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Arment Dietrich

Four Challenges Facing Location-Based Services

By: Arment Dietrich | September 1, 2010 | 
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Guest post by Mike Schaffer, social media and online marketing manager at Iostudio.

Despite the incessant buzz in the marketing industry surrounding Foursquare and Facebook Places, I see four major challenges facing location-based services.

For all the hype, only four percent of adults are using these services (not to mention the 84 percent of adults who have no idea what they are). Clearly, not a ton of folks are taking advantage of them, so let’s investigate the main reasons why they haven’t caught fire…yet.

1)      Fear – I’ve heard from countless people that they feel online check-ins leave them and their homes vulnerable to robberies, muggings, and sexual assaults. While few, if any, cases of “Foursquare burglary” have surfaced thus far, I think this is a valid point. If you tell everyone where you are (or aren’t!), all of those types of attacks are possible. Not likely, but possible. And most people don’t want to leave a figurative unlocked door to their homes.

2)      Lack of technological penetration – The geo-location world is tied to your smartphone, and if you don’t have a smartphone, well, you have to call or text people to tell them where you are (how 2009!). Despite protests from Apple, not a lot of folks have an iPhone (and let’s not even discuss the proper way to hold an iPhone 4). Until more people are living in a smartphone world, geo-location will struggle. For the record, just one in five mobile phones are “smart”.

3)      Metropolitan/urban design – Foursquare was created to help people find their friends in Manhattan. Translating that platform to other places that aren’t as densely populated (by people or public transportation options) means it will lose part of its identity. The challenge for geo-location platform developers is to give the networks value to a geographically diverse audience.

4)      Badge exhaustion – I use Foursquare. A lot. So let me be completely candid here: Those early months where I got lots of points and badges for doing things were AWESOME. I felt like a good little adventurer. I checked in at an airport at 5 a.m. for a business trip and got TWO badges that day: One as a frequent flyer, and one, mistakenly, for “staying out late on a school night.” I haven’t gotten a badge in months and it’s really starting to kill my motivation.

So, with all of these roadblocks standing in their way, do you think location-based services can overcome these four challenges?

Mike Schaffer is the Washington, DC, based social media and online marketing manager at Iostudio. He is the author The Buzz by Mike Schaffer and has been named in the Top 30 and Top 100 Publicists to Follow on Twitter.

15 comments
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Matt LaCasse
Matt LaCasse

I think geo-location services are at a crossroads right now. They can become another portion of mainstream social media, or they can become just another fad.

To really take these services mainstream, businesses will HAVE to begin using them to draw consumers in. Gap did this a few weeks ago, offering a discount for FourSquare users who checked in. Lots of issues as store managers didn't know anything about it, but it's a step in the right direction.

You're absolutely right Mike in that people will have to get over that fear of people knowing where they are at all times. Frankly, I think that fear is a little overblown, but that's a post on its own.

Great post Mike, as always.

Jacqueline Hadley Conrad
Jacqueline Hadley Conrad

I think it will move into the mainstream once people find it has real personal financial value to them. As in discounts, specials, giveaways. In St. Louis, I'm seeing a variety of businesses being very creative and proactive in using not only Smart Phone technology but geolocation services.

Frank Strong
Frank Strong

Nice post Mike. The Economist has a good article on this topic this week. They cite two key challenges -- from a marketing shop adoption standpoint. First, the 4% participation which you've noted and second, people gaming the system. I highlighted these and offer a link to the article in this Amplify post: http://bit.ly/daCZZM

Sanjay Desai
Sanjay Desai

Mike, enjoyed the post.

One aspect worth mentioning is how location-based services are becoming much more useful/interesting beyond enabling a simple check-in.

Start-ups like Booyah are exploring real location-based gaming, while Shopkick and others are focused on location-based shopping. These apps go well beyond just sharing your location with your social network and seem to be catching on fast.

I'm working on a start-up (Poig) that is also focused on adding real value in the social location space, but from a different angle. Poig is a new way to create spontaneous get-togethers--our approach is to make it easy to share what you want to do and turn it into a real world get-together.

All in all, I think these services will gain mainstream adoption, once they start providing actual value and rewards that aren't dependent on earning badges or mayor status.

Angie A. Swartz
Angie A. Swartz

Mike, you make excellent points.

I have to throw in an interesting point that I've been thinking of writing about myself.

I recently traveled to southern Ohio where I grew up. The area is economically challenged with some of the poorest counties in Ohio. I was surprised to see Foursquare mayors everywhere and frequent check in activity. I didn't expect it as this region is FAR from Manhattan and so are the socioeconomic patterns.

I think we might be surprised by how much a smart phone becomes a requirement of the younger generations much like cable TV.

Deandra D.
Deandra D.

oops, typo.... *think

Have you tried the other services such as Gowalla, Loopt, etc? What are your thoughts on those?

Deandra D.
Deandra D.

Smart post, Mike and you make some very good points. The smartphone issue is indeed an issue and with Apple leading the way in the app space, it leaves out a huge audience of non-apple users, Blackberry users (me) included. So we're way behind the curve here.

Secondly, your point about badge exhaustion is one of my many gripes with Foursquare. It was exciting for a while, but brands have to move consumers along the engagement wave. It's the reason why smaller LBS are gaining ground- brands have used them to leverage rewards for consumers who check-in, as opposed to simple badges and "mayor-ship."

With that said, I definitely thing they can overcome these challenges- the same way Twitter moved from "simple status updates" to a social platform that provides so much more, LBS will do the same. We just have to find smarter ways to use it.

Mike Schaffer
Mike Schaffer

Hi, Sanjay--

Thanks for your excellent industry insight! It's great to hear what a developer is thinking about the future of the category.

You hit the nail on the head - it's all about value. Facebook is connectivity, Twitter is about immediacy, Yelp/OpenTable are about restaurants. Geo-location networks need to establish a sustainable value model before they REALLY take off.

Best of luck with your network and definitely keep me in the loop about it's progress!!
- Mike

Mike Schaffer
Mike Schaffer

Thanks for reading, Angie!

That's an interesting testament to the power of connectivity and the importance we put on it.

I'm still undecided on if geo-location will grow like Twitter or be a fad, like GigaPets. Probably leaning towards fan, but hoping it sticks around!

Mike Schaffer
Mike Schaffer

I've spent the most time on FourSquare. I figured that the best way to test the genre was to pick one network and run with it.

Gowalla's recent deal with USA Today will help their visibility and relevance.

Each of the networks needs one thing to succeed: a critical mass of users. My guess is that many of these networks will merge (or go barren), because a more centralized system will provide more benefit to more people.

Mike Schaffer
Mike Schaffer

Deandra--

Thanks for reading and commenting!

You brought up a great point - not all smartphones are created equal. Programs must be compatible to no less than 3 types of phone systems (iPhone, BlackBerry and Android) to REALLY impact the market.

I think the partnership FourSquare launched with MTV to award badges to people who get tested for STDs is a HUGE step in the right direction.

It will be interesting to see how/if it continues to grow!

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