Max Gladwell

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Location-Based Services and the Facebook Effect

November 9th, 2010 by Max Gladwell · 3 Comments

Facebook expands its Places product by opening its API and adding a Deals feature. What does this mean for LBS?

Originally posted on the MomentFeed Location Blog.

Facebook debuted Places back in August. This added the social gesture of “checking in” to its iPhone and mobile Web apps. It was huge news for LBS, but it was mere foreshadowing to last week’s announcement. What started as a product feature has now become the Facebook Places platform. By extension, Facebook is now the de facto platform for LBS.

The impact of this on the nacent LBS space cannot be overstated. The question is whether it will be positive or negative and for whom. In the following, we highlight the three major announcements—Single sign-on, Open API, and Deals—and what they mean for the LBS ecosystem.

1. Facebook announced a single sign-on for mobile apps. Much like its Web counterpart, being logged-in to the Facebook iPhone app means you can be logged in on any app that uses this new authentication standard. This is huge for mobile in general and for LBS in particular. Consumers can now take their Facebook social graph into any LBS application. Which means that if you’re logged-in to Facebook and open Loopt, MyTown, Gowalla, SCVNGR, Whrrl, Foursquare, and others, you’d already be logged-in on those (assuming each enables it). This lowers the barrier for trying these apps and, therefore, opens them to many more users.

Key takeaway: This creates tremendous opportunities to develop a broad range of applications with a geo-social element.

2. Facebook announced that its Places API (read, write, and search) was being opened to all developers. MomentFeed has been in discussions with Facebook on this for a while, as it enables the company to integrate Facebook Places data into its LEA solution. It also enables any app to push checkins to Facebook and to pull one’s checkin information from Facebook. Now that Facebook is the LBS platform, developers can focus on adding value on top of that using the API.

Key takeaway: Facebook may be the largest LBS platform, but it won’t be the only one (especially if Google and Twitter have their say). Other companies should model their APIs accordingly and compete on features.

3. Facebook dropped the Deals bomb, complete with brand partners including Gap, REI, The North Face, H&M, JCPenny, McDonald’s, Starbucks, and 24 Hour Fitness. This self-service feature enables businesses to offer a range of incentives for checking in. All of a sudden, marketers have a clear reason to use Facebook Places and consumers have a reason to check-in. What’s more, it is free for businesses, so they have nothing to lose in trying it. This will have the greatest impact on the LBS space in general. As MomentFeed detailed in its whitepaper, LBS adoption is equal parts hardware, software, and behavior. Deals is all about the latter. All of a sudden, hundreds of thousands of businesses and hundreds of millions of consumers have a reason to care about LBS.

Key takeaway: While Deals can serve the basic needs of marketers, the LBS space is so vast that there is plenty of room to innovate, differentiate, and add value. Facebook will introduce consumers and marketers to LBS in large numbers, but that’s pretty much where it ends. Established LBS companies have a significant head start in developing beyond-the-checkin products and experiences. At the same time, Facebook has leveled the playing field for new entrants. It’s now quite simple to launch a location-aware application with a checkin feature. And there is no shortage of niche markets in LBS. All of which means that Facebook will further fragment an already fragmented marketplace.

Final note: The one feature Facebook Places does not currently offer is the “Solo Checkin,” whereby you can checkin without broadcasting it to your friends in any way. This would pave the way for mainstream adoption, as many are still wary of the privacy issues. It’s unclear whether Facebook would deem this anti-social and, therefore, anathema to using Facebook. It could also undermine the value for marketers, as the word-of-mouth advertising via one’s social graph is a primary motivator for offering deals. Still, several of the LBS leaders offer some version of this feature, which could be a small way to differentiate.

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Tags: Geolocation · Marketing