It will be no surprise to our readers that at Spreed we believe strongly in the promise of Location Based Advertising (LBA). We have talked about LBA in many of our previous posts and have built powerful  LBA features into our CleverAds mobile advertising platform.

For those unfamiliar with Location Based Advertising it is any form of advertising that targets users in a specific location and provides them with geographically-relevant ads. LBA has been around for quite some time now on the web, but typically targeting users only on the city or neighborhood level. However, with the rise of smart phones and smart phone applications, LBA becomes a lot more interesting. Almost all of the new smart phones possess GPS capabilities. This means that advertisers can now target people down to peoples exact location as they move around their respective cities.

We believe that LBA is going to be huge for the retail industry and we are already starting to see the returns as outlined in some of our previous posts. Although LBA has been around for some time, the companies really pushing this space forward are the Location Based Services (LBS), such as FourSquare and Gowalla. These services let you ‘check-in’ to specific locations and see who else is there and where your friends are. They are also useful for pushing location based deals and incentive programs. Gowalla, launched in 2007 and Foursquare launched in 2009 (according to Wikipedia). In the race to be the dominant service Foursquare is clearly winning –  Techcrunch recently reported that they are 5x larger and are growing 75% faster than Gowalla every day.

Location Based Services are exciting and have been gathering momentum over the past two years.   However we wanted to take this opportunity to point out the pros, cons and where we think they are moving in the next 6-12 months in regards to their potential for Location Based Advertising.

Pros

• These services are great at building brand loyalty. For example, if you are the person who ‘checks-in’ the most on FourSquare at a location, you become the mayor. Some stores offer free incentives to their current mayor. Also, there is a large opportunity to provide discounts to customers who ‘check-in’ a certain number of times. Think of this as an automated loyalty card program (i.e. Subway card).
• They pull nearby users in. For example, Foursquare is beginning to push deals via a banner on the application for specific stores or venues if you ‘check-in’ around their location.
• They let you know who is physically around you. I have been to many concerts and found out after the fact that friends were there. By using one of these LBS’s you can easily ‘check-in’ and find out who else is there (in real time).
• They are great for Word-of-Mouth marketing. Users can add tips to locations. If you login to a location close by to a location where a friend has left a ‘tip’, you receive the WOM advise via a push notification.

Cons

• People value privacy. I have been hearing from a growing number of people that they do not want everyone knowing where they are all the time. I think we are going to see this trend increase as time goes on. People are already worried about their privacy, but Location Based Services just up the ante on open information.
• People are beginning to experience serious ‘check-in fatigue’. Every time you go to a location, you have to manually check-in. If you are only using Foursquare, it still gets tiresome; However, if you are using multiple LBS applications, it becomes out-right annoying.
• There is very little utility for advertisers. Other than the location based deals that pop up every once in a while on Foursquare, there is very little value added to brands by these tools. People can provide you tips when you check in to a location, but there is no call to action, no directions to get to this location and definitely no ‘download a coupon’ option for this location tool.

If LBS apps are going to survive and become successful business ventures, they will need to address these cons. There is an interesting article in  today’s Mobile Marketing Watch about a new LBS app called GroupTabs. GroupTabs is set to launch in a few weeks and is a cross between FourSquare and Groupon. If you do not know about Groupon yet, they push local deals to subscribers daily. Grouptabs plans to push people deals from around their current location as they ‘check-in’. These deals will add a lot of value to the LBS chain and definitely provide utility for both the advertiser and the end user — which solves one of the major problems of the current tools.

The second article that inspired this post is based on ‘check-in fatigue’ and can be found here. In this article Saad Fazil of VenturBeat states that, “Auto checkins can become useful if, for example, I specify Starbucks as one of my favorite spots and am automatically checked in whenever I am there — thus making it easier for the company to offer discounts based on number of checkins.” I wasn’t too sure about auto check-in’s at first as people are already leaving these services because they do not want people to know where they are all the time. However, if you can specify what your favorite stores/locations are and have the tool automatically check you in when you enter the location, those problems cease to become a deterrent.

Now imagine if we mashed up the above two concepts and created an LBS application that allowed you to chose your favorite stores. Whenever you entered the store, you would be pushed a relevant coupon or promotional deal either for the store or for a relevant purchase. This would get rid of the ‘check-in’ fatigue, would in most cases solve users issues around privacy as these are not private location and would supply a great deal of value to the end user. This is the future of Location Based Services and where we would like to see this space going in the future in order to drive the Location Based Advertising Industry.

Only time will tell, but we think GroupTabs is on to a great idea and we whole heartedly support their efforts. If they can adopt the automated check-in system, we think they have  winner. At Spreed we are looking to push location based deals when people open up their newspaper app around one of the papers retail advertiser locations. The pop up would include directions to the location and a coupon for use on their next purchase. As end-users, newspaper publishers and advertisers, what do you think of this opportunity and Location Based Services in general? Let us know!

