koehler

When a business is looking at its online strategy these days, it shouldn’t confine itself to the world of computers. Instead, it needs to be thinking about how it can get into its customers’ pockets.

Trends are pointing to the inevitable fact that mobile computing, and the Web site and applications that follow, holds great promises for business.

Why? Because more and more users are accessing the Web through their phones (up 110 percent in 2009, according to a study: and the big players of Internet and technology are positioning themselves, through hardware, Web sites and applications to leverage that move.


The engine powering the gold rush onto mobile is the promise of geolocation, which is the ability for your phone to relay the information about where you are. The geolocation information in turn makes advertising on your phone smarter, since it can target you on a block-by-block basis.

Two big movements have sprung out of the geolocation shift, one being a rise in geo-specific social networking, which is increasing in popularity, and the second is an investment by some colossal companies into smart mobile advertising.

Geo-specific Social Networking

First, despite what kind of business you are in, you need to position yourself to have some interaction with geo-specific social networking sites. These have gained steam in the last few months with two sites — Gowalla and Foursquare — taking the lead in the market. Both sites allow users to “check in” at different locations on their phones and share that information with a network of friends. At this point, they receive virtual items — passport stamps and “badges” — for their check-ins, but some businesses have gotten into the mode of rewarding their frequent customers who check in often. For Foursquare users, each location has a leaderboard and the person with the most check-ins is named the “mayor” of that location. There are already examples of mayors getting extra special treatment, especially in restaurants and very customer-focused retail businesses.

Foursquare is the leader in this sphere and has already gained important business partnerships with brands like The Wall Street Journal. Foursquare has seen growth to 500,000 users in just over a year of existence, while Gowalla has a smaller membership base, but has a better user interface as well as a better reputation for accuracy. Other sites have risen and fallen in the few months this area has been trending, but these two sites have risen above the pack.

Bringing Geolocation into Your Marketing Plan

Once business owners are aware of these sites (which are mostly accessed as popular smartphone applications) they should be proactive about getting the best information they can about their location on these sites (and any others that grow up in the next few years). When someone checks in at your business, they will see some information about the business. Stake your claim and fill out your own information before a user does. Owners should also have a plan on integrating these sites into their overall communications and social media strategy. Will you check in? If you, what comments will you share? Will your employees check in? How will you reward loyalty?

The bigger question also involves not just messaging, but monitoring. Business owners and entrepreneurs who are plugged into the Internet and use it to be successful, know that monitoring the conversations and activities of current and potential customers in their community is a key to continuing success. Watching and listening to what the Web has to say is now a vital function for serious business people.

These geolocation social networking sites give you solid gold customers information because you will be able to see — in real-time — who is interacting with your business, some information about them from their bios and their networks (who are they connected to, how influential are they, where else do they check in?). Foursquare and other sites open up a door to deeper customer service information that had been available to retail outlets before. Many of these social networking check-in sites are in turn connected with more mainstream sites like Facebook and Twiiter, which helps with even more data.

On, SimpleGeo Chief Technology Officer Joe Stump laid out the hottest trends of real-time location, saying: "As it’s a new area, not all companies are being an intelligent about location data — especially real-time examples — as they could be. We will soon see more connections made from the information and more graphing done to understand it. We will begin to ask not only where people are going but also why they are going to certain places. As interest in a fellow user’s location declines the further you are from it, and interest in an event likewise declines the further in the past it was, a way of capturing and using real-time location data is needed to best leverage the potentially powerful information." (Full list here.)

Google and Apple

But the power of location data on smartphones isn't limited to small business leverage and social networking. Apple and Google, the two most dominant names in technology, want to use it to power mobile ad networks. Both Google and Apple have purchased mobile ad developers since the start of 2010 in order to monetize all of the location data available.


Apple transformed its acquisition of mobile ad developer Quattro into the iAd mobile ad system, which Steve Jobs introduced in early April. Apple's new ad platform, which will share revenue with application developers who post the ads inside of an app, also takes advantage of the unique iPhone features, including the accelerometer. Apple CEO Steve Jobs gushed about those aspects during the unveling. "This is a new kind of mobile ad," he said. "Have you ever seen a mobile ad like this? Anything even close?"

A story in the Wall Street Journal broke the news that Apple would be charging some businesses $1 million for mobile ads and control the ad content themselves: "It's a hefty sum," Phuc Truong, managing director at Mobext, a mobile marketing company told the Wall Street Journal. "What Apple is trying to do is certainly above and beyond what's been done in the past."


For its part, Google has combined its move into mobile operating systems and its own phone with an acquisition of AdMob. But that $750 million purchase has been held up by the Federal Trade Commission because of worries over monopolies. As's Epicenter blog wrote: "The FTC is right to look closely at what Google does and to make sure it doesn’t abuse its market power. Google has remained almost unassailable in its online text ads — which brings in 99 percent of Google’s $24 billion annual revenue."

Once that purchase is secured, Google will power mobile ads as it does keyword advertising, but by using a combination of the words you are searching for, along with where you are searching from. Google has already shown its ability to break new ground both online and on mobile devices. Google is at the forefront of voice search and has recently focused on boosting the ability and content on Google Map, which is also based on location data. Through Google Maps, the company is building an online business directory which has no peer. If someone uses Google Maps for directions (a free function soon coming from Google), they could also find more and richer information from the businesses around them.

The Takeaway

So where does this leave the consumer and the business owner? The consumer who is willing to check in on a location-focused social networking site has a chance to be rewarded for their loyalty to retail outlets. If you are a business owner, you have access to a treasure trove of customer intellegence.

When it comes to advertising, customers are going to find mobile ads that target them down to the city block. When you search for a restaurant on your mobile phone, there's a chance that you will get an ad for the restaurant nearest to you. If you are that business owner, you will be able to contact customers on a level in which you haven't be able to reach or access them before.

As mobile Internet access becomes the first stop for consumers in how they interact for the Web, having a savvy strategy for how you use it and interact with it is going to be crucial no matter what side of the consumer equation you are on. Innovations are sure to pop up in the years to come, but the data that forms the foundation of these new applications to come will stem from geolocation data. Being aware that this is out there and has great potential for businesses puts you ahead of others, who are walking around in this cloud of data unaware of its potential.

About the Author

Mike Koehler is a social media consultant, speaker and freelance writer based in Oklahoma City, where he lives with his wife and three kids. You can follow him on Twitter at

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