Location Based Services_Mobile Apps

September 17, 2011

Mobile Phone Location-Based Apps
Niches, Uses & Players

Deals
Coupons
Loyalty & Family
Status Tracking

Recommend Spot
ations Networking

Emergency
Flocking
Assistance

Relationships

By Peter Rovick

CONTENTS

EXECUTIVE SUMMARY ................................................................................................................................... i
TERMS ........................................................................................................................................................... 1
MERCHANT PARTNER PERSPECTIVE ............................................................................................................. 3
APP USER PERSPECTIVE ................................................................................................................................ 5
FUNCTIONALITIES: What Can I do with these Apps? ................................................................................... 6
PLAYERS & THEIR APPS ............................................................................................................................... 12
PRIVACY & PERSONAL SECURITY ................................................................................................................ 15
PREDICTIONS ............................................................................................................................................... 17
CONCLUSION............................................................................................................................................... 21
APPENDIX .................................................................................................................................................... 23

EXECUTIVE SUMMARY
Apps for mobile phone location-based services are gaining great momentum, and the field is wide open
as companies rapidly evolve technologies and related offerings. At the core is the ability to track the
location of the mobile phone. Companies are developing location-based apps that typically cater to
users seeking immediate gratification relative to their particular and immediate interests.

Differentiation is in the details. Many companies developing apps have similar claims and goals, but
user experience and acceptance (not claims) is a key success factor. For example, many apps claim
ability to bring users deals in their immediate vicinity, but several factors can shape user and ultimate
acceptance/popularity or rejection:

 Does customer experience meet claims?
 Does the app have at least one compelling and somewhat unique functionality?
 What is the geographic scope of the app? Will users be turned off if the app doesn’t meet
marketing claims for their specific locations of interest?
o Will a user wait patiently until his or her area is served or he or she move they reject
app and move on to others?
 To what extent are offers relevant and/or personalized to user interest?
 Do incentives compel users to pursue them?
 How timely is the information? Are the deals expired or could the merchant even be out of
business?
 Is the app “buggy” or simply lacking in feature development?

Initial releases tend to have multiple bugs and user feedback reflects this, occasionally resulting in
market rejection. Many early-stage startups feel pressured to release apps when they may not be
considered MVPs (Minimum Viable Products). This tends to be driven by top-down needs of the
company, in contrast to focus on customer and user experience. New and creative ideas may be
important, but execution is critical – the devil is in the details. Companies may have world-class
developers, marketers, or other key contributors, but it takes a combined effort of multiple
complementary skills. Companies may have elegant engineering, but if they don’t have good
marketing, support, financing, or other key functionalities, they likely face significant obstacles to
success.

Privacy remains a concern for many current or potential app users and often is cited as the main reason
for why people do not use location-based apps.1 At this early stage, privacy options and terms vary
significantly across apps, but likely will continue to play an important role in which apps people use and
trust to keep their location and information private per individual tastes.

1
http://www.readwriteweb.com/archives/why_people_do_dont_use_location_apps_survey.php

i

White Paper: Mobile Phone Location-Based Apps

Purpose: The purpose of this report is to focus on terms, niches, uses, and players related to location-
based apps available for Android, iPhone, Blackberry, and other phone types. While many reports
provide a quantitative overview with statistical information related to market growth, revenues, app
user base, etc., the intention of this report is to focus more on qualitative and behavioral factors related
to providers, app users, and merchant partners.

Resources: Links to sources and further information are provided in footnotes for easier access. As
well, the Appendix lists multiple additional resources related to the market, with the intention of serving
as an open source for further information.

Geographic Scope: While some specific apps mentioned may be available globally, the focus within this
report is limited to availability within the USA. Terms and uses have a global context.

Target Audience:

 Marketing and Sales Professionals: those with interest in segmentation, competitive analysis,
positioning, value propositions, etc.
 Individuals: app users exploring the niches
 App Developers: who seek behavioral and marketing-oriented insights
 App Providers: including emerging startups and established firms seeking validation,
information, and comparison
 Merchants: those with existing apps and/or those considering expansion of offerings
 Investors: including those who may be considering investments in this space or keeping tabs on
the competition, potential uses, etc.

Peter Rovick ii


TERMS
 Check-ins: Instances of tagging locations, events, or activities to show that you are present, or
at least are thinking about them. Apps including FourSquare and Facebook Places are helping to
contribute to this trend, though you don’t necessarily need to be at the location when checking
in.2 Many app providers have hopped on the check-in bandwagon, offering the opportunity to
“check-in” to television shows, movies, food, alcohol, etc.3

o Social components of check-ins relate to status and self-perception (“look at me!”),
sharing (“check this out”), and status or prominence.

o Status, Titles, & Awards: With apps like FourSquare, one can become the “Mayor” by
achieving the highest number of check-ins at location during one month. These
incentives have a behavioral impact related to self-image, ego-enhancement, and
related concepts.

 Crowdsourcing: An open call to a large, undefined community for
mass-collaboration to complete tasks. One well-known example is the
open request to Wikipedia users to add content to its growing
encyclopedic database. In the context of location-based apps, some
companies openly ask users to contribute locations, events,
merchants, deals, and other information in order to evolve databases
for informational sharing with other app users.

 Geo-Fencing: Creating defined, virtual spaces around designated locations. The current trend
relates enticing smartphone users within a chosen radius to enter a store, typically with
advertisements or coupons/deals.

o More complex uses involve tracking and analyzing the behavioral patterns of users
inside stores, including how much time they spend in certain areas of the stores and to
related traffic flows.

