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Thursday, August 28, 2014

Location based services - why operators hold all the cards

Donald Stuart, CEO of Brainstorm, explains why mobile operators are well placed to take advantage of the revenue streams opened up by location technologies.

LBS – what’s the hype?

The area of Location based services (LBS) has been getting a lot of attention of late, and it’s no wonder, Juniper Research has highlighted that the Mobile Context and Location Services market is expected to generate revenue of $43.4 billion (£26.2 billion) by 2019, up from $12.2 billion in 2014. With this in mind it is clear why businesses within the OTT, telecoms and media space are vying to get their piece of this promising revenue stream.

Mobile marketing campaigns have now moved beyond offering mass indiscriminate communications, to focus instead on delivering carefully targeted personalised messages. This transition is in turn driving a higher ROI on marketing campaigns as the tools are now available to automate the slicing and dicing of audiences in a seemingly limitless array of permutations. Yet the addition of a further dimension; that of location; adds a powerful new trigger to deliver messages linked to your location at a given moment in time, the use of which has seen response rates surpassing those of standard generic campaigns by as much as 75%. It is this additional location capability which, when married with customer demographic and buyer behaviour information, is causing such a stir amongst the marketing populace driving both mobile operators, OTT service providers and mobile device manufacturers to consider ways to monetise the location network assets they hold, and their profile-rich subscriber database. After all, the marketing mantra of delivering the ‘right message to the right person at the right time’ still holds water but should perhaps now be amended to include ‘in the right place’.

The commercial opportunities offered by the addition of ‘location’ to the marketing mix, have not been lost on mobile network operators who have been busy developing a package of location services to sell to brands & retailers. They are quickly beginning to appreciate the value of the location information that they already possess. By combining this location intelligence with the subscriber data which they also hold in abundance, they have a winning combination for businesses seeking to tailor communications campaigns to hyper-targeted recipients at the time and location when they are most likely to be responsive.

The Importance of Opt-in

According to Cisco 47% of us are willing to receive vouchers to our mobile phone when we are at or near a retail store. This brings us to another important point which is in respecting the wishes of subscribers themselves and operators are working hard to develop ways to convince subscribers of the value of opting-in to receive personalised offers thereby ensuring a win/win arrangement for all parties concerned. What’s particularly impressive is that rather than conceding the upper hand to OTT players like WhatsApp and Viber as they did in the battle for SMS supremacy, MNOs have been quick to recognise the value of location based intelligence to enterprises. We have also seen an industry first in the UK where mobile operators have set aside their competitive instincts to form Weve, an affiliation that has sprung up between MNOs enabling them to capitalise on this thirst for hyper-targeted information so brands can target all their subscribers regardless of the mobile network owner. Far from dragging their feet, mobile operators are now at the forefront in offering innovative smart technology which can turn location data into a powerful business tool.

Separating GSM from GPS

There are a lot of location services already in operation – ranging from those that use GPS satellites to WiFi and even Bluetooth, used to provide location through Beacons; it’s creating some exciting engagements across multiple sectors from travel to retail. However these technologies all rely on ticking a number of boxes namely: the consumer having a smartphone, downloading an app and actively logging in or checking in to ask the app to ‘find my nearest’ of whatever service or product they are looking for.

While these location technologies are reliant on actively checking in, think Foursquare, GSM location data is passively collected by your mobile network operator along with lots of other ‘events’ that they collect every time you do something with your phone – turn it on, send a message, etc and by unlocking these location events, an MNO can effectively create highly-targeted location based engagement opportunities. According to a Morgan Stanley study, 91% of adults keep their smartphones within arm’s reach for 14 hours a day. The fact is that our smartphone knows more about our daily routines, likes and dislikes, than most of our family members. The data gathered by GSM is extremely valuable to operators who can build ever-greater detailed pictures of subscribers which can be leveraged to provide hyper-personalised, real-time communications, with greater ROI.

Why MNOs hold all the cards

So whilst the technology exists to create personalised messages for marketing campaigns the potential uses for location based technology goes way beyond pure marketing applications to include a myriad of other potential opportunities to enrich customer service activities, aid fleet management, logistics and even help to find missing children. The use of GSM location technology gives operators the opportunity to offer feature-rich, valuable services, above and beyond the data gathered by other location technologies. This is where operators are much better placed to execute smart engagement. GSM is more effective than say GPS, WiFi or Beacons for applications that rely on passively monitoring large volumes of user data without relying on a user to do anything other than opting into the service. Therefore services like fraud management and ‘lost children tracking’ are better suited to GSM services which are the domain of the operator. Get these triggers right and operators can ensure location based services not only become an unbeatable marketing tool, but have the potential to integrate themselves into the everyday lives of their subscriber base to create innovative services that add value for both consumer and marketer. Operators are in a unique position to leverage their golden pots of customer data to provide services which OTT players have no access to, which will inevitably lead to enhanced loyalty, reduced churn and growing revenue.

Donald Stuart is CEO of Brainstorm Mobile Solutions, a global provider of mobile engagement solutions.
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Author: The Fonecast
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