• October 1, 2010
  • By Juan Martinez, Editorial Assistant, CRM magazine

Badges? We Don't Need No Stinkin' Badges

NEW YORK — The gaming aspect of location-based marketing is less important than some might think, at least according to the opening keynote of the Location-Based Marketing Summit convening at the New Yorker Hotel here this week. As if to underscore the point, the keynote was followed by a panel discussion on the future of location-based marketing and what might promote or inhibit the practice's growth.

Before a slow-gathering crowd, Ian Schafer, chief executive officer at marketing-engagement agency Deep Focus, began his keynote by downplaying the significance of the badges awarded by location-based service Foursquare. He described the rewards, which consumers earn by "checking in" at specified locations, as less-expensive versions of television commercials. Businesses, he asserted, should look at forms of location-based marketing that unlock value built over time as opposed to tiny rewards that draw customers into a store one time.

[Editors' Note: Foursquare was recently named one of CRM magazine's Rising Stars in the CRM Market Awards — see the August 2010 issue of CRM for more.]

What businesses should be studying, Schafer suggested, is what the "intensely passionate" fans of geolocation services are actually doing — what they're using these services for, and what their general awareness of these applications is.

Schafer referenced a Forrester Research study on this topic and said that he was "disheartened" by the results. The report said that 84 percent of people in the United States are not familiar with any geolocation service; even among those who are familiar with the services, 9 percent have never used one.

"This kind of data is enough to make you quite depressed," Schafer said.

Different social networks produce different kinds of responses to location-based or brand-specific marketing, Schafer said, citing a study from e-Rewards market research that showed the number-one reason people become a fan of a brand on Facebook is price-dependent, involving discounts or promotions. With Foursquare, however, the top reason was information-gathering, seeking tips about locations and where friends are going.

"Here we are talking about [games], badges, and such," Schafer said, "and it's the next-to-last reason why people are using these services." He argued that Facebook Places, which has been described by detractors as a not-so-subtle knock-off of Foursquare, captures the essence of what location-based services are all about. Pioneers in location-based services, he added, were merely "generating information and attaching it to some kind of event and then sharing it with other people so that other people see that event and capture the information." The location-based industry changed forever, Schafer told the crowd, the moment Facebook began uniting an individual's status to her location before sharing that information with the individual's network.

"If someone was talking about 'Penn Station' we all knew they were talking about the one in New York and not the one in Newark," Schafer told the audience, by way of example. "What Facebook created is a universal database of places. When you have this universal database of places we can build experiences around these things, reward people for doing things, get people to the same places, target the same kinds of marketing to them, because we know exactly where they are."  

Schafer lambasted marketers for not keeping pace with consumer evolution, noting that the industry either hasn't recognized or doesn't appreciate that online-ad impressions — increasingly commoditized and producing ever-withering response rates — are weaker than they've ever been before. Standard per-impression prices, he said, are massively inflated compared to the true value delivered by the ads, and are in desperate need of re-evaluation.

Rather than focus on impressions, however, Schafer argued that marketers need to move on entirely, identifying new approaches and new battlefields.

"Everyone is trying to find new ways to make those ads more valuable," he explained, "[but] if we're actually going to move the ball forward — looking for premium ways to get noticed by the consumer — you have to go to what's scarce."

Schafer seemed frustrated by the preponderance of marketing money spent on TV ads when the amount of time people spend with digital media is equivalent. He urged the marketers in the audience to leverage the power and reach of location-based services — millions have signed up for Foursquare and similar services such as Gowalla — in interesting and relevant ways.

"Right now the scarcest thing is attention," Schafer warned attendees. "And they're not making more of it." 

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine.

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