 Geo-Marketing: Using geographical information leveraging visualization of a
specific area to research, plan, and implement marketing programs. Current
trends focus on applications in mobile and social networking aspects with an
emphasis on “The Four Ps”: Product, Price, Place, and Promotion. 4,5,6

2
http://www.asiadigitalmap.com/2011/07/the-science-of-check-ins/
3
http://thenextweb.com/apps/2011/08/04/beyond-location-7-more-things-you-can-check-in-to/
4
http://www.db-marketing.com/geo/default.shtml
5
http://www.gfk-geomarketing.com/fileadmin/gfkgeomarketing/en/company/geomarketing_in_practice.pdf
6
http://www.searchenginejournal.com/geo-marketing-as-a-new-business-marketing-tool/20595/

Peter Rovick 1


 Mobile Phone Tracking / Localization / Triangulation: Determining the current position of a
mobile phone via one of several methods.7

o GSM Localization: The use of roaming signal strength and distance to the nearest
mobile phone tower to determine location coordinates. Approximately 80% of mobile
phones use GSM (Global System for Mobile Communications).

o 2-D Trilateration: Determining a phone’s radius from three separate locations (typically
cell towers) and using the overlap of the three relative circles to pinpoint a location.8

o 3-D Trilateration: Similar concept, except using 3 dimensions or spherical radii. An
emerging trend is using 3-D trilateration within buildings to determine not only
horizontal location, but also vertical location of the mobile phone and user.

 For example, department stores with multiple floors stand to gain from tracking
the relative movements and trends of users in each department on each floor.

 Near field communication (NFC): A technology that enables two wireless devices in close
proximity to conduct transactions and data exchange. This enables consumers to make
payments simply by tapping their NFC-enabled phones on readers or waiving the phone within a
few millimeters of the reader.

 Unique Identifier: Similar to a MAC address on a computer, a unique identifier is a series of
letters and numbers that is unique to each device.

o iPhone (UDID - Unique Device Identifier): A
UDID for Apple hardware (e.g. iPhone) is a
series of 40 letters and numbers. iPhone
users need the UDID in order to install apps
approved by Apple. Users can locate the
UDID when synching an iPhone by clicking
on the Serial Number of the device within
the iTunes screens on a computer.

o Android: There are several options - see footnotes. 9,10

o Blackberry (Pin #): Click on “Options” and then select “Status,” or in a blank email type
“Mypin” in the Subject line and press the “Enter” key. 11

7
http://en.wikipedia.org/wiki/Mobile_phone_tracking
8
http://electronics.howstuffworks.com/gadgets/travel/gps1.htm
9
http://android-developers.blogspot.com/2011/03/identifying-app-installations.html
10
http://www.pocketmagic.net/?p=1662

Peter Rovick 2


MERCHANT PARTNER PERSPECTIVE
Many location-based apps are based- upon interaction between app users and merchant partners like
retail stores, restaurants, coffee shops, and hotels. Partner recruitment techniques vary ranging from
active outbound pursuit (e.g. direct solicitation from app provider to potential merchant partner) to
passive techniques related to inbound marketing or customer referral resulting from tagging or
recommending merchants to other app users. Regardless, potential or active merchant partners want
to know “what’s in it for me?” Below are some of the potential benefits and related considerations for
merchant partners.

 Customer Acquisition & Retention: One of the most popular geo-marketing revenue models for
app providers involves charging fees to merchants in exchange for advertisements or coupons/deals
offered to customers.

o Advertising and Brand Awareness: Depending on the app, ads can appear on phones as
(potentially annoying) popups or can be listed less obtrusively in folders which users must
open in order to browse ads.

 Challenges & Opportunities: Simply put, greater complexity in app design can lead
to significant differentiation in this space. A combination of tactics can lead to
higher user satisfaction, a win-win on several levels for both app developers and for
merchant partners.

 Too many choices: Depending on the app and user location, a phone can
become inundated with ads from different merchants or even from one
single merchant. App providers and partner merchants face the threat of
user rejection and negative user feedback if users are overwhelmed with
ads. In a market where many app developers rely heavily on viral
networking to promote user adoption and retention, this can be
deleterious.

 Over-Exposure: Users may be excited to receive a coupon for a new
merchant or from their favorite merchant, but users can be turned off by
too many ads from one merchant or by ads that don’t auto-delete after a
certain timeframe.

 Quality: A picture is worth a thousand words. Ceteris paribus, well-
designed ad images will reign over those with simple text messages or
images of lesser quality.

11
http://www.youtube.com/watch?v=q-7dZQHKjPg&NR=1

Peter Rovick 3


 Irrelevance: Non-coffee drinkers (and they do exist) likely won’t want to
receive ads for local coffee shops. Selective targeting is one method of
differentiation. Apps which enable merchant partners to define parameters
of who will receive ads may not win the war, but can win many battles. By
enabling partners to search user fields (e.g. Profile categories like “Favorite
Beverage” or “Right Now, I’m Looking For…”) and send messages to a more
specific user audience, app providers can reduce ad irrelevance and increase
user satisfaction.

o Coupons/Deals: The challenge is to attract new customers and/or foster repeat business
from existing customers without cannibalizing revenues. One of the criticisms of Groupon is
that existing loyal customers will take advantage of deals, resulting in significantly lower
profits, net of discount and fee paid to Groupon. New entrants following in Groupon’s
footsteps in this increasingly crowded space simply differentiate by charging lower fees to
participating merchants.

 Brand exposure and Loyalty

o Check-ins: While Groupon fostered the craze in group coupons, many
might attribute the current craze of checking in to FourSquare. While
the act may not generate revenues, it seems to be having significant
behavioral effects.

 Status: By checking in more frequently than others during a
given time period, users of the FourSquare app and others gain
titles like “Mayor” and a relative status.

 Habits: Incentives associated with check-ins motivate users to return repeatedly to
the app(s). Once the habits are formed, users may be more likely to return and
retain status and pursue other (often incremental) achievements. Savvy app
developers provide incentives not only as a user acquisition tool, but also as a
means to retain users and foster loyalty.

 Points for Check-ins: Apps like TopGuest now offer rewards points for check-ins at
your favorite locations.12 In a market where many are wondering how app
providers will convert check-ins apps to revenues, it remains to be seen who will
follow.

12
http://www.readwriteweb.com/archives/TopGuest_apex_gives_you_loyalty_program_points_for_local_mercha
nt_check_ins.php

Peter Rovick 4


APP USER PERSPECTIVE
To accept, or to reject, that is the question. Whether ‘tis more pressing to get an app to market, Or to
more fully develop the app And by delaying risk possible loss of market share and dominance.

