Location-based marketing has huge potential—if shoppers aren’t too creeped out by it

Will shoppers appreciate personalized offers on their phones, or resent the intrusion?

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Young woman using a smartphone in a clothing store

(Tang Ming Tung/Moment/Getty)

Major League Baseball wants its fans to spend more time looking at their mobile screens while they’re at the ballpark. The league is betting that it can create a better visitor experience by automatically checking in people at the gates via their smartphones, for example, and sending them fun facts about plaques, statues and other points of interest around stadiums when they walk by them.

As little as six months ago, this level of targeted, rapid-response messaging wouldn’t have been possible. But advances in location-aware transmitters (called beacons), which send low-power Bluetooth signals to mobile devices as these devices pass close by, are changing that. Apple recently launched iBeacon, software that enables its phones and tablets to interact with such signals, and some Android gadgets have similar functionality.

About 70% of Canadian brands and ad agencies are already dabbling in marketing on mobile devices (or plan to soon), and this new technology provides an added incentive. Beacons are an improvement on GPS because they can pinpoint an individual’s location to within a few inches, even when the person is indoors. It’s the difference between determining if someone is in your neighbourhood or in a particular aisle, standing next to a specific product in your store.

Nick Koudas, chief executive of Toronto-based Aislelabs, which helps retailers understand customer traffic patterns, explains that at a basic level, these tools allow retailers to court customers as soon as they walk through the door. When a shopper enters an Apple store today, for example, the company’s store app automatically pops up on their phone (provided the shopper has downloaded it), presenting a help screen, a gift guide and a tool that can process payments via smartphone. “For the first time, businesses can connect the online behaviour of their customers with their offline behaviour,” says Koudas.

Location-based transmitters can also serve as navigational tools, helping big-box stores direct consumers to various departments and alert them to promotions as they pass by product shelves. The Rubens House, a museum in Antwerp, is already applying the technology to provide personalized guided tours: visitors’ phones or tablets recognize that they’re standing next to a particular artifact and call up information about it.

Businesses need to be careful with their location-based marketing plans to avoid the perception that this is merely a new—and exceptionally intrusive—form of spam. Noah Bass, co-founder of Aisle 18, a Toronto-based developer of retail apps, envisions, for example, supermarkets encouraging consumers to use location-aware apps to create grocery lists. Then, as shoppers walk around the store, beacons would send reminders to their phones to pick up items on their lists as they approached the relevant aisles. “People don’t just want to save time and money; they want to find products that they need or want,” says Bass.

The real promise of location-based marketing lies in tailoring marketing messages to individual consumers and presenting the messages at the very moment people are making product choices. It’s a huge opportunity, given that people check their phones up to 100 times a day and a growing percentage use their devices to make buying decisions. According to a recent report by Tapped Mobile and Brandspark International, almost a quarter of Canadian men shopping for personal electronics changed their choices after consulting their phones in stores. What’s more, 17% of the consumers polled said they would welcome more applications that integrate location-based offers.

In time, beacon-enabled tools will likely become cost-effective alternatives to paper fliers. But for now, the cost may put the technology out of reach for small retailers. Businesses have to spend between $10,000 to $1 million to build the infrastructure needed to support location-based marketing, says Bass, from installing the transmitters to integrating them with the store’s sales and inventory systems.

Consumers also have to warm up to the technology—at least enough to download the stores’ apps. At Target Field, home of the Minnesota Twins, only about 400 fans per game currently use the beacon service, in a stadium that hosts on average 30,000. But the league—and other early adopters of location-based marketing—are hoping if they build it, users will come.

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