Trends Snapshot: iBeacon - New ways to connect with shoppers

Stephen Whiteside

Warc Trends

April 2014

 

 

Trends Snapshot: iBeacon - New ways to connect with shoppers

This Trend Snapshot includes:

l Trend overview: what it is and why it's important

l Brands ahead of the curve: examples from American Eagle Outfitters, the NFL and Westpac, among others

l What it means for brands: expert insight from Dan Nolan of Proxima and Martin Shellaker of SMP

l What can we expect: where this trend might lead

l Next steps: how to get involved

l Further reading: where to find more on this subject

Trend overview

For all the buzz surrounding mcommerce tools like QR codes, near field communication (NFC) and in-app purchases, usage of

these services is typically minimal at best.

This has been a big disappointment for brands, as the possibility of using smartphones as a gateway for truly personalised,

location-based marketing has not been realised. Alongside popular disinterest, the technology available has often fallen short

of the ideal: GPS and in-store WiFi, for instance, usually cannot situate shoppers with a level of precision running down to the

shelf edge.

Apple's iBeacon could be different. This technology means every device powered by the company's latest iOS 7 operating

system can transmit and receive unique signals via Bluetooth, across a distance spanning up to 150 feet. In Apple's words,

iBeacon is "a way to create and monitor beacons that advertise certain identifying information using Bluetooth low energy

wireless technology."

For brands and retailers, the most obvious opportunity rests in utilising beacons – small pieces of hardware placed in stores,

sports stadiums and similar locations – to send out signals. Appropriate iPhones, iPads and iPods can then engage in two-way

interactions with these transmitters. Should an Apple device contain a relevant app, this process can trigger a pre-set

response, like distributing a coupon or a targeted ad, whether the app is open or not.

   Title: Trends Snapshot: iBeacon - New ways to connect with shoppers

   Author(s): Stephen Whiteside

   Source: Warc Trends

   Issue: April 2014

 

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Apple does not make physical beacons, but third parties like Estimote have already licensed the company's intellectual

property in order to do just that. And Qualcomm, the Chinese tech group, is one of various enterprises selling beacons which

are compatible with iBeacon.

An example of a beacon, made by Estimote (Source: CrunchBase)

Because iBeacon relies on Bluetooth technology – which covers a maximum distance much greater than near field

communication but is less sweeping than GPS or WiFi – it is more accurate in locating individual shoppers within stores,

coffee shops or on the high street, and so can send them messages as they walk past specific products.

Actual beacons are relatively cheap – marketing group Sonic Notify charges $300 for ten, a fee that includes shipping – and

are powered by self-contained units lasting upwards of two years, so the cost of entry is low. Unlike most Apple's services,

iBeacon is not restricted to functioning exclusively on the firm's own products, either; rather, it works on any device equipped

with Bluetooth 4.0, including those running on Google Android.

Where Apple does have an advantage, though, is in its range of complementary assets, from Passbook, where users store

loyalty and gift cards, through to the details of 575 million+ credit cards currently being stored in iTunes. Almost 80% of the

organisation's customers use iOS 7, too. Well-known investor Carl Icahn thus believes Apple is well-placed to construct a

"revolutionary payments solution" in the mobile space.

Apple introduced iBeacon across its network of 254 American stores in December 2013, giving visitors with the Apple Store

app the chance – among other things – to shop, check if they are eligible to receive an upgrade and pick up orders.

 

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Image source: Mashable

The Cupertino-based firm, however, is far from alone in investigating the potential of this service.

Brands ahead of the curve

Several retailers have moved to test Apple's mobile innovation. One example is apparel chain American Eagle Outfitters, which

allied with shopkick – a location-based rewards app – on an initiative covering 100 branches in its portfolio, including some

operating under the banner of Aerie, its sister chain. Participating stores were fitted out with "shopBeacons", hardware that is

made by shopkick and builds on top of the iBeacon platform.

A shopBeacon, as made by shopkick

Upon entering a store, shopkick users could receive rewards, deals, recommendations and reminders about items they had

previously "tagged" as being of interest – and they did not even need to remember to open the app, a key point of divergence

from earlier location-based programmes. "It gives the retailer a chance to have a one-to-one dialogue directly with the

consumer," Alexis Rask, shopkick's chief revenue officer, told the New York Times.