Contrary to cliché, timing is not everything; however timing can be one key factor in immediate and/or
future success, and for some, a key to ultimate survival. Startups which are relying solely on one app as
a platform typically face serious challenges of how to allocate scant resources including funds and
human resources. Established companies do not have to be first movers, and often have the benefit of
learning from the successes and mistakes of early entrants to market. 800 pound gorillas like Facebook
Google, and eBay clearly are not relying on one app for survival, and have the ability to throw millions of
dollars and significant human resources at one or many issues.

While the likes of Google Shopper may have been subject to early criticism, users may be more likely to
return time and again as Google evolves its product, based on the strong reputation Google has earned
in the marketplace. Small startups may not be so fortunate and may be dead on arrival through
permanent user rejection if their apps are not considered MVPs (Minimum Viable Products) upon initial
release.

A few key success factors that can determine if users ultimately will accept and embrace an app or if
they will reject it and move on to others:

 Relevant/Personalized Information: To what extent does the app cater to my specific interests
and immediate needs? How “smart” is the search functionality? Do results filter out
information that may not interest me?

 Compelling Incentives: Are offers significant enough to motivate me to pursue them?

 Comprehensiveness: Does the app cater to my locations of interest? The app may include a
robust offering for people in San Francisco or New York, but what if my focus is on the vicinity of
Chicago, small-town USA, or Hong Kong and services are limited in my area of interest?

Companies offering services of limited scope might be wise to list appropriate caveats and to set
expectations on timeframes for expected future availability. Even better, they might wait (if possible)
for initial release of an app until it can meet its marketing claims.

Peter Rovick 5


FUNCTIONALITIES: What Can I do with these Apps?
This section focuses on potential uses of apps and on user experience. So what are some of the possible
uses of apps based upon mobile phone tracking?

 Coupons / Deals: The new twist on an old and proven concept. In a world
of instant gratification, instant coupons and deals quench the thirst. “I want
a coffee right now. I’ll use my app to find me the best mocha-choca- latte
deal within a 3-block radius.” Instead of clipping paper coupons or searching
websites, people now can use apps to search for instant coupons or deals in
their immediate vicinity.

A related value proposition might be something like “For the ‘on-the-go’
individual who wants immediate gratification of needs, [app name] is the source for deals near
you that satisfy your immediate needs.”

o For app providers, differentiation lies in at least three key areas:

 Relevance: Similar to the concept of results yielded from a
website search engine, the issue lies within finding “the best
fit” without having to sort through myriads of offers. If I’m
using my app to search for coffee deals, I do not want to see
ads or coupons for clothing, jewelry, sandwiches, etc., though
merchants may benefit when this leads to impulse
shopping. That said, users likely will reject apps that
provide too much clutter, and will seek apps that provide
the most relevant results.

 Expiry: Most coupons expire, so users only want coupons that are valid right
now, or within a timeframe that is acceptable to each individual user.

 Proximity: App users are seeking deals available near them
or least “close enough” so as to compel the user to action.

o Groupon emerged from the ether by offering group coupon
incentives via its website, but now faces stiff competition in a
saturated market, thanks to hordes of copycats who seized upon the
simple concept. In an effort to evolve and continue to survive,
Groupon leveraged the “spot” market by offering GrouponNow, a
platform providing incentives to share deals via personal social networks. With newer
mobile apps, Groupon enables users to search for nearby Groupons using GPS and
location-based services. In a rapidly evolving market, this service is not a point of
differentiation; Instead, it is an act of “keeping up with the Joneses.”

Peter Rovick 6


o Deal Saturation: As the deals space becomes saturated, providers are re-evaluating
their emphasis on deals. Facebook recently pulled out of the space and Yelp is reducing
its human resources focused on daily deals 13.

o Coupon Redemption Growth: eMarketer recently reported on the rapid growth of
mobile coupon redemption, estimating “nearly 20 million US adults will redeem a mobile
coupon this year” and rates will nearly double to 16.5% in 2013 (or approximately one
third of smart phone users). 14 Group coupons/deals may hit saturation, but single
coupons hold great promise.

 Advertising: It may not be necessary for merchants to cannibalize profits by offering discounts
via coupons or deals. Simple information on products or services may be what users seek. In
these instances, app providers can increase brand awareness and mindshare through presence
in search results. App users don’t need to carry around their laptops in order to research local
merchants and related products or services. They simply use the app for category or key word
searches within their target radius.

o Which App? A key challenge for merchants is ensuring presence on appropriate apps.
Some app providers automatically include listings of local merchants, while others go
through the laborious task of “signing up” one merchant partner at a time, in what
appears to be a highly inefficient (though perhaps highly targeted) process. FourSquare,
Localicious, and others have enabled users to put merchants on the map through the
check-in process. This form of inbound marketing can lead a merchant right back to an
app provider like FourSquare to seek partner opportunities once it becomes clear that a
significant number of local users are relying on the app for instant searches.

o Add a Deal: Providers including The Dealmap allow an app user to add a deal, if they
don’t see it listed. This is a win-win-win for users, merchants, and app providers,
enabling sharing, “word-of-mouth” advertising, and potential partner recruitment
opportunities, respectively.

 Status, Achievements, Awards and Badges: Facebook and others have significantly influenced
daily and hourly habits (and positive self-image?) of millions of users through games and other
incentives to earn various achievements. Now, app providers including FourSquare, The
Dealmap (acquired by Google), and Localicious are earning a loyal following of users who
frequently return to their apps to “check in” and/or earn various badges or points.

o Incentives: A key tactic in compelling continued app usage, habits, and loyalty is
providing incentives that are easily achieved and are incremental in nature. While
development of these app features requires funding and human resources, there may

13
http://www.pcmag.com/article2/0,2817,2392245,00.asp
14
http://www.emarketer.com/Article.aspx?R=1008576

Peter Rovick 7


be no material reward (e.g. no points to cash in for merchandise) in contrast to the
multitudes of point rewards programs vying for public mindshare. “Make It A Game,
People Will Come,” reports Dan Rowinski of ReadWriteWeb.15 The question remains,
“how will FourSquare convert high usage into revenue opportunity?” If Facebook is any
indication, perhaps gaining a large and loyal user base serves as a model and addresses
the “chicken or the egg” conundrum, though revenues and a significant user base
certainly can be accrued simultaneously.

o With The Dealmap, users not only can earn badges, but also can
earn points by adding or sharing deals. These points can be
exchanged for items like gift cards

 Note: while “The Dealmap iPhone Demo” video mentions
this 16, the author could not find any references on their
website to how to exchange points for rewards – this
feature may have been discontinued.

