The Case for Early Adoption: Why Forrester is Wrong About Marketers and Location-Based Services

Sorry, Chris. At the risk of contributing to the fatigue of competing voices, I’ve got to say a couple of things about the Forrester Location-Based Services (LBS) study and public advice for marketers.

At the outset, I haven’t read the study. I’d love to read it, but I’m not ponying up $500  (though I’d be more than happy to provide a thorough review in exchange for a copy). I’ll be confining my comments to the public statements accompanying the release of Location-Based Social Networks: A Hint of Mobile Engagement Emerges, authored by Melissa Parrish with Sarah Glass, Emily Riley, and Jennifer Wise. Some of the things I’m pointing out may very well have been dealt with in the actual report, and if they were, that information should have been included in the public messaging about the release. It wasn’t, and the gist of the public statement is unequivocal.

Cutting to the chase, the author lays out her concluding recommendation and key takeaway for marketers:

But is it time for other marketers to start jumping on this bandwagon?  We don’t think so.  Though many LBSNs are gathering steam, the landscape is fragmented and the programs can’t scale just yet. But with large companies preparing to enter the market (I’m looking at you Facebook and Yahoo!) the time for marketers to get involved is coming.

For the sake of context, “other marketers” are other than those who “experiment with new technologies as a way to stay current and to reach key portions of their consumers” (in this case, those consumers being “young, male, well-educated, and influential”). Let’s set aside the fact that the category of experimental, male-targeted marketers is frickin’ huge, meaning the time is right for a LOT of businesses to get involved with LBS. Let’s also set aside any questions about the size of the data set Parrish worked with, the quality of the sample, or any other concerns about the numbers that underwrite the study’s conclusions. Instead, let’s just consider those other marketers, the one’s whose target customers aren’t early adopters of Foursquare or other location-based applications and platforms.

The crux of my complaint stems from three core beliefs/assumptions, the first two of which are:

1. IF location-based services achieve mainstream adoption and high rates of interaction, marketers and businesses will reap enormous rewards from proximity marketing, including attracting more first-time customers, encouraging more repeat business, and increasing sales.

2. IF marketers and businesses are early adopters of location-based services, the incentives they offer for discovery and patronage will attract mobile users who do not currently derive value from LBS.

Given the admittedly anemic usage statistics for location-based services, at least in comparison to other social media channels, it probably seems intuitive for Forrester to recommend a cautious approach for marketers. With a lot of social media technologies, that’d be the right call. But as far as marketing is concerned, location-based services are a fundamentally different kind of social technology, and from what I can glean from the public statements about the Forrester study, that crucial difference seems to have been missed.

The fundamental distinction between location-based services and other social media technologies is this: one of the principal benefits of location-based services is incentivized discovery and partronage. As such, marketing is hardwired into the genetic code of the technology. To understand this difference, consider another social platform that has businesses scrambling to figure out marketing value, Twitter. I still don’t think Twitter has come up with a decent marketing option, primarily because marketing is an afterthought, and generally perceived as intrusive and viewed with suspicion. Engagement with brands on Twitter is chiefly dictated by consumers, as advocates and critics, and while there’s ample opportunity for interaction, customer service generally prevails over marketing in terms of organizational imperative, scope of engagement, and communication content. In plain English, Twitter users don’t want to be marketed to. Foursquare users, on the other, want and expect to be marketed to.

In a previous post, I explained the value I get from Foursquare – “discovering new places, receiving special offers, serendipitously meeting up with friends while out on the town.” Aside from the social benefits of LBS, which are a distant third among my priorities, my use is primarily driven by desires to discover new places, explore entertainment options, receive loyalty rewards, and reward or punish businesses for customer experiences. In order to realize the full benefit of Foursquare, I depend upon the participation of businesses. I want to know details about your venue, hear about the daily specials, receive special offers, and be rewarded for my patronage. Incentivized participation is one of the principal benefits and primary selling points of Foursquare and other location-based services. Your marketing is welcome here. It actually enhances my experience. How many social media channels can you say that about?