Even more good news regarding the mobile advertising industry so far in 2010. It seems that all the hype (whether deserved or not) surrounding the iPad has translated into some very early successes for newspapers like Gannett’s USA Today. The Washington Post is reporting that USA Today sold a $50 CPM for its inaugural advertiser on the iPad, Courtyard Marriott. That comes to $0.05 per impression, compared to less than $0.01 per impression for USA Today’s Web site. Such pricing suggests the iPad may prove to be a lucrative new source of revenue for newspaper and magazine publishers.

MediaPost News has a great post on the subject at the link below

‘USA Today’ Gets $50 iPad CPMs

Mobile ad networks have typically charged $10 to $20 CPMs for advertisers looking to reach consumers via ordinary mobile phones. Premium prices range $30 to $40 for mobile video and for particularly desirable cohorts, like iPhone and smartphone owners, super premiums of $50 for popular publications, in the case of USA Today.

WaPo reported that one mobile marketing company, Mobext U.S., said publishers are charging two to four times their typical online rates, — generally under $10.

We need to apologize for the lack of posts in the past month, but as you can tell by the title, things have really been picking up. BuzzCity, a global advertising network that releases a quarterly advertising index, reported that mobile advertising grew by 38% globally in Q1 of 2010. As a personal anecdote, we can  report that Spreed’s clients  have been bombarded in Q1 by advertisers interested in reaching their respective mobile audience.

CEO of BuzzCity, KF Lai, stated that “This double digit growth is also seen beyond the top 20 markets reported on in the study. America saw a 54 percent increase of ads served over the three months in Q1 of 2010,” he said. “This sharp increase in growth, globally and in the U.S., can be attributed to the mobile-centric agencies who are delivering more constant and structured investments in the mobile medium.”

We must note here that these numbers reflect mobile banner advertising and not SMS or mobile search advertising. Banner advertising which is currently the heart and soul of mobile application advertising has traditionally been a fraction of its other two, much more mature siblings.

It is exciting to see the Canadian numbers grow by 68%, considering that Spreed’s headquarters are in Canada and a number of a marquee clients also are run out of the great white north. Canada is still only ranked number 5 in the World for mobile advertising spending. However, this is the first year we have made the top list and all of these figures are proof that mobile is a viable channel. Those media organizations who supported the wait and see strategy in regards to their mobile strategy should definitely take these numbers to heart.

Mobile advertising is still just a fraction of mainstream digital or broadcast advertising. However, page views and overall app and mobile web usage are increasing at a rapid rate. It is important to start on a mobile strategy at some point in 2010 if your organization wants to lock down users and start building up statistics in order to attract these advertisers.

Please see the chart below for exact numbers and rankings.

The Spreed team will be attendance at the Canadian Newspaper Association Ink and Beyond conference. We are very excited to be supporting this event as an exhibitor.

For the next two weeks we will be offering a special 50% yearly discount to all attendees of the conference.

Contact us at dave[at]spreedinc[dot]com if you are interested.

This morning at the NAA MediaXchange Rishad Tobaccowala gave a provocative keynote session on the future of marketing and advertising and how traditional media companies must leverage new platforms to more effectively serve advertising to customers.

As the Chief Innovation Officer of Chicago-based Publicis Group Media, Rishad is one of the most influential thinkers in the North American advertising industry. It is therefore no surprise that the audience was on the edge of their seats listening intently to Rishad`s advice.

We at Spreed found his talk very interesting considering many of his recommendations push newspapers in the direction of a number of the products and services that we provide (mobile platforms, mobile advertising, location based advertising, etc).

Rishad left with 10 recommendations for newspapers to follow in the future that we would like to share here:

1. Be schizophrenic – Only the schizophrenic will thrive. Run two or more business models at the same time but make sure they are very separate. Do not make a big mesh of all your models.
2. Embrace technology – Tech is the new magic. Make sure the follwing ive things are done by the end of this week.
   1. Use an RSS reader and start following your passions through it
   2. Get a Twitter account
   3. Get on Facebook
   4. Get on Foursquare
   5. Go to someone in your company who is younger (probably 2-3 levels below you) and make them your mentor. Take them outside of the company every two weeks and get them to teach you about what is new and upcoming
3. Embrace the blur – Church and state are too separate within news organizations. All elements of a news organization (sales, editorial, technology) need to work together in the same group.
4. Learn fast, iterate faster, make mistakes and don’t be afraid to fail.
5. Do a massive outreach to young people – You want to make the industry exciting. Don`t be swamped with old people. Get youngsters into the industry.
6. Think about what curating, combining and editing really is
7. Platforms – Every company needs a platform strategy. How do you attract new partners? What’s your device strategy (iPad, iPhone, etc)? What’s your search strategy?
8. Make sure that you celebrate the software and technology folks at your organization. Don’t hide them in a room somewhere even if they are strange. Tell them about the business and ask them to solve business issues
9. Think about  the future of your organization. Thank about your organizational design, incentives, benefits, etc.
10. This one was a bit odd and I am not sure exactly what he meant by it, but the industry is not anyone but you. there is not industry but yo, embrace the “muchness”. “This is my dream and I am going to decide how it ends”