 Flocking: This term can be used to describe the social behavior of gathering in one spot. It
seems to be especially popular in the teen and twenty-something bracket (including university
students) who can use location-based apps to identify locations of friends, potential friends,
love interests, and others, and then invite others to meet at or “flock” to one location.

o Example: You are at a bar, sporting event, or concert and notice on an app map that ten
friends are within a radius of 1,000 feet. You use the app or some other social
networking tool to invite them to meet at one location.

o HMU (Hit Me Up), a call to action, was the #1 status trend of 2010 on Facebook, with
over 80,000 mentions per day by the end of the Summer of 2010.17

 Tracking family/friends

o Children: “It’s 10 pm. Do you know where your children are?” This question was posed
every night by a local television network during the author’s childhood. Parents have
many reasons to want to know the whereabouts of their children, including safety and
health. Tracking via location-based apps can help parents keep tabs at very least on the
approximate location of a child.

 Key issue: Certainly, children who do not wish to be tracked can find various
was around being tracked, but some may find mutual agreement with parents
as to the potential benefits – its all in the “P” for “Positioning.”18

15
http://www.readwriteweb.com/archives/2way_summit_preview_location_redefined_mobile_-_whats_next.php
16
http://www.thedealmap.com/mobile/iphone-app/
17
http://www.facebook.com/blog.php?post=466369142130

Peter Rovick 8


 FBI Child ID: The FBI recently released an app that can be
used to store and share information (with authorities) in the
event your child is missing. At this point FBI Child ID is only
available for iPhone and does not allow you to track the
location of a child via mobile phone, but this and other
features may be added in the future. 19

o “On The Way…”

 Tracking apps can come in handy when picking up children from daily activities,
and also can help the child know if “mom *or dad+ is on the way.”

 Family or friends coming in from out of town? Location-based apps can enable
the host to track the location (and thus calculate the approximate arrival time)
of the guest. Several states now prohibit by law texting or mobile phone use
while driving, so allowing others to track your location enables a distraction-free
method of keeping hosts up-to-date on position and approximate arrival time.

o Medical Conditions: While there are multiple hardware devices on the market to help
family track the location of loved-ones with various medical conditions (e.g. alzheimers
or dementia), location-based apps may provide a free alternative if both parties have
mobile phones with tracking capability. Google Latitude is one app mentioned by
Dementia Weekly and Alzheimer’s Weekly.20

 Note: Some hardware devices may provide additional benefits including
instructions on what to do if a device bearer is found in need of immediate care.
These devices typically are worn on around the neck (necklaces), or on the wrist
(bracelets or watches) or ankle.21,22

o Emergency / Guardian Angels

 Safety in town, on campus, etc.: Undergraduate and graduate students can
add an extra layer of physical and emotional security by enabling friends to
track their whereabouts. The occasional news story will mention a student who
was confronted or even attacked while walking across campus, perhaps during a
late night return from library to dormitory. Location-based apps now enable
friends and even campus staff or security (depending user choice and on app
features and/or settings) to track students .

18
http://www.brighthub.com/electronics/gps/articles/47117.aspx
19
http://www.fbi.gov/news/stories/2011/august/child_080511
20
http://www.alzheimersweekly.com/content/geotracking-and-geofencing
21
http://www.alz.org/georgia/in_my_community_20344.asp
22
http://alzheimers.org.uk/site/scripts/documents_info.php?documentID=109

Peter Rovick 9


 Apps Against Abuse: Vice President Biden and Secretary Sebelius announced “a
challenge that encourages the development of applications that provide college
students and young adults with the tools to help prevent dating violence and
sexual assault.”23 This may lead to an app that enables a student to notify
instantly campus security with the click of just one button in such urgent
situations.

 “Spot Networking”: There are some newer apps that enable users to find out what other user
are in their immediate vicinity and to seek networking opportunities “on the spot.” People
often associate this with downtime, when one has free time before a flight, train, meeting,
meal, game, or some other event. For example, business travellers often have to wait an hour
or two for a flight and may want to seek insights regarding a current business problem, home
project, hobby, or other personal interest. Some apps allow users to search profile details of
other users within a defined radius and then contact them to suggest a possible quick meeting.

Did you know that he/she is an expert carpenter? Parents may find themselves watching a
children’s soccer game, but may not know that a fellow parent is a specialist on a topic that is of
current interest. Profile details in social networks often reveal facets about people that may not
have come up in casual or even deep conversation. Profile details on an app may reveal
something new and interesting to fellow app users. Potential ice breaker?

Here are just a few sample apps and scenarios…

o Travel:

 IMGuest: This app enables business travellers to learn more about fellow hotel
guests in order to connect and create new business opportunities. Perhaps a
drink and conversation at the bar is in order after a long day of work. “Don’t
just Check-In, check around”24

 Uppward: You are on a flight to [Buenos Aires] in the company of multiple
other frequent business travellers who have at least a few things in common or
that might interest you (e.g. mobile phone apps, restaurant suggestions,
destination knowledge, frequent flier program insights, or skills and
experience).25,26

 Yammer: connect with your co-workers and networks while out of the office.

