Max Gladwell

Entreprenurship and Adventure Sports

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Four Reasons to Invest in Location-Based Services

November 17th, 2010 by Rob Reed · 4 Comments

On the question of why to check-in, most are still at a loss. We try to clear it up with four good reasons.

When I talk to non-LBS folks about services like Foursquare, Whrrl, and Gowalla, the typical response is, “Why the hell would I do that?” In other words, why invest the time to check-in? Why bother? What do I have to gain from sharing my location and volunteering this personal information? What’s the pay-off?

The most basic reason for checking in—letting your friends know where you are—is pretty obvious, yet most people don’t see this as having a lot of value. They don’t see it as a sufficient exchange of time and personal information for utility and/or tangible rewards. And that’s what it boils down to for any type of online or mobile service. What’s the consumer value proposition? Or more generally, how does it improve my life?

I’ve often said that LBS trails social media by about two years in terms of its adoption and growth trajectory. Throughout 2010, it has felt like we were re-living 2008 from a marketing and technology perspective. Only instead of exploring, celebrating and/or misunderstanding social media we’ve been doing the same for LBS. A recent study by Pew aligns with this thinking.

According to Business Insider,

“Pew reports that a two years after Twitter launched it only had 6% of the population using it. This suggests Foursquare (and Gowalla, to a lesser extent) are growing just as fast as Twitter did in its early going.”

Not coincidentally, in 2008, I got the very same response when I advocated using Twitter, both from colleagues and brands: “Why the hell would I do that?” In other words, why would I broadcast what I was doing? What’s the utility in that? And who cares what a bunch of strangers are doing?

Answering these questions with any level of satisfaction was nearly impossible. Twitter was so new that you really had to experience it for yourself to understand what it was about and why the hell you’d want to tweet. Indeed, even after 150 million users, the question is still asked, and the answer is far from uniform. There are many reasons to use and gain value from Twitter. The same will ultimately be said for LBS.

In preparation for the next two years, we explore four reasons to check-in and how LBS can improve our lives.

1. To get deals, coupons, discounts, and other rewards

This is the most easy and obvious use of LBS for consumers and businesses, so it’s no coincidence that deals is playing such a huge role in Facebook Places. All of a sudden, 200 million mobile Facebook users have a reason to check-in, and countless businesses have a reason to encourage this behavior. Before this, it really wasn’t obvious to the average Facebook user. It was just a niche form of status update with some added context. Now you can get a discount or make a $1 donation to charity. Of course, Foursquare has its own self-serve coupon and “Specials” features. With SCVNGR, you can attach discounts to game-like challenges, and Gowalla recently unveiled a suite of business features, complete with incentives to check-in. Getting a deal or discount is a universal good and, therefore, has universal appeal. That’s the good news.

The bad news is that relatively few businesses will offer discounts or deals in the short term. And if this is your primary motivation, the absence of a deal means there is no reason to check-in. There clearly has to be more to it.

2. To capture and record all of your travels

A digital travel diary may not be so obvious now. But with the benefit of hindsight, it may be of tremendous value.

I look back to the year 2000. I was a freelance writer for adventure travel magazines, covering snowboarding and mountain biking. Suffice it to say, I visited beautiful places and had some phenomenal experiences. I can easily recall the highlights, and I have thousands of slides from these adventures. But if LBS had been available, I’d have a complete digital diary of the airports, hotels, camp grounds, national parks, ski resorts, bars, and restaurants I’d visited.

This exact value proposition was the key motivation behind Gowalla, where you have a digital passport and earn unique stamps based on the places you check-in. If I recall correctly, Gowalla founder Josh Williams was in Tahoe when he first had the idea (Tahoe is a great place to ski…almost as good as Mammoth.) With a decade worth of content, this can get pretty interesting, especially as features emerge to visualize and re-live those experiences. Today, the most one could have is a couple years, and those memories are probably still somewhat fresh.

Finding value here obviously requires some long-term thinking on the part of consumers. It’s a far cry from the instant gratification of a discount. It’s also not a reason to check-in everywhere all the time. You may feel supermarkets and gas stations don’t qualify for a digital travel journal.

3. Intelligent recommendations

The promise of intelligent recommendations is the feature that gets me most excited. Based on the data I volunteer through checking-in everywhere I go, whether it’s a public or private checkin, location-based services can use their aggregate data to accurately recommend other places I’ll like. Mind you, this is no small task.

Think about the types of breakfast spots, sushi restaurants, cafes, bars, tourist attractions, and hotels you like. The reasons you like them are incredibly nuanced. In many cases, you probably don’t know exactly why you like one or another. Plus, your tastes change over time. So much of this registers at a subconscious level that we’re not even aware of our tastes or that they’ve changed. As such, making an intelligent recommendation about what other places you’ll like is a huge technical challenge. But it also has corresponding value.

Let’s consider a use case. You live in Los Angeles, and you’re traveling to a city (New Orleans, Montreal, Paris) where you’ve never been. You could use a basic place-finder app like Poynt or Geodelic to search for a nearby restaurant or coffee shop. If you want more information, you could use Yelp, which provides user reviews and ratings to further inform your decision. These services provide broad value for everyone. You don’t have to contribute anything. Just open the app and access the information. But the value here isn’t that deep because it’s entirely non-personal. With a Yelp review, you have no clue about whether you’d agree with the people who rated a restaurant with one or five stars. You could invest a lot of time reading all of the reviews to come to some type of conclusion, but who has time for that? It defeats the purpose. With checkin-based LBS apps, there’s a better way. (Note: Yelp also has a check-in feature.)

By checking-in everywhere I go at home and when I’m traveling, no matter how mundane or insignificant, these apps can learn a lot about what I like and don’t like. With enough data, they can learn more about my preferences than I probably even realize. Again, let’t think in terms of many years’ worth of data that may also include sentiment value one way or another. Then consider a data set that includes hundreds of millions of users all over the world.

When I land in New Orleans, Montreal, or Paris, I don’t want to look for a sushi restaurant or sports bar that I might like. I want an app to intelligently recommend a sushi restaurant or sports bar, based on a massive set of data including my own, that I’m all-but guaranteed to like. This type of predictive intelligence for location is only possible if we provide the raw data i.e. a complete history of check-in behavior. That’s the trade-off. That’s the value exchange. And that’s ultimately how LBS improves my life.

Whrrl has been a pioneer in the recommendations space, and Foursquare is rumored to be working hard to add this functionality. Gowalla recently added a Highlights feature, whereby you select your favorite spots in specific categories such as sushi, coffee shops, or museums. Which is precisely the type of data Gowalla needs to make intelligent recommendations about other spots you’ll like at home or when traveling.

4. It’s a fun game to play

Several of the services offer gaming or gaming mechanics, which can add a fun factor to checking-in. Foursquare has its badges and mayorships; Whrrl has Societies and corresponding levels, and SCVNGR is designed around post-checkin challenges that anyone, including marketers, can create. SCVNGR is explicitly positioned as “a game layer on top of the world,” which adds an element of deeper engagement for marketers by associating these challenges with deals, coupons, and discounts (see #1). MyTown, of course, is a pure location-based game, complete with product checkins.

The most compelling aspect of gaming mechanics is that they provide independent value from numbers one, two, and three above. Playing or winning the game is the objective, which can have plenty of entertainment value. In this case, however, the answer to the question of why the hell you’d check-in would have to be, “Because it’s fun.” This clearly appeals to early adopters. It remains to be seen whether this is a sustainable value proposition that improves the lives of mainstream consumers.

Originally published on the MomentFeed Location Blog.

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Tags: Geolocation