I recenltly wrote a think piece for MPG Media Contacts on the subject of location-based services. I've posted it below and would be very interested to hear what people reckon...

Near-constant hype in the trade press would suggest that “location-based services” are causing a revolution in consumer behaviour, brought on by a new-found ability to collect amazing discounts and deals in exchange for “checking-in” to shops, bars and restaurants. But is this really the case?

Let’s start by defining exactly what we mean by “location-based services”. Theoretically, they are anything that makes use of the GPS functions on mobile phones. But the area of real interest to advertisers is products like Foursquare or Facebook Places - extensions of the social networking concept which invite users to not just share what they’re doing, but also where they’re doing it.

Foursquare has been on the market for 2 years now, amassing an impressive-looking 7.5 million users worldwide. A social network based around a gaming mechanic, Foursquare allows users to “check-in” to venues  to collect “badges” (rewards for visiting certain places) or even become “mayor” (an award given to the person who has checked in most often over a set period of time).

While it’s been seen as a huge success so far (with figures released in February this year showing 2 million check-ins per day), much of this growth is coming from the US. Indeed, ComScore data shows that there may be fewer than 100,000 regularly active Foursquare users in the UK.

While that’s by no means an insignificant number, it’s dwarfed by the 30 million people in the UK currently using Facebook, 10 million of whom use it on their phones. And these mobile users can also now “check-in” to venues using the recently-launched “Places” feature (which essentially re-creates Foursquare’s core functionality).

Surely this will lead to an explosion of checking-in across the world’s biggest social network? Not yet, it would seem. With Facebook currently being very cagey about how many people are actually using the new feature, it’s safe to assume that Places is still to take off in the way so many in the industry predict that it will.

Indeed, a brief scan of most people’s feeds will show a small proportion of their friends checking-in – often the same people who adopted Foursquare with such great initial enthusiasm. Are the majority of consumers struggling to see a benefit to checking in? It would seem so.

With this in mind, both Facebook and Foursquare are giving retailers the opportunity to reward consumers who do check-in with free products, discounts and other offers. The benefit to retailers is clear – every time a customer checks in to your store to collect a deal, they are telling their friends where they are, advertising your offer and, by extension, also endorsing your business or product.

There’s still some debate to be had about how much this endorsement is worth, with early adopters valuing it somewhere between the price of a cup of coffee (Starbucks) to 20% off the price of a sports car (Mazda). But this is the sort of variation you’d expect from category to category.

However, it’s not just about offering money-off deals. In a potential indicator of future interaction between mobile and outdoor, a campaign for Cheryl Cole’s latest album invited users to check in to poster locations for a chance to win X-Factor tickets.

And the History Channel recently worked with Foursquare to provide “tips” on London landmarks to users of the service. More than 7,500 users checked during the first week of the partnership, demonstrating a demand for useful content and not just discounts. The partnership also points the way to small but increasingly deep interactions between users and brands.

But a technical challenge still remains for users wanting to get started with checking-in. For starters, they need to be armed with a smart phone (with GPS enabled and the right app installed) and, most importantly, be in a place where they can receive a data signal – often a challenge in itself.

So what could happen in the future to make things a bit easier for users? Certainly, Near Field Communication promises to make location-based marketing simpler, as customers will only have to touch their phone against a reader at the venue to collect deals and tell friends where they are. 

And while NFC may still be a long way from being a common feature on mobile phones, the rumoured arrival of O2’s “mobile wallet” (which allows users pay for everyday items like coffee by swiping their phones) this summer can only serve to stimulate demand for NFC technology.

But what of the short term? With Facebook currently looking for new partners for a second burst of Places launch activity, it could well be that one of these businesses hits upon something that has so far eluded everyone: a deal of significant interest to consumers for checking-in to become mainstream user behaviour.

Indeed, while location-based marketing seems be some way from a tipping point, its current state of adolescence presents brands with an excellent opportunity to “test the waters” while the rules are still being defined.

And the low cost of transferring an existing “offline” deal to Foursquare or Facebook Places has certainly encouraged experimentation. For example, Yo! Sushi’s voucher-like offer of a free meal for two to customers who checked in using Places was taken up by an impressive 1,000 Facebook users within 24 hours of launch.

So while brands would be well-advised not to put all their eggs in the location-based basket just yet, it’s clear that these platforms can already play an important role as part of a multi-channel integrated campaign – particularly in the retail and restaurant categories.

But it’s also evident that new innovation in this space will help to move location-based  services from a niche concern towards mainstream adoption – and the team here at MPG Media Contacts will be keeping a close eye on this evolution so our clients are perfectly placed to take advantage.