23
http://challenge.gov/HHS/199-apps-against-abuse
24
http://imguest.com/help.php
25
http://www.planely.com/info/about/
26
http://uppward.com/

Peter Rovick 10


 Relationships: There already are multiple apps focused on personal relationships that can help
people to track potential love interests, to avoid “the ex,” and to develop, maintain, or enhance
a relationship via activity suggestions, analysis of romantic skills, set reminders for daily tasks,
etc..27

o Trust: tracking the spouse – a recent court ruling in New Jersey (07-07-11, A-0654-10T)
found that tracking spouses with a GPS device is not an invasion of privacy, with certain
limitations. This not only applies to the person who wishes to track the spouse, but also
to private investigators.28

27
http://www.huffingtonpost.com/2010/05/20/best-iphone-apps-to
rescu_n_583203.html#s91080&title=Girlfriend_Keeper
28
http://www.judiciary.state.nj.us/opinions/squibs10-11.pdf

Peter Rovick 11


PLAYERS & THEIR APPS
As the world of apps rapidly expands, so too do the potential functionalities like those listed in the
above sections. It is no secret that emerging startups typically need to devote all of their resources to
one critical function that will serve as their point of differentiation. Even if they are first-to-market with
a new functionality, they will need to continue to differentiate as established players like Google add
similar functionalities on their existing apps.

Beware of the 800 Pound Gorillas: Have tried the latest Netscape Navigator browser? Perhaps you
have, but the last Navigator browser was released in 2007, long after Explorer and other browsers had
dominated the market (yes, the AOL merger and Mozilla stepchild can be taken into account, but you get
the picture).

As Google, Facebook, and others further develop their apps in this space, with seemingly endless
available resources in comparison to those of startups and even the likes of Groupon, mere survival
likely will be the concern for many smaller companies, perhaps even for well-funded startups like
FourSquare.

Large companies like Google and eBay already are busy with acquisitions to complement their existing
offerings. Among the higher profile acquisitions in this space are Google’s acquisition of The DealMap
and eBay’s acquisition of Where.

Check-in Space: FourSquare is enjoying popularity as the hottest check-in app, but best not to rest on
one’s laurels. Competitors large and small likely will crowd this field and strive for differentiation and
market share. Quipster by Mobilitz claims to go beyond the “where” to the “why” of check-ins.

Family& Friend Tracking: Many apps enable users to show their current or most recent location, often
by listing an address or by pinpointing the location on a map. Other apps simply who where one is
“checked-in,” or location names that a user posted for others to see.

Since personal privacy remains one of the biggest deterrents to adoption and repeated use of location-
based apps, companies provide options to enable various degrees of privacy. Many allow users to turn
on/off location tracking capability, and some allow users to select which other users can see your
location. That said, most apps lack privacy setting functionalities that might provide sufficient level of
comfort to those interested in using apps for tracking family and friends.

For those seeking privacy, Neer by Qualcomm provides a higher level of privacy than what currently is
provided by other apps, for those who are wary about sharing information with the world. Neer users
add family and friends to their “Inner Circle” with the concept of sharing “just the places you choose
with the people you choose.”

Peter Rovick 12


Generic Location Names: Actual locations are not shared, only the names users assign to them like
“work,” “school,” and “soccer practice.”

“Did the kids get picked up? Is now a good time to start dinner? Is a colleague still in her office, or has
she already gone home for the night? Those are some of the use cases Neer wants to address.”29

Company App Name Link

Banjo Banjo www.ban.jo

Blockboard Blockboard www.blockboard.org

Bloomspot Bloomspot www.bloomspot.com

Crowdbeacon Crowdbeacon www.crowdbeacon.com

eBay Where

eBay Milo

Facebook Facebook Places www.facebook.com/places

Facebook Mobcast www.facebook.com/mobcast

foursquare foursquare www.foursquare.com

Friends Around Friends Around www.friendsaround.com

Google Google Latitude www.google.com/mobile/latitude

Google Offers/The
Google DealMap www.thedealmap.com

Google Google (Near Me Now)

Gowalla Gowalla www.gowalla.com

Groupon Groupon Now! www.groupon.com/now

iapps24 StepTrace iapps24.com/steptrace.html

LivingSocial LivingSocial livingsocial.com/mobile

29
http://latimesblogs.latimes.com/technology/2011/01/neer-is-location-technology-for-those-who-dont-want-to-
overshare.html

Peter Rovick 13


Locimobile (GTX Corp) iLOCIi2 www.locimobile.com

Localmind Localmind www.localmind.com

Loopt Loopt www.loopt.com

Loqly Loqly loqly.me

Meet Gatsby Meet Gatsby www.meetgatsby.com/about

Mobilitz Quipster www.quipster.co

Niftybrick Software HeyWAY www.niftybrick.com/heyway.html

Qualcomm Neer www.neerlife.com

NeuAer ToothTag www.neuaer.com

OmniSoft Systems gOmni Tracker www.gomnitracker.com

Ping4 Inc. P!NG4 www.ping4.com

Sonar Sonar www.sonar.me/faq

BaDTech SAS TellMeWhere tellmewhere.com

WhitePages Localicious www.local-icious.com

Winkpass Creations Friend Mapper www.amigomapper.com

Wizi Wizi www.wizi.com

Yelp Yelp Mobile www.yelp.com/yelpmobile

Travel & Spot Networking

Uppward Uppward www.uppward.com

IMGuest IMGuest www.imguest.com

Relationships

OkCupid OkCupid www.okcupid.com

Peter Rovick 14


PRIVACY & PERSONAL SECURITY
The entire premise and promise of location-based apps is predicated on knowledge of the location of
mobile phones. According to a 2011 report by White Horse Productions, privacy concerns remain the
main reason for why people (both current and potential app users) do not use location-based apps.30, 31

While there may be many potential benefits as mentioned in the above Functionalities section (e.g.
tracking friends and family, finding local merchants and/or deals, etc.), a common reaction is immediate
rejection of the concept (and thus the apps) for reasons of personal privacy. That said, this may be more
of a knee-jerk reaction, before a potential app user even investigates the specifics related to privacy and
use of personal information.

Hence, the challenge and/or opportunity for greater adoption lies in app functionality (options available
in privacy settings), privacy policies, and public education.

Some Key Questions include the following: the who, what, where, when, why, and how…

 Who do I want to track my location? I may be willing to allow specific family members, friends,
and colleagues to track my location, but can they learn or infer things about me that I do not
want them to know? Do I want my employer to know that I am not where they think I should be
at this moment? Do my children want me to know where they are?

 What information (and how much of it) do I want to share? I may be willing to share my
location with a certain subset of people, but what other information am I willing to share? My
location alone can lead others to infer things that may or may not be true.