 

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Image source: TechCrunch

In the fast-moving consumer goods industry, Coca-Cola has outlined a belief that iBeacon holds relevance for its business.

Simon Miles, digital director of Coca-Cola Enterprises, revealed to The Drum that the soft drinks giant was considering how to

exploit this channel to help its products stand out in crowded commercial environments, be that global sporting events or when

shoppers are making day-to-day choices in restaurants.

"You can start to imagine what you can do to bring your campaigns to life at the fixtures like the World Cup," said Miles. "Even

in supermarkets, there are tens of thousands of product SKUs. How do you get yours seen? This will start to help us cut

through. Also in the licence trade – in bars, for example – it's hard to see what soft drinks are available as people simply can't

see over the bar; there are no visible signs. We can do that with iBeacons.

"The opportunities in different environments – like live events, restaurants and licence trade – are big."

Confirming the theory about the importance of this approach from the store to the sports field, the National Football League

installed beacons in Times Square, New York, and the MetLife Stadium, New Jersey, for the 2014 Super Bowl. The

transmitters provided users of the NFL Mobile app guidance on anything from buying official merchandise to where to see the

Vincent Lombardi Trophy. (Major League Baseball similarly announced plans to add beacons to over 20 stadiums to coincide

with the beginning of the season.)

The advantages that sports franchises might accrue from this type of activity were summed up by Tery Howard, svp/chief

technology officer of football team the Miami Dolphins, which tried out 50 transmitters on in its home turf, the Sun Life Stadium,

in the final two games of last season.

"As much as we try to understand our fans and members, we need more insight, provided they are willing to share it," she said,

as reported by Fortune. "This technology could be transformational for us in allowing us to understand behavior at the pace

that the fans allow us to."

 

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Image source: Sports Business Daily

Financial services may, at first glance, seem like a less natural fit for iBeacon, but some clients of Westpac – the banking

group based in Australia – will be receiving messages, incentives and offers when they are in, or near, a local branch. Initial

trials have been run in a handful of outlets both in its home market and in New Zealand. "This is an opportunity to add another

dimension to customer service," Simon Pomeroy, Westpac's chief digital officer, New Zealand, said.

What it means for brands

For Dan Nolan, co-founder/engineering lead at Proxima – a company that partners with brands to deliver location-based

experiences – one of iBeacon's primary benefits is that it works with almost every leading smartphone manufactured in the last

18 months, giving the platform an extensive reach beyond iOS devices alone.

"Micro-location is huge, and the potential from beacons is absolutely massive," he said. "You're able to help pinpoint people in

store and provide them with information and context, massively reducing the cognitive load of being in a space."

Consumers may only have to be close to a beacon to generate a response, but this is just the first step: as Nolan's observed,

it is clear brands and retailers have a "substantial ability to create a more engaging experience and understand how

consumers are interacting with their spaces."

And it is through these attractive experiences that enduring success will be achieved. "The biggest drawback is you need to

get a piece of software on a device," Nolan asserted. "It's then up to the developers and designers to build a compelling

experience around that – whether it's having real-world things react, building something cool like a scavenger hunt, or

leveraging that existing identity information to know that a consumer is at a particular vendor.

"Beacons are intimately tied to the mobile experience, and if you already have a top-notch one with a good user base, you're

going to find integrating and building a compelling beacon-based experience to be a lot easier."

Martin Shellaker, director at agency SMP, agreed prompting app downloads is the main task for marketers – and he presented

 

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an illustration of how to pursue that goal. "One such idea, applicable to grocery shopping, is location mapping – e.g. you

create a shopping list that is then 'sorted' as you enter your local store to create an efficient shopping route, highlighting your

position in relation to the products on your list. The opportunity then is serving you offers direct to your phone based on

previous purchasing behaviour."

A future possibility could involve empowering people to scan products they want to know more about, and instantly compare

alternatives on criteria like value, health benefits and reviews on social media. "Again, once the app has been downloaded,

shopper journeys can be mapped, and iBeacons can be used to push specific offers to specific shoppers," said Shellaker.

Given that the mobile wallet "is slowly but surely becoming a reality," he continued, it might not be long before customers have

an end-to-end experience in store solely using an app on their phone. In the meantime, the rise of beacons is "certainly a

significant step for shopper marketing", as it enhances both data collection and targeting capabilities.

