Location-Based Marketing – Location-Based Social Media

copyrights:Aleksander Buczkowski 2011-2012

Social Media is a “group of Internet-based applications built on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content”. Business has been adding social media including Twitter and Facebook to their marketing mix from the early beginning of the phenomenon. In the beginning of 2012 Facebook had more than 800 million active users, from which 44% accessed the service  through their mobile devices. Twitter had over 300 million users from which 55% were mobile users . In the next stage of development social media started to utilize the concept of location. First by Location-Referring Services e.g. venue social recommendation web services where users were publicly sharing their opinion and experiences about particular restaurant or store. Further the intersection of social media and Location-Based Services resulted in the development of Location-Based Social Networks or Location Sharing Services, which can be defined as social media or networks that are accessible through a mobile device which allow to broadcast user’s location or geotag created content. Location Based Social Media can be broadly divided taking into account how they are utilizing the concept of location:

  • ‘At-the-location’
  • ‘About-the-location’

‘At-the-location’ services can be defined as services where location-based content is created at the geographic location. ‘About-the-location’ services can be defined as services which are referring to particular location but the content is not necessarily created in this particular physical place.

From the other hand Location-Based Social Media can be divided taking into consideration dedicated functionality of services:

  • Location-Based Social Networks or Location Sharing Services (e.x. Foursquare, Facebook Places)
  • Location-Referring Services (e.x. Yelp, Qype, Google Places)
  • Social Media with geotagging functionality (e.x. Flickr, YouTube)

 Within this three categories only the first group – Location-Based Social Networks is fully dependent on mobile devices , which means that users are able to use the core functionality only with the location-aware mobile device with installed specific application. The content of this type of Location-Based Social Media is assumed to be created at the location of the venue it refers to. Two other groups are web-based services that are offering additional features with their mobile versions e.g. local search, automatic geotagging. Location-Referring Services content is not likely created at the location of the venue it is about the location. Social Media with geotagging functionality content can refer to anything (not necessarily the location that it was created at). Geotagging usually can be automatically done with a mobile device but in some cases it can as well be added later using computer (e.g. Flickr). All of these services offer different privacy settings, so that particular information can be visible publicly, to venue owners, and to personal social networks.

From the marketing perspective all types of LBSM can bring value to marketing process however Location-Based Social Networks are receiving the biggest attention due to their interactive potential of building community around physical venues. Most popular LBSN can be divided into two major groups depending on whether the location is linked with the core functionality or it is an additional feature:

  • Dedicated
  • Integrated

 Dedicated Location-Based Social Networks include such a media where the primary functionality is based on Location-Based Services (location of the mobile device and wireless internet).  There are more than one hundred of dedicated LBSN but most of them did not achieve any significant market recognition. The most popular service from this group is Foursquare with the community of 15 million users world-wide and growing around 1 million users per month. The other services until now did not capture that significant number of active users however their unique functionality and specific user group can be of significant value to particular brands in their market segment. The industry can be considered to be in its infancy and it is struggling with several issues. The first problem is lack of profitable business models to monetize user base. The second issue is lower than anticipated user acceptance for location sharing services. Due to several scandals including iPhone by Apple Inc. in April 2011, the location tracking technology in mobile devices was under intense scrutiny. Nonetheless Location-Based Social Networks are gradually achieving mainstream market acceptance what is visible in the growing number of users.

Dedicated Location Based Social Networks
Name Number of users (in December 2011)
Foursqaure 15 mln
Loopt 5 mln
BrigthKite 3 mln * shut down in Dec 2011
SCVNGR 1 mln
Gowalla 1 mln * acquired by Facebook in Dec 2011

From the other side Integrated Location-Based Social Networkd are those where location is an extra feature, not necessarily a core functionality. Two major players in this group are Facebook and Twitter, but as well other services including Flickr and You Tube that are utilizing location-awareness of mobile phones. Facebook added location-based functionality in August 2010 introducing Facebook Places and from that time it recorded more than 40 million users broadcasting their geographic location.

Most of Location Based Social Networks have in common so called ‘checking-in’ – the act of claiming one’s location in a particular venue (verified by positioning system) and sharing it with one’s social network, general public, or selected individuals. There are two types of ‘check-ins’: active and passive. Active is when user physically pushes a button on his location-aware mobile device to claim his presence in the venue. Passive is when user’s device or an action (e.g. swiping a loyalty card) claims his presence in the venue without him physically doing it in a mobile device.