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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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Don’t believe the hype

If you’re a business owner considering your firm’s social media options, it’s hard not to be distracted by the shiny object that is Twitter. The microblogging service launched in 2006 has purportedly grown to more than 100 million users, been featured on the cover of Time Magazine, and received $48 million a month in free press coverage. If being a media darling signified business value, Twitter would be the Holy Grail of social media. Unfortunately, that’s not the case. For a seemingly simple piece of technology, Twitter is surprisingly complicated – at least insofar as business utility is concerned. Extracting value requires effort, commitment, and an understanding of Twitter’s limitations. Before you cave in to the urge to jump on this social media bandwagon, there are a few things to keep in mind.

Usage statistics are inflated

At April’s Twitter developers conference, Chirp, the company announced their latest usage statistics, including:

  • Twitter has 105,779,710 registered users
  • 300,000 new users sign up per day
  • There are two reasons I suggest these numbers are inflated. First, among these 100,000,000+ registered “users” are single users with multiple accounts and spam accounts. How significant is this phenomenon? According to a study from Edison Research, only 17 million Americans have Twitter accounts, which is an enormous discrepancy even if we factor in Twitter’s claim that 60% of new users are coming from outside the US. Multiple accounts are so pervasive that third-party clients such as Hootsuite, TweetDeck, and Seesmic have made multiple account management a primary feature. Spam accounts not only inflate Twitter’s usage numbers, but also dilute the already anemic follower counts for users (more on this below). Taken together, these factors suggest a high degree of skepticism when it comes to anticipating Twitter’s potential reach.

    Second, and more important than the question of raw user numbers, is the issue of Twitter’s astonishingly low usage statistics. According to a study by Harvard Business Publishing, “among Twitter users, the median number of lifetime tweets per user is one.” The study found that the top 10% of Twitter users account for 90% of tweets, compared to usage statistics for other social networks, where the top 10% account for roughly 30% of contributed content.  A June 2009 report from Sysomos, Inside Twitter: An In-depth Look Inside the Twitter World, found that 85.3% of Twitter users update less than once a day, while only 1.13% of users update more than 10 times  a day.  More than half of Twitter users hadn’t posted a status update in the past week.  According to HubSpot’s State of the Twittersphere report, 54.8% of users have never tweeted. To put this activity data into perspective, consider comparable numbers from Facebook.  According to self-reported statistics, nearly half of all Facebook’s 250 million active users log on daily (48%) and 20% of users update their statuses at least once a day. Media hype aside, Twitter is hardly a hotbed of social activity.

    Twitter takes the “social” out of “social media”

    In addition to Twitter’s inflated usage data, there is the related problem of anemic social connections. One of the primary reasons businesses are excited about social media is the possibility of tapping into the network effects of this new medium – the buzz generated by active, engaged users and disseminated across their peer networks, an amplified version of word of mouth marketing. Unfortunately, Twitter users are among the least connected of any social network. As the Hubspot report notes, 55.5% of users are not following anyone, and 52.71 % have no followers. Moreover, only 18% of all Twitter users have more than 100 followers, and 81% are currently following fewer than 100 people. What this suggests, and as the Harvard Business Publishing study concludes, is that Twitter “resembles more of a one-way, one-to-many publishing service than a two-way, peer-to-peer communication network.” Unless your target audience is among the active 10% of Twitter users, you should probably look elsewhere to capitalize on the network effects of social media.

    Advertising opportunities are extremely limited

    Twitter’s recently introduced Promoted Tweets – a search-based advertising program very similar to Google’s AdWords – marks the company’s initial foray into paid advertising. It’s too early to gauge user reactions or measure the success of this new advertising vehicle, but there are several reasons to approach with caution. Although Twitter boasts 600 million search queries a day, 75% of Twitter traffic comes from third-party applications, which don’t display Promoted Tweets. Twitter’s acquisition of the popular Tweetie iPhone app has led to speculation that promoted tweets will be integrated into the mobile client, and there’s no reason to believe that Twitter won’t pursue integrations with other popular clients, but that hasn’t happened yet. Additionally, Promoted Tweets only appear in search results – not in user’s feeds – although that too may change in the near future. Until that happens, Promoted Tweets will deliver a very limited number of impressions, and user reactions will be difficult to measure. A number of high-profile brands are taking Promoted Tweets for a test run, and businesses would be well-advised to keep a close eye on this emerging advertising opportunity. However, it is far to early for most businesses to allocate precious marketing dollars to this experiment.

