Forrester Recommends Caution with LBS

According to a Forrester of study US Online adults, only 4% have ever used location based applications. The report has some very interesting data [although the definition of Location Based Social Networks is mired in ambiguity. Content based location networks like Yelp and Where seem to be excluded.]. The predominantly male audience is talked about as an influencer, but also as a “drop in the bucket” compared to the effectiveness of the audience that interacts with SMS, mobile search and display media on WAP sites.

Two things bother me. First, Forrester is late to the party and just knocked over my lamp and let my out my cat. Second is the recommendation in the report called Location Based Social Networks Show a Hint of Mobile Engagement, which you can buy here.

“Forrester recommends that bold, male-targeted marketers start testing but that most marketers should wait until they can get a bigger bang for their buck, when adoption rates increase and established players emerge from the fray.”

– quoted from the report abstract.

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Conversations and Engagement, Not Impressions and CTR

Since when is social media all about impressions? As someone who constantly encourages clients and prospects to think about the quality of their social media audience before the quantity, I find this recommendation to be rooted in paid media type thinking. This is earned media. We need to switch lenses and look at the audience again.

A Smaller, Yet More Engaged Audience of Influencers

The good news is that while the audience is small compare to Facebook users or Google users, it is growing very rapidly. This audience is also willing to activate. We know that they will fill their social graphs with checkins, offers, badges and other surprises. Their mean household income is $25,500 more than the average US online household, so in theory they have more spending power (assuming they are not concentrated in higher cost of living areas). They rely on their phones for information. They are 24% more likely to look to their phone before they make a purchase, 24% more likely to want to receive a relevant (text) message from a business, 23% more likely to use their phone to participate in a sweepstakes or contest and 22% more likely to text for a coupon or discount. In other words, these people are a marketer’s dream.

This is cutting edge stuff with a ton of potential. We have only seen small pockets of fully integrated campaigns (like USA Today) that uses paid media to drive people to a LBS app to spurn adoption and engage with the brand. Most of the growth is organic, through PR and events. It is still very new stuff and the fact that there are so many large and small vendors in the space is a detriment to more widespread adoption because there is still no de facto standard for checkins, although I think Foursquare has a shot at being it if they keep up their pace and continue to innovate and appeal to and keep the interest of people who are always hungry for more.

I understand that Forrester is a group of analysts and that they need to use their data to make what they feel is the best recommendation for their clientele, but given how smart they are, I would think there would be some suggestions on how to further the industry in the report. They themselves begin the article by calling the industry “nascent”, which is a perfect word, but what about loyalty (their example is Starbucks and a “startup LBSN”, what?)? White labeling opportunities? Contextual recommendations? Usefulness of checkin data? Where’s the future?

The thinking of these platforms is very “What’s next?”. Forrester’s, in this instance, “What’s now?”. My recommendation is to test into these platforms, collect and analyze data on your influencers and engage heavily with those who are engaging with you.

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