Location-based services: are they there yet?

We look at Facebook, Foursquare, Google Latitude and Yelp to see how their mobile location-based services have prospered -- or not.

Mobile users are more connected to the Internet than ever. As of December 2011, ComScore estimated that there are 97.9 million smartphone users in the U.S. -- nearly a third of the total population.

Almost every one of those devices can provide its location to services in which users choose to participate, allowing them to tell their friends where they are, what businesses they frequent and how those businesses perform. For example, a retail store might offer discounts to entice customers to let their friends know where they're shopping and how good the store is.

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But not all location-based services -- or their mobile apps -- are created equal.

What follows is a look at the background and differing approaches of four major social media platforms that provide LBS, with a special eye to what it all means for businesses that are looking to connect to customers. Two of the four networks, Foursquare and Google Latitude, are completely location-based; the other two, Facebook and Yelp, are social networks that have incorporated location-based services into their existing infrastructures.

Facebook

The LBS story of Facebook is -- and there's an irony alert here -- far from being liked. While Facebook has done a pretty good job of monetizing advertising, social mechanics and user-contributed content, it has pretty much fumbled the LBS ball to date.

Many industry analysts and pundits thought that when Facebook launched its Facebook Places service in Aug. 2010, it would spell doom for the Foursquare LBS. With check-ins and the capability to see which friends were nearby, Places was meant to give mobile Facebook users power to track and be tracked by the popular social media site's members. It would also give local advertisers (and by extension, Facebook) access to a lot of hyper-local customers -- literally, people who were just down the street.

Facebook Places

But Facebook Places completely failed to take off, to the extent that just a year after its launch, Places was essentially deactivated. Facebook still retains some LBS functionality: mobile users can opt to attach their location to their status updates and check in at business locations. But business participation in Facebook's check-in program is minimal; a quick survey of Chicago check-in deals yielded just five hits.

Altimeter Group mobile analyst Chris Silva sees the pullback not as a failure of the Places tool, but rather a retreat on the part of Facebook from a faltering mobile strategy. In February, Facebook's own pre-IPO S-1 filing all but admitted the flaw, which Silva pointed out on his blog.

"Sounds like a problem -- the biggest-news IPO in Silicon Valley is essentially admitting it's concerned with its prospects for monetizing mobile users," Silva wrote.

Today, Silva is convinced that Facebook must and will turn itself back to the mobile environment. "Their next step is inherently mobile," Silva emphasizes.

For now, however, mobile is taking a back seat. Facebook's "focus is on the ads right now," explains Shon Christy, founder and president of Christy Creative, LLC, a midwestern social media marketing firm, "particularly ads that are part of Facebook's Reach Generator ad packaging program." The Reach Generator program, launched by Facebook at the end of February, enables participants to promote posts from their pages and pay via an ongoing payment plan, rather than per-click.

Still, Facebook can't be counted out completely out yet as an LBS player, for two reasons.

First, in late 2011, Facebook announced that it had hired pretty much all of the developers and engineers from Gowalla, an LBS-based social media platform that focused on social-network city guides using members' photos and descriptions. Facebook did one of its famous acqui-hires -- instead of buying the company outright, it picked up the talent but left the technology and the service alone. As a result, Gowalla ended up shuttering itself on March 12, 2012.

Second, Facebook has rolled out its new Timeline feature to users, a chronological tool which has become its default interface. The Facebook location-sharing tool enables users to assign location information to events, images and statuses throughout their Timeline "history." As a result, location will become much more a part of the user's story, interwoven with all the other properties of Facebook posts.

With the Gowalla brain trust on board, it is not unreasonable to expect more location-oriented functions to appear within Facebook as the Timeline continues to roll out. Mobile users might want to keep an eye out.

Location-based services as social media

When businesses consider using location-based services, one thing to remember is that LBSs are basically yet another form of social media. And according to Shon Christy, founder and president of Christy Creative, it's imperative that businesses make sure they have the right fit for their social media outlay.

"My clients don't have the resources to waste getting their social media strategy wrong," Christy emphasized.

But an even broader issue is how businesses can use any social service, location-based or otherwise. Jack Gold, a 20-year analyst with expertise in the mobile space and founder of J. Gold Associates, has a counter viewpoint. "The notion that business can leverage consumer-facing services is a new one," Gold says.

It's not that Gold has anything in particular against social media use for businesses, but he is particularly cautious about how businesses should go about using public, non-secure networks that were most definitely not designed with businesses in mind -- or, if they were, it would be business solely on the terms of the social network in question.

"None of these networks really have corporate-level features," Gold explains. "Not without some level of enhancement."

For Gold, the focus is not on the individual networks, so much as developing a cohesive strategy that protects the company from the many pitfalls of using any social media service. Location-based services, in particular, offer unique challenges. Privacy is the most obvious concern, since customers are often rather prickly about letting their whereabouts be known.

