The data that is being collected about where people are in the world and what they are doing there is exploding. According to a recent McKinsey survey, more than 1 petabyte of personal location data is being generated annually. Approximately 400 terabytes are being generated from smart phone opt-in tracking alone
The ability to pinpoint the location of devices, even as small as a mobile phone, has increased dramatically over the past 10 years with technologies such as GPS improving significantly. This has sparked intense interest by service providers as well as over-the-top players in harnessing this information for use with new businesses and new business models. The opportunity is great. Over US$100 billion in annual revenue will be generated by service providers by 2020 from personal location data- related services.
One of the most promising areas for new revenue generation is in the area of geo-targeted mobile marketing, often called Proximity Marketing. With the incredible success of daily deal opt-in models, exemplified by companies like Groupon or LivingSocial, it is now established that consumers see value in discounted offers and coupons being pushed their way regularly. However these models currently fall short in their ability to deliver timely and highly relevant offers to the vast majority of recipients.
Telcos, with their large existing customer bases, an established billing relationship and the ability to pinpoint the location of a customer, are ideally situated to take this business model one step further by delivering real-time, location-based offers. A simple example would be for a smart phone user, who has opted in, to receive a coupon for a discounted beverage as he gets within a certain distance of a coffee shop.
These types of marketing services can provide a win-win scenario for both operator and consumer. The consumer receives a high valued, non intrusive offer that is both relevant and contextual. The operator opens up a new revenue stream. Operators can take advantage of their prime position to deliver these types of services based on their knowledge of subscriber location, historical usage patterns, and demographics – but only if they have the right tools in place to do so. Here are few elements they will need to consider:
• Personalisation – Early experiments by wireless carriers are based on a brand-centric approach where subscribers opt-in to receive coupons and offers from their favourite brands when in the vicinity of their stores. As models evolve, the ability to deliver more sophisticated and personalized location-based recommendations and offers will becomeessential.
• Location-based analytics – Providing rapid insight on coupons pushed, redemption rate, recipient profile by geographical area or ‘geo- fencing’ zone will be at the heart of the model as both a foundation for various monetization options for the carriers as well as a vehicle to determine a campaign’s return-on-investment for retailers and brand owners.
• Big Data – With more than 1Tb per day generated from smartphone opt-in tracking alone, the proximity marketing domain is highly data intensive. As telcos step up their investments in this space, in-memory technology will become an attractive and cost-effective option.
The monetisation of location-based data through various services such as Proximity Marketing represents a huge opportunity for service providers. To succeed, and compete effectively against over the-top players, they will need to fully leverage the trusted relationship established with their subscribers as well as to put in place an infrastructure adapted for Big Data. The stakes are worth it : US$100B in annual revenue by 2020.
