Location-Based Marketing Doomed by Location-Based Services?

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Will location-based marketing be doomed by too many location-based services?

In the past, I have written about whether location-based social networks will catch on and location-based social networks introducing deals. Up until the past few days, I was certain that location-based marketing would be the next big marketing channel.

After I read “Location-Based Cola Wars: Pepsi, Coke, Foursquare and SCVNGR” by Frederic Lardinois, I started questioning the path location-based services are taking. Different location-based services are partnering with different brands and companies — for example, SCVNGR with Coca Cola and Foursquare with Pepsi.

Eh. . . why?

What is the rationale behind Coke and Pepsi teaming with different location-based services? Do they refuse to be on the same service due to their feud? They both have a fan page on Facebook.

Exclusive rights can be a valuable commodity. Look at how the iPhone helped AT&T. At the time, there was nothing remotely similar to the iPhone (in the U.S. market at least), so AT&T getting the exclusive rights was a big deal. Apple’s iPhone had a huge demand prior to release. People waited in lines for hours to be among the early adopters. The iPhone brought in a ton of new subscribers and extended existing customer’s contracts by 2 years.

But what if there were a low demand for the iPhone or cell phones? Would it make sense for Apple to only sell its product via one service provider? Would it make sense for AT&T to pay for exclusive rights?

Location-based services are in low demand. I have laid out what I think the medium should do to catch on. By each location-based service teaming with a different brand, it is making the medium complex. I am not saying people are stupid, but rather that when people have to remember which service is partnered with which brand it begins to seem like work. This is not a good thing.

You want location-based services to be simple — like dialing a phone. You open the app, you find the location, you look at the deals, and if you want you can check-in. Anything more is a plus. One location-app may focus on the social aspect and allow people to friend and message each other. Another app may focus on the marketing aspect and push deals more heavily. Still another app may make a game of it and award badges, etc. The point is that for the location-based service medium to catch on, it needs to be simple.

The medium’s chief obstacle is easing people’s fears about using location-based services. Unfortunately, this will only happen after the location-based medium has a large user base. So for now, location-based services need to do whatever they can to get people to give them a try. My concern is that by forming these partnerships, both the companies and the location-based services are doing the location-based medium a disservice by basically requiring people to have a different location-based service for different companies and places.

Don’t get me wrong, I understand that location-based services are in their developing stage and that it still needs to demonstrate its potential to these big companies. My problem is with these partnership deals and the fact that they are counterintuitive when you consider the lack of demand for location-based services right now.

Then again, location-based services are years away from being integrated into our everyday lives. For now, both location-based services and businesses can experiment with offers, interfaces, etc. and get feedback from users. I guess we can think of the current state as the beta phase.

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