"Governance of policies is the key problem," Gold adds. "Users and companies don't always see eye-to-eye on expectations of privacy."

This means that the development of policies around the users' privacy (and the rest of the social media interfacing) is critical if a company wants to connect to customers using these public networks.

Foursquare

Foursquare was one of the first to exploit the notion of location-based check-ins in 2009 -- an idea that other services have tried to reproduce, to varied success. With Foursquare, a person's location is important only as a way to find friends and compete in geographic-based gaming.

The basic idea of Foursquare is likely the most familiar of all the LBS tools: Users check in with their mobile devices at venues and are awarded points for checking in. Check in enough times at a venue (which can be a business, concert or event) and you can be awarded a badge from Foursquare, or become "Mayor" of that venue until someone comes along and bumps you out of that spot.

Foursquare

Most members use the service in one of two ways: They can either compete for badges and points without necessarily revealing their locations, or broadcast their locations in the hopes that nearby friends will see the updated status online and join them at that venue. Even this is not binary: Many users game and socialize in blended efforts that suit them.

Christy highlights this gamification as a major reason why Foursquare is often the centerpiece of a social media strategy for his retail and restaurant clients. "As a society, we're just competitive," Christy says.

From a user perspective, Foursquare clearly has an impressive base: At the end of 2011, there were a reported 15 million Foursquare users. This strength is enhanced by tight integration with Facebook (which also neatly solves Facebook's immediate lack of a native LBS).

For businesses, the social/geo/gaming aspect of Foursquare is very easy to plug into. Mayors can be awarded small gifts for their titles: Free coffee or a certain percentage off for that day's purchases are very common. Businesses can also create longer-term promotions that involve more user participation, or branded "tip" lists for Foursquare users that reward checking in at certain venues or purchasing items from businesses.

According to Silva, Foursquare has all but wrapped up the LBS space. "They are doing the best job so far in monetizing location services," Silva explains, going on to describe a recent Foursquare/American Express partnership program that enables an instant discount for patrons who check in at participating vendors. For vendors, this is a painless way to upsell, Silva adds, while customers experience a seamless discount, since the transaction takes place on their American Express card.

Recently, Foursquare has enabled user tip lists that let participants recommend (or not) any given venue and give their own advice on what's good or bad about the venue. This has been seen by some analysts as a foray into Yelp's social recommendations.

"If you're scoring at home, Foursquare claims to have "tens of millions" of tips," wrote marketing and SEO expert Matt McGee on his blog in January. "Yelp has somewhere around 22-23 million reviews, as I understand, and Google has somewhere in the neighborhood of 13-15 million reviews and ratings combined... I'd say that the game is on in local search."

Foursquare also has a list capability that was implemented last August. A list lets a Foursquare user build a group of businesses that they prefer to frequent, such as "my favorite restaurants" or "10 great independent bookstores." By sharing these lists with friends, Foursquare users can share their interests and favorites in larger chunks of information.

But end-users aren't the only ones that can benefit from lists. Businesses can also create branded compilations that can bring customers directly into their door, as well as deliver their brand in other ways.

Foursquare is clearly the one to beat in this space.

Google Latitude

Compared to Facebook and the other LBSes, Latitude's story seems more like a confusing labyrinth.

Google Latitude

It was originally built by the same folks who created the Dodgeball geo-location service, which Google bought in 2005. (Eventually, the two Dodgeball founders left Google under less-than-ideal circumstances.) One of the Dodgeball creators, Dennis Crowley, would go on to found Foursquare after Google halted Dodgeball in 2009 and replaced it with Latitude.

The Google Latitude service is an add-on to Google Maps that allows mobile phone users to let specified Google account members know where they are. The location can appear on, say, Google Plus as a status update, or can be viewed on an iGoogle home page in case a loved one wants to see where you are at any given moment. The service also features automated check-ins and departures, and deals. Android users of Google Latitude recently got the ability to see a check-ins leaderboard, which let them see other users who are checking in at that particular business.

Google far and away has the best and broadest reach of any of its LBS competitors to get advertising connected with geolocation.

Up and coming LBSs

There are other, less well-known location-based services for mobile devices out there. Here are a few that definitely bear watching:

Banjo: Banjo is a "social discovery" app designed to bridge the gap between different social media networks. It was designed by founder Damian Patton, who was in Logan Airport tweeting while a friend he had not seen in years was just feet away on Foursquare, and they didn't realize it. Banjo coordinates location information from the various social networks and lets you know where friends are no matter what social network they're using.

Highlight: A recent media darling of the SXSW conference, Highlight lets you know when you are physically near those people with whom you share a second-level connection, such as your brother's best friend, or a business associate's co-worker. It can even share locations for those who have similar interests or even live in the same hometown -- nice to know when traveling far from home.

