Close-up: Is location marketing mobile's future?

Are location-based marketing and apps the new holy grail of advertising, Matt Williams asks.

When Sir Martin Sorrell makes an observation, people tend to listen. So when the WPP boss spoke at the Mobile World Congress in Barcelona last week, it was unsurprising that it was his thoughts that captured the headlines.

And in his speech, which focused on the future of mobile advertising, was a claim that location-based marketing and apps are the "holy grail" for advertisers.

"Sir Martin's predictions are usually very accurate and he's right here as well," Shaun Gregory, the managing director of O2 Media, says. "Location marketing is the one thing that everyone wants to talk to us about at the moment. We know a lot about our customers, so if we can combine that knowledge with their location, we can serve them with more accurate campaigns."

A handful of brands have already experienced some success with location-based marketing. Brands such as Starbucks, which used geo-fencing technology to automatically send a "money-off voucher" to opted-in O2 customers when they were near a branch of the coffee chain. Domino's Pizza, meanwhile, attributed strong growth in online sales last year to a location-based mobile campaign run through Foursquare.

That's all well and good, one industry creative points out, but Domino's and Starbucks both had the attraction of new technology to help it succeed. "Consumers were intrigued by the innovation," he says, "but will they still embrace it when every retailer and restaurant is bombarding them with similar offers?"

The answer, you suspect, is no. In fact, it could potentially have the reverse effect, with consumers getting frustrated by overbearing brands bombarding them every time they cross the street.

Perhaps that's when it's time to get creative. "The problem with location-based marketing is that, at the moment, a lot of it is like digital versions of those 'golf sale' signs," Ben Mooge, the creative partner at Work Club, says. "It'll only get interesting when you can do more than just offer a free coffee."

That time seems to be coming. "A new wave of smartphones, such as the iPhone 5, are on their way and they will have location-based marketing at their heart," Jon Carney, the chief executive of the mobile agency Marvellous, says.

At the same time, Gregory explains that networks are now developing platforms that will allow brands to run location-based campaigns without requiring the consumer to "check-in" or make the first move: "The danger of location-based marketing before was that it relied wholly on browsing, but that's not the case any more."

And with those barriers broken down, Tom Ewart, the joint executive creative director at Publicis London, says that location marketing can really fulfil its potential.

He points, in particular, to examples from Japan, such as the "iButterfly" campaign from Yamada Denki, Japan's biggest electrical store. "Consumers are encouraged to catch virtual butterflies in-store to unlock a coupon," he says. "It's charming, fun, engaging and relevant."

Until now, brands have been reluctant to fully commit to location marketing campaigns, and even if they have, they've tended to play it safe. But as technology evolves and agencies and brands are able to produce more creative and interactive campaigns, location-based mobile ads could prove themselves to be more than just a passing fad.

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CREATIVE - Dave Bedwood, creative partner, Lean Mean Fighting Machine

"I'm always wary of anything being called the future of anything. I think creatives just see it as another trick they can use until the next one comes along.

"At the moment, creatively, location marketing is starting to feel a little 'faddy' - a lot of the ideas all feel very similar, mainly revolving around treasure hunts.

"But that's not particular to location marketing, any old or new media, platform or technology can be used badly and annoyingly, so it's nothing new there. That's the problem with shit ideas, they're media neutral. But, in the right hands, location marketing can offer up some interesting ideas and opportunities, such as the KLM 'surprises' campaign."

MEDIA OWNER - Shaun Gregory, managing director, O2 Media

"From a brand perspective, you can clearly see the value of location marketing.

"It's not just now about where the customer is, you can now predict what mood they're going to be in too, which is a huge advantage. If people are at an event or gig for instance, they're going to be in a different mood to how they are feeling at the gym, so if you can predict customer behaviour you can create better and more targeted marketing campaigns.

"The danger is that people think that because mobiles have a small screen you can't be creative. But the creative opportunity for mobile has never been so great."

MEDIA STRATEGIST - Jeff Hyams, chief strategy officer, MEC EMEA

"I'd agree that location-based marketing is going to be an important part of brand campaigns, but it's really a key piece of where mobile advertising is going, not the only piece.

"And I think that the campaigns can be creative, but importantly it's redefining what 'creative' is. This isn't just about a piece of content. The consumer is far more accepting of 'clever uses of technology' in the mobile environment.

"This does require a new type of collaboration among specialists though. Great location-based campaigns only happen when technology is married to the idea, the production and, of course, fulfilment."

MOBILE SPECIALIST - Jon Carney, chief executive, Marvellous

"At the moment, there isn't enough inventory out there for location-based campaigns to have real significance.

"But you can see the attraction. Take Google, for instance. The data it has means it knows all about you, and when you put that with knowing your location then you really have something.

"It'll be particularly beneficial for brands that are consumed on the move - there's a huge opportunity for alcohol brands, for example.

"It's now up to the media agencies in particular to open their clients eyes to this potential. And that's something I haven't seen happening as yet."