Spamming mobile users with text messages is not going to win customers' hearts and minds, but location-based services can generate profit if you pinpoint what they need. Daniel Thomas reports Imagine walking past a Starbucks coffee shop and being told that your favourite brand of coffee is on offer via a message received on...
your mobile phone. Although this idea is not tremendously appealing to most people - considering that you can read it on the chalkboard - this is the type of line that has been wheeled out by companies offering location-based services for the past couple of years, to a largely apathetic response. However, there are increasing signs that location-based services will be a way for retailers and other service providers to capitalise on the massive popularity of mobile phones in the UK and, in doing so, increase their revenues and improve customer service. Larry Delaney, general manager of the location-based services business unit at MapInfo, an organisation which specialises in these platforms and applications, says location-based services are ready to move beyond the conceptual stage. "We are at the point where location-based services are starting to happen," he says. "All we need is the first real application to kick the market off - something that will really move into the consumer's conscience." Delaney says services such as targeted special offers do not really showcase the real advantages of location-based services, and would not reflect well on the third-party company involved. "You don't want to be walking down the high street getting a text message every time you walk past a store," he says. "Something like a branded store locator has far more potential. "For example, a brewer could form a partnership with a 'night guide' provider so that every time a consumer requests information on the nearest bar they are pointed to one of its outlets," Delaney says. Analysts agree that all location-based services need is some real applications. "Our research has shown that consumers are willing to pay for relevant location-based services, especially when they are accessing the information via their mobiles," says Adam Daum, chief analyst at research group GartnerG2. "However, they have to be customised and specialised - information on child-friendly restaurants in the area, for example." Jeremy Green, research director for wireless at analyst firm Ovum, says technical constraints have not been an issue. "Location-based services have been held up by the lack of a business model, rather than by the technology," he says. There has, in fact, been some movement on the application front, with the mobile operators - frantically searching for ways to increase revenue - keen to push commercial location-based services. In July, Vodafone became the first UK mobile phone operator to enable third parties to launch commercial location-based services, with all the other operators except an as yet unnamed provider expected to follow suit by the end of the year. The first service, launched in conjunction with location-based service provider Mobile Commerce, was for celebrity gossip Web site Peoplenews.com. Vodafone users are able to text words such as "eat" or "bar" to short-code service 80400 and receive an SMS reply informing them of nearby celebrity haunts. The deal changed the landscape for location-based services, believes Steve Page, chief executive of Mobile Commerce. "This is the first time an operator has released a location data feed to a company like us," he says. "Until now, these services have been proprietary to one network, but all the operators are interested [in this], with only one holding back." Having services that are proprietary to one network has long been a problem within the mobile industry and this has, to some extent, stifled the progress of location-based services, admits Delaney. "The roaming agreements [which allowed users to call mobiles on other networks] that the mobile operators agreed are a good example of where we want to be with location-based services," he says. "A good sign is the [legislative] pressure we at MapInfo have come under to offer a pan-European solution." In an ideal world a mobile phone user would be able to go to a foreign country and use a "mobile concierge" to find the nearest hotels, restaurants and bars and so forth, says Delaney. But this is unlikely to happen anytime soon, he admits. "There are just too many localised operators which want to keep the technology to themselves," he says. Of course, receiving directions to the nearest bar that is frequented by your favourite soap star is an example of the "sexy" side of location-based services, but there is plenty of scope for corporate use and opportunities to cut costs, Delaney says. "The most significant business-to-business application would be a simple tracking device, keeping track of your employees [to the nearest cell] via their existing [Wap-enabled] mobile," he says. "This has always required investment in GPS [global positioning systems] until now." This investment has put many companies off from implementing employee tracking, Green says. "A number of telematics companies have been offering these services for some time, but take-up has been minuscule," he says. Location-based services can also be used in more sophisticated ways, by, for example, integrating with mobile management or existing customer relationship management systems (CRM), Delaney says. "It would allow a more dynamic use of, say, a field salesman's diary by, for example, guiding them to the most relevant customer in their location," he says. "The link to the CRM system could just be the simple address." Third-generation mobile services, as and when they finally arrive, will provide a massive boost to location-based services, says Delaney. "That is when you will see the mobile phone really challenging the laptop and the desktop as an information source," he says. "At the moment, the only advantage a mobile has is location, but when you add high quality images to that you are really going places." Whether that is a map directing a reveller to the nearest bar or guiding an employee to the best customers in the area or, indeed, a high quality image of a large café latte, it is clear that location-based services will be an issue many IT directors will have to address sooner rather than later. What can location-based services do?
- Tracking employees, without having to invest in expensive global positioning systems
- Giving employees information, such as directions or, by linking with CRM systems, the location of the best customers
- Telling consumers the nearest outlets of interest, such as bars or hotels. This can be utilised as a branding tool by third parties, such as brewers
- "Buddy finders" could be used by parents to track their children.