 What are the advantages/benefits and disadvantages involved? Perhaps my decision to use a
location-based app is based upon the net weighting of benefits derived vs. potential risks.

 When do I want to be tracked (if ever) or do I even want to allow tracking? At times, it may be
useful for people to know where I am or to check on my status when I am “on the way,” but
when do I not want to be tracked? Can I turn off the functionality, and even then, what can
people infer from this? Even when location tracking is turned off, some apps list “last known
location.” This may not suffice for the wants and needs of the user.

 Why do others want to track me? Tracking may be very useful when gathering with friends and
family or in other instances, but are there other purposes of which I may not approve?

 How will app providers (people, carriers, governments, etc.) use information that I share? Will
they share all or portions of my personal information with other companies or individuals and

30
31
http://www.whitehorse.com/resources/#

Peter Rovick 15


how can it positively or negatively affect me? What is the app provider’s (and my carrier’s)
Privacy Policy, and how many people even read this policy, let alone actually understand it?

 How can I adjust settings to control how much information or data I share? Can I do more
than simply turn tracking capability on or off?

A Few Considerations Related to Privacy:

 Privacy Policies: Read the policy offered by the app provider. At minimum, this may help to
remove some FUD (Fear, Uncertainty, and Doubt). Remember that carriers/network operators
(e.g. Verizon and AT&T) almost certainly can track your location32 (though there are ongoing
legal challenges), so unless you are willing to cancel your mobile phone subscription, the
question is who else do you want to allow access to your location information?
 Privacy Controls: Explore and experiment with the privacy control options on each location-
based app. Many already allow you to turn tracking on and off, but what do the apps indicate
when you have disabled location tracking? Some show your last known location while others
show nothing. What other privacy control options and functionalities are available on each
app?
 Analytics: How will various entities utilize location-based data as the industry evolves and what
are the potential benefits and drawbacks for the many stakeholders involved? For people who
want in-depth information, seek reports like “Location Analytics and Privacy” by ABIresearch. 33

Lessons from the Past? If the evolution of online payments offers any indication, people will become
more comfortable with privacy issues as location-based apps evolve. In the late 1990s when a
significant number of companies started offering online payment options, many people were slow to
adopt due to privacy concerns. Today, just look at the success of one company: Amazon.com as an
indication for adoption of online payments. People still may be concerned about purchasing from a
non-trusted source, but well-known companies seem to have quelled the concerns of most potential
customers enough to compel them to purchase online. The same likely will hold true for location-based
apps, particularly for apps offered by well-known companies like Google and Facebook at earlier stages.
As people embrace their apps, they likely will gain confidence and then explore apps by lesser-known
companies.

32
http://www.nytimes.com/2011/03/26/business/media/26privacy.html
33
http://www.abiresearch.com/research/1007751

Peter Rovick 16


PREDICTIONS
 In-store Applications (next big thing?): At this relatively early stage of the LBS apps, most apps
simply focus on attracting customers to the front door (e.g. of a store). The question is “what
value can apps provide once potential customers have entered the front door and now are on-
site?”

o Look for newer technologies that enable stores to track and cater to in-store customer
behaviors. This may lead to improved customer experience in several areas, including…

 Locating items: Directions that help customers (app users) to find products of
interest in less time with less hassle.

 Impulse purchases: Instant advertisements or coupons on your mobile phone
may lead to additional & unplanned purchases.

 3-D Trilateration: Merchants with multiple floors (e.g. Macys and other
department stores) will track not only your horizontal location, but also your
vertical location (Floor 1, 2, 3, etc.) as well as your movements around and
between floors.

 Improved store layouts: Merchants may be able to analyze traffic flows and
behavioral patterns of customers in order to enhance store layouts and more
efficiently utilize floor space.

 Exit Strategies: As behemoths like eBay, Google, and Facebook rapidly develop their offerings
and fill in gaps (see above grids and categories) to address various a variety of typical uses, it will
be increasingly difficult for startups to compete and survive. Acquisition may be the main
strategy of many smaller startups, but which companies will be attractive candidates and why?
“Good value” will work for some, but ironically early success may be a deterrent for companies
like Foursquare if valuations over-inflate.

o Groupon put the group deal “on the map,” but now faces stiff competition from
Facebook, Google, and many others and likely will see eroding market share in coming
months. After rebuffing an offer from Google, Groupon filed for IPO which initially was
planned for September, 2011, but now appears to be on hold until market conditions

Peter Rovick 17


change.34 In the current challenging IPO market Groupon and other hopefuls may see
reduced valuations and/or reduce initial price offerings. Timing is a key factor.35

o Companies like Where and The Dealmap already have been acquired by eBay and
Google, respectively.

o Look for continued acquisition activities by established companies, especially
acquisitions of startups which have earned reputations as leaders in one or more
functionalities or sub-markets. Rumor has it that Facebook may put in an offer for Hot
Potato in the near future.36 Who will be next – Loopt, Gowalla, or FourSquare?

 Wireless Companies Will Develop Apps to Drive Use: One of the key reasons Qualcomm
developed Neer was “to give users more excuses to use their smartphones.”37

o Look for other hardware companies and carriers (among others focused on wireless
technologies) to develop apps which can drive usage and loyalty to their products and
services.

 Privacy: As noted earlier in this report, privacy remains a key obstacle to adoption of location-
based apps and related services. While most apps include privacy settings, many are limited at
this point, and may not be enough to overcome the “creep factor” associated with location-
based apps.

o Look for app providers to bolster privacy settings in the coming months, though this
may be difficult for small companies which feel pressed to allocate limited resources
towards other functionalities related to their core value propositions.

 Tracking and Analysis: App providers who charge fees to merchant partners (e.g. restaurants,
coffee shops, & retailers) will be challenged with demonstrating ROI to the merchant partner.

