A view from Mel Exon, managing partner and co-founder, BBH Labs

Why Beacons are poised to take proximity-based marketing to the next level

Sometimes talk of frictionless mobile payments and proximity-based targeting has felt a little like waiting for jetpacks.

We’ve all seen the diagrams of the device in our pocket sensing information from the environment around us with magical accuracy, and we know it’s technically possible, but there’s been little sign of it actually happening in our daily lives.

The phrase "proximity-based targeting" may not make your pulse race, but forget the clunkiness of a QR code or the basic act of swiping a card over a sensor using NFC technology (NFC tends to be capable of simple transactions only), or location-based services such as Foursquare (GPS-enabled, so not fantastically accurate, particularly indoors).

Instead, say hello to iBeacon. Unveiled by Apple last year as part of its iOS 7 launch, it is described as "a new class of low-powered, low-cost transmitters that can notify nearby iOS 7 devices of their presence" and use that proximity to pass data. In Apple’s case, the phone (from iPhone 4 onwards) is also a beacon in its own right, capable of transmitting information, not just receiving. Google is also baking beacon technology into Android 4.3.

Two things make this particularly interesting for marketers.

First, the fact that the beacons use Bluetooth LE (low energy), so succeed in delivering greater accuracy than GPS, while draining less precious battery power. Suddenly, we have the data-transfer capabilities of Bluetooth, accurately pinpointed to your exact location, possible for a viable period.

Second, the data transfer is passive and immediate: it seems we’re finally at a point when devices can talk to one another without us needing to do the work.

Two commercial applications (and "watch-outs") for marketers:

1. Enhanced experiences

For gigs, art galleries, stadiums and parks, strategically placed beacons allow users to pick up information about the history of a location or the background to a painting in a gallery, say, just by having their phone to hand. The exhibition owner, in turn, picks up useful information about where there are hot spots, blockages or dead zones. At SXSW in March, for example, the conference’s official mobile iOS app used iBeacon to send users information about the sessions they were in. The trick here, as app developers, is to judge the messaging content and vel­ocity very carefully – that is, do not spam people.

2. Next-generation retail

Beacon can work in several ways to change and improve a retail environment (beyond simply welcoming or issuing a coupon on arrival):

  • Act as an "indoor GPS" system, helping someone find the product they’re looking for.
  • Map where the best deals are for them, based on their previous shopping habits or perhaps the time of day/week.
  • Develop location-specific offers, like Macy’s is doing in the US in partnership with Shopkick, where offers are dynamically tailored to customers based on where they are in the store.
  • Beacons also make mobile payments faster and easier. PayPal is bringing out its own beacon, allowing users to make hands-free payments. The issue to overcome initially will be behavioural: we humans are used to physically exchanging something for goods.

Then there are the implications for out-of-home advertising, on-premise, not to mention peer-to-peer and our future digital identities. As marketers, this is a way to rethink how we design user interactions.

Fundamentally, this technology has the potential to alter how we interact with the world, not just how we shop – and it’s closer than we think.