What exactly are iBeacons and how do they work?

Ed Lea, CEO and founder of Paddle 

‘iBeacon’ is an Apple marketing term for a specific type of Bluetooth Low Energy (also known as BLE, Bluetooth 4.0 or Bluetooth Smart) peripheral. They can be either dedicated hardware, made by third parties, or iOS 7 devices acting as iBeacons via third party apps.

iBeacons simply advertise their presence so that iOS devices that are specifically looking for them can find them. Developers give each beacon an identifier and then add code to their apps to ask the user’s phone to notify the app when that identifier is detected. 

Joel Blackmore, senior innovation manager at Somo 

Apple likes to own an entire ecosystem and it is setting this up for mobile payments now. Whilst the announcement has caused some concerns over NFC mobile payments in the short-term, in iBeacons Apple has laid the ground works for a far more exciting mobile payments prospect

Instead of limiting mobile payments to physically queuing up, tapping your device onto a till-point and then leaving, Apple has introduced a system that allows a user to be greeted on their device as they walk into a store, to be guided through the store’s layout, to be shown product information and promotions and to pay without being in a queue (and without tapping anything). 

Dom Guinard, co-founder and CTO of EVRYTHNG

Battery life has always been one of the main challenges for the Internet of Things (IoT) to truly take-off. Wireless communication consumes a significant amount of energy, so IoT apps have always been a trade-off between energy consumption and functionality. 

Bluetooth Low Energy (BLE) changes the deal as it enables identification and payments but also wider-range communication (in the 10-40 metres range), environmental sensing, indoor localisation, content push to phones, etc. Achieving all that for a low-power consumption allows BLE devices to run on a coin-sized battery for several years.

iBeacons are based on BLE which means that iOS devices will soon support BLE. Add this to the fact that Android supports standard BLE since 4.3 and you might have found the common spark that will truly ignite the Internet of Things revolution.

Adam French, UK Country Manager, Boost Communications

It will be one of those technologies that will be made or broken by what developers do with it. It’s a sure bet ad tech companies are already reasonably far down the track in experimenting with how to use this new location awareness to create offers, ads and experiences that engage, delight and incite.

What are the potential benefits for retailers and marketers?

Ed Lea, Paddle

For payments iBeacons are only marginally more useful than GPS, but BLE offers a lot more possibilities. It can provide location-based context, but also allows for communication between dedicated hardware and smartphones (iOS and Android, but also Windows Phone and BlackBerry). This communication can facilitate payment.

If the BLE device has its own internet connection, then smartphone payments can be made even when the user’s device does not have a network connection of its own (e.g. in a retail environment with no Wi-Fi or 3G signal). The smartphone just needs to use Bluetooth to communicate.

This is the approach that PayPal seem to be taking with its recently announced Beacon product – a confusing name in light of Apple’s iBeacon as the two products are significantly different. 

Paddle has also been working on a BLE payment solution that we expect to start beta testing with retailers in Q4 2013.

Adam French, Boost Communications

Speaking strictly from an advertiser’s point of view, increasing the sophistication of user targeting is one of the keys to realising mobile’s vast potential as an advertising platform.

The more tightly an advertising message can be targeted towards a particular context, user behaviour or user profile, the more likely it is to offer real value – and deliver better engagement and results. Location is undoubtedly important.

A rapidly growing number of customers already use their devices in-store to research and compare products, so the behaviour pattern is already in place. Advertisers would dearly love to be able to measure how close a consumer is to a particular area, and target a message to that consumer’s device accordingly. iBeacons appears to be an elegant solution to this.

Joel Blackmore, Somo 

iBeacons will be the biggest change for retailers since smartphones. Within the space of a month or so there will be 700m iOS devices with iBeacons, enabling indoor positioning, micro-location, and a new form of contactless payment. 

With iBeacons, retailers will be able to deliver highly targeted product and store information, guiding shoppers around their store, providing details and content – and, most importantly, delivering exclusive in-store offers and deals. 

Savvy retailers can fight back against ‘showrooming‘ by delivering exclusive offers in-store, to be bought there and then, reducing the competition of shoppers searching online for the best deals. 

We’re experimenting with using iBeacons to deliver unique content available only in-store, directly in front of a product, and have developed three proofs of concept using iBeacons that deliver different levels of content based on the distance a shopper is to the product.