Partners who pay fees for services should want to know details related to how they are
benefitting in return for partner fees. This includes analyzing and acting upon data yielded from
34
http://online.wsj.com/article/SB10001424053111904537404576554812230222934.html?mod=WSJ_hp_LEFTTop
Stories
35
http://articles.economictimes.indiatimes.com/2011-08-11/news/29876489_1_ipo-filing-scott-sweet-enduro-
royalty-trust
36
http://techcrunch.com/2010/07/27/facebook-hot-potato/
37
http://latimesblogs.latimes.com/technology/2011/01/neer-is-location-technology-for-those-who-dont-want-to-
overshare.html

Peter Rovick 18


advertisements or discounts offered via location-based apps. How many potential customers
were targeted during a time range or with a specific offer and which users took advantage of the
offer? Are we cannibalizing sales or gaining new customers and/or business that we would not
have gained without the app and related offers? Are we impacting customer behaviors by
fostering increased loyalty from existing or new customers?

A related question is “how will partners capture data like POS (point of sale) data?” This likely
will be easier for larger partners (think chains like Starbucks and big box retailers like Macys)
who already have scanning capabilities at the cash register and related networked infrastructure
for compiling, storing, and analyzing data from purchases related to consumer behaviors.
Tracking results likely will prove a significant challenge for smaller partners like “mom & pop”
coffee shops, restaurants, and stores, most of which won’t be able to scan coupons on mobile
phones or capture data automatically at POS. Even if these smaller merchants manually track
coupon/offer redemption, how can they ensure accuracy, especially if they need to train and
remind multiple (often short-term) employees to track the data? As well, what is their incentive
to share this data with the app provider? If the app provider is unable to demonstrate ROI
based on data, merchant partners have much better leverage to negotiate lower fees or no-fee
terms.

o Look for app providers to differentiate by capturing and sharing data and analytical tools
with partners. The likely early winners will be established companies with deeper
pockets who can afford to devote resources to developing these tools for their partners.
Data types, accuracy, and relevance to merchant interest will be important factors as
well as the quality of the tools provided to sort through and analyze the data.

 Manufacturer & Retail Nirvana? Tobi Elkin of eMarketer lent great evidence for
the promise of mobile coupons and related data capture in an interview with
Tiffany Tan of Clorox. 38 Tan notes “In an ideal world, we would like it to show
up at the shelf—a consumer walks into the store, goes to the shelf and sees
Clorox products.” In regards to the current challenges, Tan adds “But the reality
is that most retailers where CPG products are sold don’t have a universal coupon
reader system at the point of sale. That fact affects how elegantly our coupons
can get implemented. As technology advances we will get there, but right now
for CPG, mobile couponing probably isn’t what everyone imagines.” That said,
this is just one sign of the promise of mobile apps and the veritable gold mine of
related consumer data.

o Look for use of NFC (Near Field Communication) as one creative way to capture point of
sale (e.g. coupon redemption) data. The ability to “tap & pay” with your mobile phone
(preferably) or wallet will provide a faster payment experience, while also enabling app
providers and merchants to more accurately track data.

38
http://www.emarketer.com/blog/index.php/tracking-mobile-coupons-shelf-cloroxs-nirvana/

Peter Rovick 19


NFC has been touted for several years as a “next big thing,” but the adoption curve has
been slow especially in the USA (reminding some of the ever-elusive but anticipated
promise of PKI). That said, at least two developments this year may help to cross the
chasm from talk to actual usage.

 Google Wallet & Google Offers: In late May Google announced a Google
Wallets NFC payment program as well as NFC incorporation into Google Offers,
asserting that “300,000 merchants are ready for the Google Wallet program.”
Google’s VP of Commerce Stephanie Tilenius did acknowledge “this vision will
take awhile *sic+ to come to fruition.” 39 That said, the reality that a tech giant
like Google is executing on NFC may be the long-anticipated kick start that NFC
has needed. Google’s proof of concept in lining up key players along the chain
(financial institutions, mobile network providers, retail companies/merchant
partners, and consumers) should lead the way for others to follow. 40

 Global Initiatives and Standardization: While Japan has been the leader in NFC
and mobile payments, major European mobile operators recently committed to
rolling out NFC mobile payment services in “select markets” by 2012. Franco
Bernabe, CEO of Telecom Italia notes “NFC represents an important innovation
opportunity and will facilitate a wide range of interesting services and
applications for consumers, such as mobile ticketing, mobile couponing, the
exchange of information and content, control access to cars, homes, hotels,
offices, car parks and much more.” 41

o Just one example, Telefonica sees London as the first mass-market for
NFC payments, predicting the British 2012 Olympics as a catalyst for
introducing NFC-supported handsets. 42

39
http://www.zdnet.com/blog/btl/google-wallet-nfc-payment-program-google-offers-announced/49431
40
http://www.fiercewireless.com/europe/story/can-googles-nfc-initiative-trigger-uptake-m-payments/2010-12-
10#ixzz1Da2eJZ9O
41
http://www.eweekeurope.co.uk/news/gsma-banks-on-nfc-mobile-payments-21725
42
http://www.fiercewireless.com/europe/story/london-first-mass-market-nfc-mobile-payments-says-
telefonica/2010-09-17#ixzz1Da2TWSKS

Peter Rovick 20


CONCLUSION
Still in the introduction phase of the industry lifecycle, location-based apps and related services are
evolving rapidly with significant advancements on a monthly basis. Macro (industry standards) and
micro (individual app) technology advances and related app functionalities are creating vast
opportunities. App developers and app providers (often one and the same) are working along with
mobile networks, merchants, and other players to explore and exploit the potential benefits for all
stakeholders involved in the mobile app gold rush.

At this point revenue drivers for location-based app providers are related to advertising, coupons, and
deals. The rush is on to establish partnerships with merchants and stake claims in this wide open field.
The challenge for some app providers is how to convert to revenue opportunities their apps based on
people tracking, social networking, check-ins, relationships, and other functionalities.

Manufacturers (e.g. Clorox) and merchants see great opportunity in promoting their products and
services in the new mobile world as new possibilities are created. Capturing and aggregating data
related to advertisements, coupons, and deals is a key early challenge, especially for smaller companies
lacking in-store networks and point of sale redemption technologies and related devices. The long
awaited realization of NFC for mobile payment, data capture, and many other benefits will help in this
area. Manufacturers and merchants stand to gain significantly from analysis of data related to
consumer behavior coming from location-based apps, in an effort to enhance customer experience and
loyalty.

