Location! Location! Hype?

Location! Location! Hype?

Media Attention

Location-based services have been getting widespread media attention of late. Facebook caused a stir this month when it announced "Deals," a promotional platform for local businesses that works in conjunction with its "Places" application. "Deals" is just the most recent entrant in an increasingly crowded field of location-based services that already includes Foursquare, Loopt, SCVNGR, Shopkick, and many others.

Early Stage

It's fair to say that adoption of these varied applications is still early stage. A study by Pew Research conducted in September revealed that only 4% of online adults use a service like Foursquare or Gowalla to share their location. Some have taken issue with study because it did not mention Facebook "Places" (which was launching while the study was fielded). It's also notable that the question that Pew asked did not cover location based shopping or promotional applications.

Lot of Excitement

While these services have yet to attain mainstream acceptance, the rapid growth of theses services (albeit from a reliably small base) has generated a lot of excitation. Foursquare recently added it's 4 millionth member just 50 days after reaching 3 million members. No doubt Facebook's participation will also accelerate interest and adoption.

The promise of location services has propelled some big players to participate. When Facebook announced "Deals" they launched with 22 premium partners. Gap away away 10,000 free pairs of blue jeans and then offered a 40% discount when someone checked into any of their stores. The North Face cave $ 1 to charity for a store check-in (or a check-in to a national park). Both McDonald's and Starbucks have also announced charitable contributions for store check-ins.

Partnering With Stores

Other location based services like Shopkick and Checkpoints are partnering with stores and brands to offer shopping rewards. Best Buy and Macys, as well as Kraft and Proctor and Gamble, are working with Shopkick to reward customers with incentives for walking into a store and more for scanning barcodes of certain items. Checkpoints, an iPhone app that launched in September and already has surpassed 100,000 downloads, also awards points and other goodies for scanning some product barcodes.

Concerns

For location-based services to truly go mainstream, they will have to overcome privacy and security concerns, at least among a certain segment of customers. One avid online user said, "I do not like broadcasting where we are or when my husband's gone, just for safety reasons."

Perhaps wildly popular Facebook will help location-based services realize its aggressive potential. As Sam Altman, chief executive of Loopt said, "Clearly location is not yet mainstream – it's still a younger-demographic phenomenon – but if anyone can change it, Facebook will."

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