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According to Forrester Research, a service is only as powerful as its reach. And considering that only 4% of U.S. online adults have used location-based mobile apps, marketers should keep away.
Even if these services were approaching their adoption limits, that would be bad advice. As it stands, location-based services are just getting started. And smart marketers are getting in now.
According to Forrester:
"Marketers want to know who’s using these services, how often they’re using them, what they’re using them for, how marketers can get involved, and if they should.
"We dug into our research to try to answer these questions and at a high level, what we found is that just 1% of US online adults are using [location-based social networks] LBSNs weekly, while 4% of them have tried them at least once."
Those numbers sound accurate. But it's what Forrester recommends for marketers gets it wrong. Forrester analyst Melissa Parrish writes:
"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."
Tell that to brands like Starbucks, Bravo and New York magazine. These companies aren't expecting all of their customers, viewers and readers to check-in on Foursquare. However, they are widening their offerings and giving consumers extra benefits by opening up to those who are aware of and actively using location-based services.
If marketers waited for a mass quantity of their potential customers to enter a new medium before testing out the waters there, there'd be a lot less marketing in the world.
Moreover, it's important to analyze this paltry 4% of U.S. adults who have tried location-based services. Not surprisingly, it's a demographic that marketers often fall over themselves to reach. In an article titled Why Most Marketers Should Forgo Foursquare, AdAge breaks it down:
"Almost 80% of location-based service users are male. Close to 70% of them are between the ages of 19 and 35, and 70% have college degrees or higher. Forrester also found these location-app users to be influential (the report finds they're 38% more likely to say friends and family ask their opinions before a purchase) and they are especially receptive to mobile coupons and offers. This set is up to 20% more likely to consult their phones before a purchase, and are far more likely to research products and services and read customer reviews."
Of course, 19 to 35 year old males may not be the only demographic that brands and marketers want to reach, but in a new digital medium, it's pretty understandable that users would trend young and male. Moreover, these are exactly the kinds of users that influence other people.
It's an important point to keep in mind that these services are still new. And the investors that gave Foursquare $20 million at the end of June weren't paying for the company's share of that 4% of US consumers. They were paying for the potential that location is set to realize in the next few years.
With companies like Google and Yahoo getting in on the game, more people will soon be aware of (and likely using) them very soon. That could also change the proposition for marketers, but counting the current userbase and telling marketers to hold off is silly.
While businesses without brick and mortar stores are a harder sell on location-based services right now, many companies — big and small — are finding great ways to use them.
Similarly, a new customer loyalty app for businesses integrated Foursquare today, which prompted Foursquare's head of business development, Tristan Walker, to promise that in the next "6-12 months, there will be some seriously interesting innovations where social meets loyalty."
In that time, it isn't likely that a majority of U.S. consumers will become location addicts. But that doesn't mean marketers shouldn't be testing out new (and cheap) ways to make use of location data.
Most importantly, these services are own of the few new social propositions that actually have clearcut business tools built in. Twitter's been around for four years now. And just today, interactive shop 360i announced that only 12% of tweets mention brands. That doesn't mean marketers shouldn't be on the service.
Judging a new tool entirely by the makeup of its early adopters is shortsighted to say the least. As AdAge commenter paular8706 put it:
"I'm kind of shocked by the Forrester report. This is the equivalent of saying, in 1994, that the internet skews male, so real marketers should avoid it."