Without reading the report, I think it’s safe to say that Parrish and the other contributors to the Forrester study see the potential value of proximity marketing via location-based services. Who wouldn’t see the value in a channel that functionally allows you to tap your customers on the shoulder while they’re in the neighborhood and whisper an offer they can’t refuse? They see the value, but they urge caution. Here’s where I think the difference between location-based services and other social media channels really matters, and why I think the conclusions of the Forrester study should be reconsidered. Early adoption of location-based services by marketers and businesses is integral to the mainstream adoption of location-based services. Marketing is inextricably bound up with the sine qua non of location-based services, and therefore an essential component of the user experience. Without marketing-driven incentives for participation, adoption will remain limited to the young, male, well-educated and influential audience that primarily derives value from the social, gaming, and other aspects of the experience, aspects that have thus far failed to demonstrate wider appeal. Instead of urging caution, Forrester should be championing early adoption and encouraging businesses to nurture a technology that can make their dreams of proximity marketing come true. They should be warning businesses not to remain on the sidelines, and advising them to take an active hand in the direction of this burgeoning market. Get out there and figure out what works for your target customers. Generate the added value that will drive adoption. I’d love to see the cost calculations that indicate this approach isn’t worth trying.

I’m using Foursquare as an example here, but I’m truly platform agnostic when it comes to my opinions about the potential of location-based services. I like Foursquare because it has a strong and quickly growing user base, dedicated tools that are easily accessible and affordable to most small business interested in reaching a local audience, and offers one of the top 2 or 3 best UI/UX in the market. Will they eventually dominate the space Facebook-style? Will Facebook get it together in time to lay a Google-style smackdown on Foursquare? Is Yelp itching to tag in? Don’t know, don’t care (though I will care in exchange for a financial stake in and/or lucrative engagement with Foursquare, Facebook, Google or Yelp). The marketing tactics that attract the most new and repeat business are unlikely to vary significantly across platforms. Moreover, since this is an emerging market built on fledgling technology, active marketing participation can influence the direction of future application and platform development. What works for marketers will be built into the feature sets of all LBS platforms, because what works will provide the best experience for LBS users. So, you don’t need to wait for a Winner to emerge from the fragmented platform and application marketplace before you incorporate proximity marketing via location-based services into your marketing mix.

Aside from hindering adoption and missing out on the opportunity to influence the direction of the technology and market, the cautious approach recommended by Forrester will unnecessarily extend the learning curve for marketers, and lead to the adoption of inappropriate engagement models. This is my 3rd basic assumption:

3. A platform agnostic approach that encourages early adoption, experimentation and testing offers the best hope for long-term success when the technology matures.

In the public statement accompanying the Forrester study’s release, Parrish suggests that “other marketers” take a wait-and-see approach to location-based services, primarily because usage is low, the user base is monolithic, the market is fragmented, and the future uncertain. I’ll grant that all of this is true. But as I said before, the ultimate Winner’s technology will not be so unique and distinct from Foursquare, Gowalla, Brightkite, Loopt and other existing location-based services as to render obsolete the marketing lessons learned before the victory. If anything, the uniformity of existing users should indicate a need to tailor marketing tactics to particular target customers. As with all social media technology, usage differs dramatically based upon the diversity of users. Learning what works for your particular target customers will be a matter of trial and error. Waiting simply amplifies the pressure to adopt a “previously proven” engagement model once the market matures, one which is unlikely to fit the unique circumstances of your business, product, services, customers, competition, and local market. Marketers should be encouraged to start experimenting with LBS now, while the barriers to entry are relatively low, and the benefits of early adoption so very high.

Aside from pragmatic concerns about the recommendation of caution issued by Forrester, what the study ultimately highlights is the need to preface our research with an understanding of the things that make each particular social technology unique, as well as the particularities of user experiences and expectations of each. Marketing is a critical aspect of location-based services, and recommendations based on any study that fails to put that fact front and center should be highly suspect.

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