US Mobile Market Ready for Location-Based Advertising

Monday 20th July 2009 - 11:50

INTERVIEW: Location-based advertising (LBA) is still in its early stages - and has so far mostly been rolled out in European markets, including France, Romania and Germany.

Now
TechnoCom has brought a mobile advertising and marketing content delivery platform to the US where it believes the opportunities are huge.

Smartphone.biz-news spoke to Janice Partyka, vice president of external affairs at TechnoCom, about its
SpotOn GPS application and plans for combining location-aware advertising with navigation.

TechnoCom last month announced that it was launching SpotOn GPS, a mobile navigation system that offers turn-by-turn navigation, search and mapping.

Nothing particularly startling in that. But where this hosted solution differs is that it is a mobile advertising and marketing content delivery platform that combines advertising with navigation.

What makes this interesting - especially at a time when budgets are being fiercely scrutinised - is the potential it offers carriers and brands to increase the effectiveness and reach of advertising and promotional messaging.

The argument is that the return on investment from mobile advertising dollars is greatly enhanced by presenting ads, coupons and offers to consumers at select times, in the right places and close to points of sale.

Recent figures show that the mobile advertising market in the US is expected to reach USD $2.3 billion, roughly 25 per cent of the overall market by 2011.
Janice Partyka, vice president of external affairs at TechnoCom

The largest segment is expected to be mobile couponing reaching almost USD $4 billion by 2011 or 42 per cent of the overall market.

Janice Partyka, vice president of external affairs at TechnoCom, said a key factor in launching the navigation system was their popularity as mobile applications.

"We see it as a marketing and advertising pipe," she said. "In Europe there are offerings that combine navigation with advertising and marketing. But we are the first to introduce it to the US."

Appeal of LBS

Location-based advertising has been shown to yield significantly higher conversion rates with direct response modes, such as click-to-locate and click-to-navigate, compared to non-location-based advertising.

This makes LBA and navigation an appealing combination.

Helping drive the adoption of both is that fact that for end-users, ad-funded navigation can represent a balance between exposure to advertising and access to reduced-cost, or potentially free, navigation.

Partyka told smartphone.biz-news that market research shows that a large percentage of people say "yes" when asked if they would be interested in an offering that deferred subscriber costs.

"We have to be smart about it and not make the advert very intrusive," she said.

"It has to be relevant to who they are and what they are doing."

So while someone might appreciate receiving an offer from a nearby restaurant at lunchtime, they are unlikely to be so well disposed to getting one at midnight.
"That's not useful. Relevance is really important," said Partyka.

She said that as well as carriers - the traditional channel for navigation - there were other options for SpotOn GPS.

These include affinity groups, such as airline mileage rewards programs, shopping clubs or travel clubs, all of which can offer search listings of their inventory, suppliers, and partners.

Partyka said that, for instance, a mileage program can list restaurants or hotels that offer their customers extra mileage incentives.

The mileage program member may decide to view hotels on a map, receive coupons, offers and advertisements; click-tocall; connect to a website to see rates and book nights; and click-to-navigate to the business's location.

Partyka said this extends the reach of partners to get bookings.

She said SpotOn GPS has other applications, such as a large retailer branding the application to always show its locations on maps, provide special offers that are regionally or outlet-specific, highlight certain vendors, and display loyalty messages.

Other customers, such as wireless operators, may opt for third-party advertisements that SpotOn GPS offers as a bundle.

Flexible Revenue Model

But Partyka said that what SpotOn GPS also offers is flexibilty when it comes to the revenue model being used.

While the traditional method is for navigation to be offered to end users on a monthly subscription, TechnoCom's app can be be adapted to its customer's requirements.

The revenue models include subscriptions, premium content fees and advertising transaction fees.

So this can range from a client paying the full fee or chosing a mix of reduced subscription with a share of advertising revenues - to the extent that it could is heavily discounted or even free.

Partyka said that how customers end up working the charge with the end user depends on them.

"In some cases they would not charge the end user for the service," she said.

So, for example, it could be part of the American Express offering for Platinum Card holders, with the cost fully absorbed by membership charges or promotion budgets.

"Someone else might make a minimum charge but much less than what would have found before," she said.

Speedy Launch

Designed as a turn-key solution, SpotOn GPS can be ready for service launch within sixty days of contract signing.

Partyka said the app does what any other navigation, search and mapping service does.

Worldwide rich mapping options include street maps, 3-D map views and satellite images. Location-specific traffic and weather are also offered.

She said it is initially being supported on Windows Mobile, Blackberry and Java handsets but will be coming out on Android in Q3 and the iPhone Q4 2009.

Based on LocatioNet's amAze GPS service, it has has been white-labeled by leading international carriers and service providers, including Bouygues France, Orange Israel, Vodafone Romania and Telegate Germany.

Partyka said SpoOn GPS is aimed at a wide range of end-users with access to international local search databases, and text and voice prompted instructions in thirteen languages with more being added.

Other features being developed include user generated content, such as enabling users to identify where speed traps are located.

TechnoCom expects to have its first customers for SpotOn GPS shortly, according to Partyka: "This is the beginning of the market. We have clients that are ready for it."
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