Location and advertising – a match made in Heaven?

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Osman Iqbal: What does location-based advertising actually entail?

Richard Lee: Simply put, location-aware advertising involves the delivery of targeted ads based on the user's location.

Andrew Grill: In the most basic sense, an ad can be delivered based on either the user's current location or a history of where he's been, coupled with a user profile of his interests and previous purchases, etc.

RL: The ad could also be based on a user's planned future location. For example, if a person in London searches a mobile travel application for POIs in Barcelona, then ads relevant to Barcelona could be delivered through the mobile application.

AG: Example: A movie chain has a list of subscribers who have opted in to receive movie news and discounts. The movie chain could send an ad offering 50% off any movie ticket purchased within the next 30 minutes, to members who are near one of their cinemas. Importantly, they'd disregard those already in the cinema.

In the real world, though, the movie campaign example would be difficult to execute. GPS drains battery power, so not all movie club members would have the GPS turned on. Some would be indoors and unable to provide a location fix. Also, how often would you need to check the location of each user to see if they are close to the cinema? What would these location requests cost the subscriber or advertiser, and how many are wasted on movie club members who are nowhere near a cinema?

The same holds true (and in a more expensive way) if cell-ID is used, as each subscriber would need to be "polled" on a regular basis (at a wholesale cost of an SMS) to see if they are near a cinema.

The most effective and efficient way to provide this sort of LBA is with zone detection, where some software resides on the handset or the SIM card, loaded with the entire movie chain's cinemas as profiles. Every minute or so, the software checks locally in the phone to see if it is near one of these zones, and only if they are "in the zone" will a message be sent to the ad server.

For LBA to take off, it must have an element of zone detection for the push-ad campaigns to work at all.

OI: Location and advertising seems to be a match made in heaven – what's holding it back?

AG: The ability to provide a user's location in real-time, at a reasonable price and with a reasonable level of accuracy, and reliability – something that has eluded the mobile advertising space until now. Issues with the available technologies (cell-ID and GPS) and their suitability for LBA not being commercially or technically viable have been the main reasons for the delay.

The inherent low-accuracy of cell-ID, coupled with the fact that an operator has to charge the equivalent of a wholesale SMS charge for each location request, means that the use of cell-ID for LBA will never take off.

GPS technology will never be a real contender for LBA because of issues with high battery drain, inability to provide a fix indoors, and the time for an initial fix.

What's required is a technology that sits between cell-ID and GPS, and provides a relatively good level of accuracy that doesn't need anything added to the phone and doesn't consume network resources by regularly checking a user's location from the network side to see if they might be near an advertiser's store.

RL: What I believe is holding back the deployment of this type of solutions on a broader scale is predominantly the lack of a well-balanced model – one that's an attractive proposition to advertisers and adds value for the consumer by delivering ads that are relevant without being intrusive.

OI: Can location-aware advertising exist without the operator?

AG: Yes – the latest version of Google Mobile Maps (GMM) has a feature called My Location, which allows the user to find his current location on a Google map without dealing directly with an operator. Google has deployed the application to enable those users who have a GPS device turned on to report back the cell-identifier (cell-ID) of the nearest mobile base station while the GPS-enabled handset is using Google maps.

Google has developed a global database of this information, which allows the majority of users who do not have a GPS handset to also pinpoint their location as the GMM application reports back the current, or "serving" cell-ID and this is compared with the Google database and plotted on a map. Reports from many in the industry suggest that Google has developed their solution without any assistance from the operators.

However, Google faces the issue of cell-ID database integrity, since operators are known to change cell-ID numbers frequently. Google's system will have a lag as new cells are heard and need to be mapped into the database at the correct position.

The step for Google from placing a blue dot on a map, to pushing location-based ads with their significant ad inventory should be a small and obvious one.

OI: Are consumers hesitant about location aware advertising? What measures can be put in place to avoid intrusion?

AG: LBA could be perceived as SPAM. Hopefully operators, advertisers and marketers won't just use raw location in their targeting criteria. Enabling the end user to opt-in and opt-out, and to switch off location-based applications, is very important.

RL: Opt-in consumers can also be given control over the volume of ads that can be sent per hour or per day and/or when to send them. Equally important is the quality of the database that is being used, to ensure ads are relevant to the user.

OI: So, what would be the ideal conditions for proximity advertising to really take off?

AG: There are four key areas of focus to ensure mobile advertising is a success:

1. Flat rate data plans for all. The UK and other markets have made a good start here.

2. A common framework for mobile page rendering and addressing. Since the beginning of 2008, there is strong evidence that the "m" address is winning over .mobi, but the industry has a long way to go on the issue of page rendering to ensure mobile compatible pages are presented to mobile users.

3. Mobile location using zone detection instead of GPS. There has been no significant investment in network cell-ID systems as there have been few positive business cases.

4. Customer profiling layered with real-time location information. If you know that I'm a 39-year-old male living in London who likes gadgets and technology, and you know my location right now, the type of ad I'm likely to respond to is fairly well defined.

OI: How do you see the future of location advertising? What will be both the technological and business changes?

AG: More work on the targeting and segmentation of subscriber data, as well as intelligence on user behaviour needs to be undertaken. Recent initiatives by the GSMA & UK operators to explore delivery of cross-operator metrics for mobile advertising show that the operator community is committed to making mobile advertising a success.

In terms of technology, new approaches to location around zone detection, where the entry or exit of a pre-defined zone is reported to an ad server rather than the exact location (speeding up the location fix as well as the time to select and serve the ad) will be key technical innovations to power location based advertising.

RL: I believe that within 18-24 months, many mobile operators around the world will deploy LBA. Major brands are already allocating big chunks of their budgets to the mobile media. As handset manufacturers launch new phones that bring location-aware capabilities, the burden (and costs) on the mobile networks to constantly poll the location of user will be reduced, making it easier to justify investments in this area.

OI: What standards need to be put in place for the respective players?

AG: For some time there's been a code of conduct for location services in countries such as the UK, but the existing code may not adequately address new uses such as LBA. The most basic requirement will be for the end user to implicitly and overtly opt-in to receive LBA, or opt-out.

Interchange of location information should also be standardised between operator and non-operator groups so that an easy to understand API can be used by third party developers wanting to provide everything from "mashups" to large scale advertising campaigns.

RL: Rather than talk about standards, I believe that what is needed is a central regulator to monitor and ensure compliance with an industry code of practice for the delivery of LBA.

Andrew Grill is general manager of sales & business development for Seeker Wireless, and has been responsible for sales of the SeekerZoneTM location solution to operators such as Vodafone, and for developing partnerships with HP and Acision.

Richard Lee is CEO of Creativity Software, a technology business that specialises in delivering location-based solutions such as family / friend finder, asset tracking & fleet management, lone worker protection, mobile travel & social networking applications, and location-based advertising.


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