While the investment in hardware may be comparatively modest, it is evident that some related expenditure `could well be

necessary. "Although iBeacons are not only low energy but also low cost, to make them pay it will require a level of critical

mass in terms of app downloads and store traffic to ensure the cost per contact makes sense," Shellaker said.

What can we expect?

The greatest potential application of iBeacon for brands is the capacity to connect digital and physical spaces, as best

exemplified – at present at least – in the retail environment. The resultant targeting opportunities can begin with very basic

segmentation, as recipients are divided based on the knowledge that iOS users tend to be more affluent than the norm,

whereas the Android audience is more like the mass market.

Beyond this, there lies the enticing prospect of linking an individual consumer's in-app activity – say, searching for a product –

with their browsing and buying behaviour in bricks-and-mortar stores. Coupons can even be used as an incentive at the point

of purchase, a strategy which could undercut, at least to a degree, the growing threat of showrooming (namely, consumers

using smartphones to compare goods and prices while out shopping).

The rise of iBeacons is thus set to augment the role of brand apps – but with the caveat that consumers must be willing to

download them, and then keep them there for the long term. If iBeacon secures a (far) stronger degree of interest than

preceding location-based tools, competition to gain all-important space on a device – and, ideally, the home screen – will

intensify. By contrast, should demand be less than stellar, marketers run the risk of wasting scarce funds on promoting their

apps. Brands will need to strike a balance here.

On the plus side, beacons promise a very clear form of value exchange between the brand and the consumer: namely,

swapping a limited amount of personal information for access to money-off vouchers, discounts and utility-based tools like

personalised maps of the inside of stores that guide individuals to certain products (an area that Philips is exploring). The risk

here it that customers will be bombarded with offers and messages, the most likely result of which is that everyone loses.

The advance of iBeacon also raises questions regarding the future of near field communication. Although the two systems

appear to have different roles, their ends are effectively the same. Consequently, it has been argued "there's probably only

room for one". While both systems are cheap and simple, iBeacon's combination of positional accuracy and sharing

information over a higher distance is a distinct advantage, especially because of the low uptake of NFC. Apple's possession of

shopper payment details could really pay off here, too, not least if it follows through on its mooted iWallet.

 

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Looking beyond the retail sector, beacons have viable extensions into numerous further areas, from the "smart" home (say,

turning on the air conditioning or heating when a consumer returns home) to sports and events (pre-loading tickets onto a

phone at the stadium on game day to reduce waiting times) and in galleries, museums and other attractions (providing tours

and information about certain exhibits).

In each case, further consumer education would be required, primarily to strengthen confidence in the security credentials of

beacons and their connected apps. As with any form of new digital technology, privacy is a concern – particularly as app

developers do not need to attain formal permission to track users, whether their motive is to gather insights or to build up a

profile for targeted in-app advertising.

Most brands would be unlikely to gamble on collecting data without formal authorisation given the inevitable negative fallout.

Consumers, of course, also have the choice simply not to download an app or to uninstall one already on their phone or tablet.

Switching off the Bluetooth functionality on a device will have the same result, giving concerned individuals various ways to

opt out – and serving as a reminder to brands that they ought to proceed with due care and attention.

Next steps

l Assess the overall opportunity that exists for your brand: what physical spaces (stores, coffee shops, stadiums, etc.) offer

the most viable points of integration with iBeacon?

l Evaluate your app: does your app already offer the kind of functionality and experience required to fully leverage iBeacon

– and, if so, does this need to be promoted?

l Consider the targeting opportunities: as iBeacon is in a test phase for brands and shoppers alike, more generic offers

and deals may be the most viable form of trial early on. More precise targeting can follow later.

l Reassure consumers: privacy is a big issue for unfamiliar technologies of all kinds, and brands must seek to build

confidence the integrity and security associated with iBeacon to succeed.

Further reading

l Location-based marketing gets detailed

l 10 trends for 2014

l Brands tap location-based marketing

l Mobile cocooning: How growing reliance on smart devices is influencing consumer behaviour

l The future of shopper marketing: Connect with the Mobile Shopsumer

l Using GPS Analytics and In-the-Moment Mobile: Surveys for insight into 2012 holiday shopping behaviour

This trend relates to the following themes or ideas, drawn from Warc's Index and Topic Pages:

l Mobile & Tablets

l In-store Marketing

l Shopper Marketing

l Behavioural Targeting

l Experiential

 

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