Neer: Neer refines LBS down to the very personal level. You set it up for a close circle of family and friends and the app will inform you when that person is near or leaving a given location. A spouse could configure it to automatically send a note to their partner when they're leaving work, for example. It can also be configured to ping you with geo-oriented reminders, like when you're near the grocery story and need to buy milk.

Unsocial: A Foursquare for professionals, Unsocial uses your LinkedIn account along with keywords to help you connect with other professionals in your immediate area. Once you've found somebody whom you think you can do business with (or just exchange professional gossip), you can message them to see if they want to talk and/or meet. You can also find out what events are happening in your area.

Waze: Labeled as a "social driving app," Waze is an LBS that can passively identify problems on a given route (sudden slow traffic indicates a traffic jam). With just a few taps, the app can also deliver more detailed information, such as road hazards and accident locations. Don't worry, typing is disabled while the vehicle is in motion.

There are a lot of compelling pieces here, pieces that would seem to be perfect for a success story. So what's the problem?

"Latitude was one of those things Google said 'Hey, we think this is something important, and we ought to have it out there,'" Christy says. But, he continues, they've done basically little else.

Silva agrees, seeing Latitude as one part of the giant Google Services machine. "Latitude is one asset that will make other assets better," Silva says. "It will probably be a super power for another Google application."

These are similar to the problems Facebook Places experienced when that service was initially launched: The service was released, it had big potential and then no one knew what to do with it. Unlike Facebook's pull-back-and-regroup effort now underway, it doesn't appear that Google is doing anything but pushing Latitude forward and hoping that the general rise in Google services adoption will drive more people into Latitude use.

Yelp

Yelp has simultaneously delighted and angered businesses by enabling customers to immediately review service and products from local businesses, right from their mobile devices.

Any of the other services mentioned here can let you review a business, but for Yelp it's the reason for existing. "Yelp is all about the peer reviews," Christy says.

Yelp

Yelp is interesting because it straddles two platforms. Desktop users can use Yelp as a pure "where-am-I-going-to-eat-tonight?" research assistant, making it more of a local search tool than a true LBS. But on mobile, it's an LBS through and through. Smartphone users get results close to where they are, while the Monocle feature enables users to hold up a camera-equipped device and see augmented reality overlays about the restaurants and businesses that are in front of them.

Businesses have had, until recently, one official way to interact with Yelp: Buying yellow-page style advertising on the Yelp site. This can be a bit dicey, though, because sometimes ads will appear next to negative reviews, which can negate the positive effects of the ad itself and waste a business' money.

In fact, there have been accusations that Yelp's reviews weren't reliable -- that, for example, businesses "astroturf" their entries by encouraging or even paying people to post positive reviews. Yelp CEO Jeremy Stoppelman countered these allegations in an October 2011 blog entry in which he writes, "We work hard to keep that trust by protecting the integrity of our review content, and use a number of methods to prevent shill or otherwise unreliable reviews from misleading consumers and harming businesses."

These bumps aside, Yelp has done very well in the business information space of LBS, inspiring a number of similar competitors. Yelp's ease of use and sheer number of businesses listed makes it an invaluable source of information, particularly for travelers new in town. Yelp's mobile client is easy to use and fast.

Lately, in an attempt to position itself more against Foursquare, Yelp has introduced check-ins for businesses, with very familiar-sounding gaming aspects: Users can become barons, lords, kings and queens of businesses, neighborhoods and cities, respectively. They can also see which businesses their friends have visited.

Silva sees some potential in Yelp moving forward, but he does not believe that Yelp has the chops to take Foursquare head-on, as it seems to be doing.

"They need to focus on the things in their service that are unique, like Monocle," Silva explains. "They should be improving on this AR [augmented reality] service and using it to help leaders like Foursquare augment their services."

Yelp has also added the capability for businesses to offer check-in offers to loyal customers -- again, very much like Foursquare. "It will be interesting to see how this particular feature plays out. We could see statistically more positive reviews from Yelp users (because they are getting loyalty rewards), or more upset businesses that are angry they are getting negative reviews even though they are giving out loyalty rewards," Christy says.

Conclusions

Location-based services can have a lot or a little to offer businesses, but all of them should be watched, because ultimately connecting customers to merchants is what any LBS has to do. And beyond the desktop, pure-play start-ups are figuring how to combine where you are into unique offerings designed to deliver real value and new customers wherever those customers may be.

The LBS game is still rapidly maturing, and as more smartphones penetrate the market, businesses would do well to consider their best LBS strategy, so they can find the customers that are seeking to find them.

Read more about mobile apps and services in Computerworld's Mobile Apps and Services Topic Center.

This story, "Location-based services: are they there yet?" was originally published by Computerworld.

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