As local digital media wrestles with the question of how to successfully monetize mobile, a potential new disruptor is literally mapping out a claim to that space.
Indoor marketing — the practice of targeting, following and serving up advertising messages and offers to consumers once they're inside a retail space via their smartphones — is moving out of the blue sky zone and closer toward market implementation.
If and when it does, local media could face another direct threat to its already declining advertising revenue: hypertargeted advertising that hits consumers right at the aisle level. Imagine getting pinged with a coupon for jelly just as you add peanut butter to your cart at the grocery store, for instance.
"The people who should be nervous are traditional media," says Neg Norton, president of the Local Search Association. "That's the pool of money that's ultimately going to get reduced."
Norton was among those wading through indoor marketing's nascent landscape at Place, Opus Research's Oct. 8 summit on the new technology. But lest local media brace itself in the crash position for a Craigslist-like impact, the picture created at the conference was decidedly marked by caveats. Conflicting technologies, privacy concerns and brewing territorial wars within its arena presaged this: Indoor marketing may eventually pose a serious threat, but it will have to get out of its own way first.
Indoor marketing's dreamiest advocates see not-too-distant future redolent of Minority Report, where Tom Cruise navigated through a shopping terrain incessantly (and holographically) beckoning him by name and his preferences.
"The nirvana of advertising is to send the right message to the right audience at the right time," says Google's Don Dodge, a developer advocate. "Now you can do it in the right place."
In reality, the phenomenon has some strong tech trends nudging it in that direction. Among them is 64% U.S. smartphone penetration, according to Greg Stirling, senior analyst and program director at Internet2Go for Opus and Place's ringmaster.
Stirling cites Pew research that finds 72% of smartphone owners use them in stores where they're often looking for coupons and "showrooming" — comparison shopping via the Web. Another Internet Advertising Bureau study finds two-thirds of shoppers using their mobiles in stores are likelier to buy a product.
"Consumers are already using smartphones in-store for research," Stirling says, adding that no new consumer behavior will need to be adopted for indoor marketing to take root.
Technologically-speaking, indoor marketing's foundations are already being laid. Part of that foundation is mapping, and Joseph Leigh, Nokia's head of venue maps, points out that 99% of all major shopping malls in the U.S. and Europe have already been mapped in much the same way as Google's Street View has mapped neighborhoods.
"And we're only just getting started," Leigh says.
Not only is the territory being digitally mapped down to individual stores, but also the metrics of human traffic inside those venues have taken a dramatic leap forward in accuracy, again thanks to smartphones.
In a case study presented by Path Intelligence, a London-based shopper analytics firm powered by Massachusetts Institute of Technology-developed tracking technology, shoppers were anonymously targeted via their smartphones and followed through a number of shopping malls owned by Forest City Enterprises, yielding near-chillingly granular data, including their nationalities and time spent and pathways followed through the malls.
Forest City, for its part, uses the metrics to gauge lease terms for retailers and to plan mall infrastructure changes.
Given that not much is generally known about a shopper until the point of sale, this kind of human traffic analytics is opening up insights to retailers and brands on an order they've never known.
For example, an opt-in, consumer-facing app made by Point Inside yields data on shoppers' pathways through stores, their number of visits per week, the effectiveness of promotions served to them and even their shopping lists, says Todd Sherman, chief marketing officer. (Sherman notes another interesting insight: Shoppers often prefer finding an item on the shelf via their in-app store maps rather than consulting an associate, though the app can be used to summon an associate if wanted.)
"For a large chain, this turns their shoppers into a highly-targeted, highly-relevant audience," Sherman says.
Point Inside's clients include hardware chain Lowe's, but how many other major retailers are dipping a toe in these waters?
Google's Dodge says that of the top 50 retailers, more than half have some kind of indoor marketing initiative underway. "Of the top five, all of them," he says.
So, smartphones have ushered in an era of unprecedented targeting precision and retailers are keen to mine its prospects. What could possibly be putting the brakes on indoor marketing?
To start with, there are a number of technological pathways to tracking, and none have yet taken the lead. For instance, tapping into a smartphone's GPS is one route, but "GPS doesn't work indoors, and that's where business happens," Dodge says.