    Aside from paid advertising, many businesses are looking to Twitter primarily as a marketing channel, and there’s no shortage of how-to advice from ambitious online marketing mavens. And there are plenty of success stories, to be sure. However, inflated usage numbers and limited network effects make Twitter a less than optimal marketing tool. If you are going to push marketing messages to Twitter users, you would be well advised to follow the approach of Dell and others who have reaped rewards by providing Twitter users with exclusive offers and other incentives. Trying to tailor your brand messaging to the confines of Twitter’s 140 character limit is hardly a recipe for success in and of itself. And if your social media resources are constrained, or you are  under pressure to deliver tangible results, there are other social media outlets that will provide bigger bang for your buck.

    Do the right thing

    So, avoid Twitter like the plague, right? Wrong. Although it’s far from a mature marketing channel, there are some indications that Twitter is a viable component of your marketing strategy. According to comScore’s Q1 2010 e-Commerce Spending Report, 23% of Twitter users follow businesses to find special deals, promotions, or sales. Of that, 14% of Twitter users reported taking to the stream to find and share product reviews and opinions. As users become more active and the social aspects of the site become more robust, marketers are likely to find a number of opportunities to engage consumers. In the meantime, Twitter offers an important case study for the value of social media beyond the marketing silo.

    Customer Service & Brand Equity

    Twitter’s primary business value at this point is derived from the feedback users’ offer about your brand and products. Whether positive or negative, user reviews and recommendations provide valuable insight into your customers’ experiences. A variety of social media monitoring tools make it relatively easy to find out what your biggest fans and harshest critics are saying about you. Companies that are willing to listen, respond, and react to these compliments and complaints have a lot to gain from engagement. Best of all, you don’t have to cultivate a large following or worry about the breadth of your reach to see tangible results.

    Market Intelligence

    Just as customers are talking about your brand, they’re also talking about your competitors. Twitter allows you to learn about consumer needs, capitalize on your competitors’ weaknesses, and draw on their strengths. A well-developed monitoring strategy will allow you to keep your finger on the pulse of consumers, and to stay ahead of the curve when it comes to emerging developments in your market.

    Product Development

    Consumer tweets are not just an index of customer satisfaction, but also a great way to learn about what your customers like – and dislike – about your products and services. Rather than simply reacting to complaints, the most successful companies will proactively respond by incorporating feedback into future development plans. Even a relatively small number of suggestions will provide direction for further investigation through focus groups and other targeted research. Consumer-driven innovation may provide the critical edge your business needs to achieve or maintain dominance in your market.

    These are just a few examples of the real business utility of Twitter as it stands now. Building relationships with influencers and thought leaders in your market, creating relationships with potential strategic partners, and building connections to facilitate sales are also potential benefits that are independent of Twitter’s marketing value. And that’s the main point here: with limited resources and a variety of other social marketing channels available, why spend valuable time and energy trying to make Twitter something that it’s not, when there’s already a lot of value in what it is? So yes, you should be playing with Twitter. Just don’t allow marketing imperatives to skew your focus.

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    Shel HoltzShel Holtz has forgotten more about communication technology than I and other mortals will ever know.  Founder and prinicipal of Holtz Communication + Technology, Shel is one of the leading voices guiding the integration of business practices with social media technology.  His books, journal articles, blog and podcasts have been required reading & viewing for me since I first had the good fortune to stumble across them as a graduate student, more than a decade ago.  I’ve always been inspired by his ability to accurately place new technologies into an appropriate corporate communications context, so that new innovations appear less like a revolutionary break and more an evolutionary step along a continuum of best practices.

    In this interview with Shel Israel, Holtz discusses the future of corporate blogging, the advent of Twitter, lifestreaming, and other new social media technologies, and the importance of social media for corporate crisis management, among other things.  An informative and entertaining read, to say the least.

    UPDATE: Here’s part 2 of the conversation with Shel Holtz.

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    TwittervilleIf you don’t know Shel Israel – social media guru, master storyteller, and self-proclaimed “nice guy” – Twitterville: How Businesses Can Thrive in the New Global Neighborhoods [Portfolio, September 2009] is an excellent introduction. Shel’s book “tells the stories of more than 100 people Israel has interviewed in all aspects of business ranging from home office to global enterprise. It tells you about accidental citizen journalists who happened to be present when a plane landed on the Hudson River; when an earthquake devastated Szechwan, China; and how people with causes have raised money from thousands of people, sometimes in just a few hours and how government is starting to use Twitter to be both more efficient and responsive. Twitterville is intended to tell you how so many people have succeeded with Twitter, so that others can get ideas on how it may help them as well.”

    For more on Shel and Twitterville, check out his interview with CNN and on SocialMedia.biz.

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    From Lee Lefever and the CommonCraft Show.

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