Geo-Fencing: A Location-Based Service Alternative

A new program in the UK will target opt-in subscribers with location-based offers from Starbucks and L’Oreal – without depending on smartphones or GPS.

UK mobile operator O2 is launching a program targeting a million subscribers with Starbucks and L’Oreal coupons. The discounts are offered via O2 More, an opt-in subscriber offer program that allows companies to offer discounts based on user-submitted preferences and demographic info. The program will support a new geo-fencing trial service from Placecast, creating 1,500 geographically restricted areas in which Starbucks and L’Oreal are able to offer deals to nearby customers.

What caught our attention – and what makes this platform different than other location-based service promotions – is its employment of geo-fencing. Geo-fencing refers to the creation of boundaries that trigger an action or notification when a person enters or exits the area. The advantage, or differentiation point is that geo-fencing doesn’t require a smartphone or GPS-enabled phone; the O2 roll out relies on the carrier’s network to establish a subscriber’s location. In short, geo-fencing (and the O2 platform) offer marketers a wide-reaching, easy way to target all customers of a certain operator, provided they opt-in.

Geo-fencing has to build a case for itself as a viable platform in the US – ensuring US mobile carrier participation and a wide enough subscriber base to make it attractive to marketers. But in a landscape where smartphones don’t yet represent the majority of US mobile phones (as of the fourth quarter 2009, Nielsen estimates 21% of American wireless subscribers were using a smartphone), geo-fencing may represent an effective means of capturing a broader consumer base with location-based targeted offers.

Placecast

[via GigaOm]

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