The Official blog of Dark Matter, Inc.

From Matt Silk, SVP of mobile messaging company Waterfall Mobile

“Geofencing” is a specific use case within the realm of location. You need to be locating a phone (with high frequency) to trigger a geofence, because one is totally dependent on the other. Same goes for the “range search” functionality. Range searching means sending a message to all phones within X meters of location Y.  Again, range search requires either high frequency pinging (aka tracking) so you know where the phones are at a given time, or a single massive “locate everyone” investment. In other words, both geofencing and range search depend on frequent location pinging.

High frequency location pinging has implications on device battery life. That’s certainly a downside. The end user has to download a tag [an app that runs in the background of smartphones to provide updated location info] which is also a downside. Also, device coverage is limited here; while the number of smartphones or open handsets is growing quickly, it’s not near a majority.

However, if the end user has controls to manage his or her privacy and they have visibility into how their location is being used and which brands can track them, and when they get messages, you can envision a whole new ecosystem of brands giving their customers incentives to be tracked. The brand says, “we can send you more relevant, highly contextual messages about deals, etc. if we know where you are.” The users either will or will not accept those terms. The benefit is that brands develop location profiles of their customers, and customers get better service.

In the near term, a good middle ground for marketers is pinging the carrier networks for real-time location prior to doing a marketing blast, and then tailoring the outbound messages accordingly. Take a big retailer for example: they could craft a blast for their entire list, with default, generic messages for people not near a store. People near a store get a very targeted message, and everyone else gets the normal marketing message.”

The rapid evolution of mobile phones, both on a hardware and a software level, combined with a surge in application storefront releases  could drive revenues from mobile location-based services to more than $12.7 billion by 2014, according to a new report published by Juniper Research.

While service usage will be highest in Far East China over the next few years, greatest revenues will come from Western Europe, Juniper forecasts. Revenues will come from sales of apps through application stores and other channels, but also from mobile advertising tied to those apps. In fact, the Juniper report notes that advertising will likely form an increasing share of MLBS-related revenues over the next five years.

But, let’s take a step back and see how location-based mobile marketing works. Essentially you set up a “Geo Fence” with a company like 1020 Placecast which is typically a half mile or one mile radius around a storefront. Anyone within that radius receives an SMS message (usually with a coupon or something) driving them to the desired store. Of course, any SMS campaign does have to implement the double opt-in process, which retailers cannot overlook. But, the results of geo location campaigns are typically good largerly due to their inherent relevancy. Relevancy targeting can include weather, traffic, demographics or psychographics for a particular area or events going on at a particular time to increase the relevancy of the message being delivered. And the campaigns provide retail stores with foot traffic and beef up their mobile databases, which can be used later.