Location-based apps providers continue to emerge and stake their claims on new and evolving sub-
niches. Over the last couple of years, it might have sufficed to bring a raw (non-robust) app to the
market, but this window is closing as giants tech firms (e.g. Google, Facebook, eBay), mobile network
operators (e.g. Verizon and AT&T), and larger merchants (e.g. Macys) develop and enhance their mobile
platforms. Many startups will pin their survival plans and exit strategies on acquisition by one of the
market giants, but Google and others already have been busy in partnerships and acquisitions to round
out their offerings.

While privacy concerns currently limit wider adoption of location-based apps, many issues will be
addressed through more robust privacy setting options in the apps themselves, greater clarity in privacy
policies, and mass cultural acceptance as location-based offerings continue to expand. Many see
parallels related to online payment methods that originally met with a mix of concern and cautious
optimism, but which now are globally accepted.

The stage is only partially set, the players are auditioning, and the script evolves. Act I is far from
complete, and Act II promises a bright future for those who offer robust solutions and stay ahead of the
curve.

Peter Rovick 21


Author Bio: Peter Rovick has over fifteen years of sales and marketing experience and has worked for
several tech startups, assisting with go-to-market strategies, channel and direct sales, and related
activities. He earned his BA in Psychology at Bucknell University (’91) and his MBA at Babson College
(’09), where he was awarded a Babson Fellowship, graduating Cum Laude with a Global Management
Concentration. Peter is an active volunteer for multiple organizations including his alma maters and
WGBH, the major PBS affiliate in New England.

Contact: provick@hotmail.com
Twitter: @SmartphoneTrack

Peter Rovick 22


APPENDIX

Market Analysis, Forecasts, and Statistics

Associations
 Mobile Marketing Association: http://mmaglobal.com/
 Association of National Advertising: http://www.ana.net/
o Digital, Social & Mobile Advertising: Provides links to reports by various sources under
“Insights & Research” tab

Newsletters
 Jumptap MobileSTAT:
http://www.jumptap.com/dynamicContent/images/photo/MobileSTAT_july_2011.pdf

News
 All about Geomarketing: http://www.allaboutgeomarketing.com/category/apps/
 eMarketer: http://www.emarketer.com/Articles.aspx
 iPhoneTrackingApp: http://www.iphonetrackingapp.com/
 Mashable: http://mashable.com/mobile/
 Mobile Commerce Daily: http://www.mobilecommercedaily.com
 MobiAD News: http://www.mobiadnews.com/
 MobileBeyond: http://mobilebeyond.net/
 TechCrunch: http://techcrunch.com/ (click on “Mobile” & “Social” tabs)
 TNW: The Next Web: http://thenextweb.com

Surveys
 White Horse:

White Papers
 MomentFeed: Location is the New Frontier in Digital Marketing
o http://momentfeed.com/whitepaper/
 The Social Customer: Location-Based Marketing White Paper (multiple parts in blog format)
o http://thesocialcustomer.com/maxgladwell/33718/location-based-marketing-
whitepaper-part-i

Peter Rovick


 Telesoft Technologies: Location-Based Services white paper:
o http://www.telesoft-technologies.com/support/document-library/location-based-
services-white-paper

Research Firms
 ABIresearch: http://www.abiresearch.com/
o Location Analytics and Privacy: The Impact of Privacy on LBS, Location Analytics, and
Advertising – 3Q2011
 comScore: http://www.comscore.com
o Mobile Metrix
 eMarketer: http://www.emarketer.com/Products/Reports.aspx
o Mobile Coupons: Offers and Deals Light Up the Last Mile – SEP11
o Coupon to Groupon: New Channels for an Old Tradition – JUN11
o Beyond the Check-In: Best Practices for Location-Based Marketing – JAN11
 Forrester Research: http://www.forrester.com
o Mobile Commerce Forecast: 2011 To 2016 – 17JUN11
o The State of Mobile Commerce Apps – 16JUN11
o Mobie is Not Just Another Channel – 25FEB11, updated 08MAR11
o Location-Based Commerce: An Evolution in Mobile Shopping – 15FEB11
o Mobile Adoption And Sales Forecast, 2010 To 2015 (US) - 14JAN11
 Gartner: http://www.gartner.com/technology/home.jsp
 GigaOM: http://gigaom.com
o Location-based Services Worth $10B by 2016
 Grizzly Analytics: http://www.grizzlyanalytics.com/
o Mobile Location-based Services, 2012-2015: From Standalone Apps to Integrated
Features - 23MAY2011
 IDC: http://www.idc.com
o Worldwide and U.S. Mobile Applications, Storefronts, Developer, and In-App Advertising
2011–2015 Forecast: Emergence of Postdownload Business Models, JUN2011
 Juniper Research: http://juniperresearch.com
o Mobile Location Based Services
o Mobile Payment Strategies
 Market Research.com: http://www.marketresearch.com
 Mind Commerce: http://www.mindcommerce.com/
o Mobile Social Commerce: Social Media + Mobile Commerce Creates Market
Opportunities – SEP11
o Near Field Communications (NFC) Markets: Challenges, Opportunties, and Market
Forecasts to 2016 – JUL11
o Mobile Local Search 2011 – JUL11
 Nokia Research Center (NRC):

Peter Rovick


o Location, Context, and Mobile Services
 Pyramid Research: http://www.pyr.com
o Location-Based Services - Market Forecast, 2011-2015
o Europe Telecom Insider / Vol. 3, No 1, June Edition - The Peril and Promise of Mobile
Social Networks for Operators – JUN2011
 Salisonline: http://www.salisonline.org/
o Global Mobile Application Market (2010-2015) -18JAN11
 The Search Agency: http://www.thesearchagency.com
o Comprehensive Guide to Location-Based Social Media
 White Horse Productions: http://www.whitehorse.com/resources/#
o Lost in Geolocation: Why Consumers Haven’t Bought It and How Marketers Can Fix It
o The Future of In-Aisle Mobile
 Yankee Group Research: http://www.yankeegroup.com
o Mobile Transactions
o Google Opens NFC Payments to Lock Up Location-Based Advertising

Peter Rovick

Location Based Services_Mobile Apps

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