Who's on first? Key problems today with location-based services

Abbott: "Who’s on first."

It's a classic comedy routine by Abbott & Costello. And it's the first thing that came to my mind while watching the launch of Gap's free jeans promotion on Facebook Deals. Location-based services are hot right now - wildly promising but wholly experimental. With only 4% of online Americans using LBS, brands are paying an oversized amount of attention to opportunities in the space.

I see three key challenges today's brands face before LBS can work:

• Users aren't always as savvy as we assume they are. No marketer wants to make the mistake of assuming that all customers are the same or that the marketing department reflects the customer base. So while your team fights for mayorship of the office, recognize that your customers aren't yet doing the same with your stores. Here's an example of users "checking in" during the giveaway:
• Privacy is a sleeping dragon. Most users don't know about advanced privacy controls, but it's dangerous to assume they don't care. There was no mass exodus after the WSJ reported on Facebook privacy leaks. When I look at my Twitter stream, most users have location turned off - it's disabled by default now, but don't be surprised if that changes to support growth in the ad business. If that happens, then we'll hear about how much users really do care. Because they do. Deeply.
• You can't handle the traffic. Early brand interaction surprised and delighted customers. As more consumers became active, we saw front line breakdowns with social media middlemen. This has since been solved with promos utilizing existing POS systems. But that's just couponing, which has existed for 124 years - not 21st century location-based services. Today's organizations aren't ready to respond en masse at scale in real time.

LBS have lots of promise and some real challenges to solve. Today we only have a hint at what's on second and I don't know on third. 

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Comments

[Tom E]

Hi Peter,

You make some interesting points regarding LBS. The prime distinction at the moment between the likes of Gowalla and Foursquare vs Facebook Places is engagement.

When Facebook Places becomes more mature and integrated with other Facebook services I think that may also swing the public's appetite in favour of using LBS.

Until then, the challenges you've outlined in your post need to be mitigated.