The Hyper-local Opportunity

[img_assist|nid=13634|title=|desc=|link=popup|align=left|width=150|height=150]Author George Orwell is famously quoted as having once said: “Advertising is the rattling of a stick inside a swill bucket”. All political sub-text and unpleasant human/beast analogies aside, the man has a point. Certainly the message in his definition ringing out across the farm is clear: Food here now! It is advertising simplicity itself: What, Where, When, all so neatly packaged in a single resonating sound that is immediately received and understood by the target audience.

The inevitable rush to the swill bucket speaks volumes about what to expect from response rates when these parameters successfully collide. It doesn’t take a huge leap of imagination to move from Orwell’s example to the friendly neighbourhood ice-cream van – and from that, to the sound of a retail coupon being downloaded to your mobile device as you stroll along the street towards the advertiser’s store. The fundamental advertising principles are the same.

Undeniable momentum
Hyper-local mobile advertising may be in its infancy, and operating in a fragmented ecosystem, but the momentum backed by all players towards its exploration, in the pursuit of engaging consumers through location targeting, is undeniable. From the technology solution providers enabling mobile advertising, to the brands adopting it in their marketing mix, and ultimately the consumers who are already responding to advertising received or accessed via their mobile devices, it seems the appetite for location-based services (LBS) shows no signs of slowing.

Why is this happening now? The conditions for the opportunity to thrive have arrived, and they range from the sheer ubiquity of mobile devices and the proliferation of inexpensive wireless mobile connections, to the resurgence of good old-fashioned added value, to the collective consumer conscience in the wake of a global recession. Countries with high smartphone penetration rates such as Singapore are poised as early adopter host nations for LBS and hyper-local mobile advertising to find its commercial footing. 

If there is excitement in the air, it’s because all players can sense the vast commercial opportunity unfolding. Worlds are about to collide and change forever. Mobile, Retail, Advertising, CRM, LBS, online, offline, through-the-line – it’s the mashup of all mashups, the stuff advertising dreams are made of. For players, the race to connect brands to resources to consumers to retailers has already begun.

The opportunity

Judging by the flurry of M&A and IPO activity, there is market-wide agreement that opportunity exists at the intersection of Mobile and Brand, and goes by the name of Location.

Further evidence of the race to secure a slice of the location-based opportunity is gaining more coverage than a royal wedding – from heavyweight social media offerings in the form of Foursquare, Facebook Places, Gowalla and Twitter Places, through to mobile operator- sponsored LBS via SMS, government endorsed Traffic GPS services, and independent ventures that seek to innovate new offerings which combine brand, mobile and location through mobile apps and sites.

It seems everyone from the small single boutique owner and the independent app publisher, right through to the mega media brands, are no longer content to passively debate the possibilities from the sidelines, but are now fully committing to the exploration of this compelling trio.

Level playing field
So what can we expect from the great union between mobile, brands and location? One of the most exciting aspects of mobile advertising at the hyper-local level is that small brands will have a chance to compete on a far more level playing field with their larger competitors.

The big brand and budget dominance that typically overshadow all but the most creative and innovative smaller advertisers in other formats are not necessarily the determining success criteria for a hyper-local mobile economy. In fact, the growing accessibility and affordability of user friendly, web-based mobile ad networks and agencies can see smaller, swifter and more responsive brands seizing the opportunity to road test campaigns and establish effective mobile connections with their local consumers, before the big brands have even mapped out their mobile advertising strategies at corporate HQ.

Often, no specialist technical knowledge is required to create, manage, analyse and budget for mobile ad and coupon campaigns, and this empowers small business owners who have traditionally found other forms of advertising prohibitively expensive for their scale of operation.

Take for example the independent Coffee Shop X, struggling to compete against its well known multiple competitors in the same neighbourhood. With the technology available, and even on a limited budget, Coffee Shop X manager can run a variety of mobile coupon-based sales promotions. These could be used to shift excess stock; promote competitive differentiation by advertising unique offerings (e.g. in-store events); launch new drink promotions; and even roll out a compelling loyalty program that could win valuable neighbourhood market share and repeat custom.

Much will depend on creativity, innovative use of technology, and the ability to deliver added value to nearby consumers driven from the mobile world, where they experience banners, coupons or related LBS via social networks, apps and sites, straight through the real-world door to the cash till.

Challenges
But hyper-local mobile advertising is not without its challenges, of course, and issues of privacy, relevance and value will ultimately be judged by each consumer on a pass or fail basis, before habitual use is established. For privacy and spam, the old rules still apply – LBS needs to support the opt-in culture of digital media. Similarly, retailers need to be sensitive to what may be perceived by consumers as an over-enthusiastic approach to cross-promotional or behavioural-based follow up campaigns – after all, nobody likes to feel as if they’re on a list, simply because they clicked on a banner.

Happily, the issue of relevance for consumers works hand-in-hand with LBS and hyper-local mobile advertising. The impact on both real and perceived consumer value increases tremendously, as does the brand offering itself, when this model is coupled with relevant content of favoured apps and sites. Again, the real-world retailers, brands and service providers have a responsibility to uphold promises made in the mobile world. Poor customer service, unfulfilled offers, or even staff who are untrained or unprepared to redeem coupons or offers can turn those valuable check-ins into check-outs!

For brands and technology providers who can strike the right blend of What, Where and When for consumers by tapping the hyper-local mobile advertising opportunity successfully, the commercial gains could not only corner the neighbourhood economy, but also see them replicate their success worldwide. Global market share looks set to be measured out in the combined achievements and performance of each store, at each location. Brace yourself for the inevitable rush.

Christian Geissendoerfer is CEO of mobile couponing firm, Yoose