New posts on location based marketing are in my updated blog http://georillas.com/blog/

Thank you for your support and comments

Claudio

Starting the year with a smile:-)

Since mid 2010 I’ve been writing a book about Location Based Services (LBS) applied to the marketing practice. While many people exclusively associate Location Based Marketing (LBM) with check-ins applications, the uses of location in marketing goes far beyond that.
This weekend I began the chapter about check-ins. I wanted to open it exploring the motivation behind checking-in. Why are people sharing their location? Exploring this topic I had a little Fun with F words and this is a fine compilation of my notes.

The F* word

Marketers like to frame concepts in terms of numbers & letters, like the 3 R’s, the 4 P’s, the 4 C’s, or the 5 W’s of marketing.
Looking into check-in applications the first and most important F word is “FIND”, and the rest fit under this vast category. But leaving this at only one “F” is a facile job. I had to F.I.O. four or five main categories.

The Five F’s of Check-ins

Fun

First and foremost many of the check-in based social networks are games. People participate for the fun of it. They fiddle around and compete to achieve virtual status, badges, stickers, pins and many other prizes.

Friends

Finding friends is another significant category. You check in to find-out the “fauna & flora” in your neighborhood. The idea is to facilitate fortuitous face to face encounters with folks and fellows, and filter your frenemies. Furthermore, this includes other activities like flirting and going footloose fooling around (only if you fit-in).

Fancying

Are you a fan of a specific place? If so, you would like to feature this place in your comments, fostering and forming good opinions about it. Others will check-in to learn about favorite sites, and they might visit your preferred food place for your comments, doesn’t matter if it is frozen yogurt, french fries, falafel, fried fish, frappuccinos, or frosted flakes.

Freebies

After the fun fades and you are tired of getting another flamboyant badge, and you find that looking for friends in a new city is a futile task, the FREEBIES are the reason that will keep you checking-in. You will check-in fishing for offers, fetching coupons and free stuff.

Following

Following is my fifth category. And in this one I include following yourself (looking at your traveling history) and following others.

Final thoughts

Much needs to be fixed in the check-in apps. Some of the problems are the (lack of) fairness of the system, and the faux Check-ins. While those are not a felony, fraudulent check-ins detriment the real value of the community.

IMPORTANT: While I made this exercise for the FUN of it, the categories are for real (I’ll elaborate them in my book). This framework will allow marketers the use of check-in apps functionality efficiently. I hope it wasn’t a futile effort and that I pass your critique with flying colors. My fringe benefit is in your comments. I’ll appreciate your F-eedback.

The 7 F’s of Check-in

Thanks for your comments on Twitter and emails.
Here are the last two F’ words that fits under “Why are people checking in”: 6- Fame 7- Flirt
And with that we have the 7 F’s of Checking in.
Updated graph

My best wishes of peace and prosperity.

Check-ins, badges, Mayors, stamps on passports, rewards, and other new concepts from the past are flooding the net as the latest trend in location based services applied to marketing purposes. While looking at those new tools I had a strong sense of déjà vu, and I tried to learn some lessons from the future.

Sub sole nihil novi est

"...There's nothing new under the sun..."

It all started last week when I was watching with my son an episode of Seinfeld, which was originally aired on December 1997. Besides introducing the concept of “Festivus”, one thing caught my attention: Elaine was looking for a reward card from a place called Atomic Subs. She had already eaten 23 bad subs because she wanted to “…become the Submarine Captain and have a free sub…” . Interesting enough, 13 years ago she wanted to have the free sub but ALSO get the title of “Captain”. Sounds familiar?

Looking around other concepts, I found that the idea of stamps was introduced in US around 1896 by S&H Green Stamps. During the 1960s, the company printed three times as many stamps as the U.S. Postal Service. Customers received stamps on retail stores, gas stations, supermarket at the checkout time. Customers collected those stamps to trade them for different prizes.

The above mentioned were Check-outs. A full scale rewards system for Check-ins on the other hand, was introduced by American Airlines in the early 1980s.

The intrinsic value of Check-ins and Check-outs

There is a huge difference though between the old check-ins / stamps and the new ones. Note that Checking out at a supermarket or checking-in in an airplane connote an exchange in value, most commonly known as “customers paying for something”. The current rewards, on the other hand, are offered to individuals (not customers yet) that just showed up. At times where online shopping took a great deal of business from brick and mortar stores, I can understand the excitement on bringing the customers back to the door. Nevertheless, while it’s true that the first step to have a sale is having the customer there, rewarding them just for showing up without following up on a sale doesn’t make much sense in the long run.

The real value of Check-ins, stamps, and other incentives should reward more than just physical presence. Moreover, the real question is how you get the customer to the door from the beginning. Can geo-social check-in applications significantly extend the customer reaching radius around retail locations? For that, there are other effective Location Based Marketing solutions – some of them don’t even require a smart phone or GPS, but that is a topic for other discussion.

Using games for serious business is not a game

Loyalty is an emotion-based bond between the customer and a company, and using games to create that relationship is clever. But the ultimate goal for that bond is to create profits, and the question is if we are creating a long term relationships or just short-term impulsive purchase behavior.

The emphasis in Location Based Marketing in general and Geo-Social Marketing apps in particular shouldn’t be on Location or Social, it should be on Marketing. That’s why having a marketing professional involved in the process is so important. While this might sounds obvious to some of the readers, I found many cases where SOME “social media consultants” without formal marketing training or background make an upgrade from social to geo-social and now they become also the face of the Location Based Marketing practice. Location is an extremely useful tool, and geo-social games are only a part of it. Location Based Strategies should be incorporated AS PART of the marketing mix and with the overall marketing strategy in perspective.

Back to the roots

A few years ago I joined a valuable organization called MENG (Marketing Executives Networking Group). If you are a senior marketer, I strongly recommend joining. One of the benefits of MENG is having the opportunity to send questions to a huge membership composed by senior marketers.

Many MENG members created and manage some of the largest loyalty programs for leading brands. Last week I asked them: what are the costliest mistakes you can make when building a loyalty program. I took a few of the many responses and I’ll try to look those through the Location Based Marketing lens.

Across the board they all agree that treating all members equally is a big mistake. Profitable members are not equal to less valuable members. In LBS terms, customers that check-in once a week and buy $150 worth of breakfast for the office colleagues should be more important for the business than the one that checks in every day and buys a coffee for $4.5. Moreover, the business should have an employee policy regarding check-ins, otherwise nobody can “compete” with them as they check in every day.

The second most commented mistake is about lacking data mining and customer purchasing behavior tracking. Understanding, segmenting, and serving customers according to their buying behavior and demographics is key. In LBS terms, it’s not enough to have information about unique visitors, check-ins per day and time. The focus should be on what they purchased and their demographic profile. When and where are more logistic oriented; who, what, and why are the ones you should focus on, and the combination of the five makes a killing solution. At this point I see Facebook Places as the one with the best profiling capabilities, but we still need to see how privacy issues will be resolved.

Loyalty programs should be customer centric, and strive to provide rewards that fit the specific individual. You should engage the customer on a regular basis. In LBS terms, you should incorporate Location to communicate with your customers when they are there, but also use other channels to bring them to the door when they are away.

Location can be expensive and the last mistake I should mention is spending more than is necessary to keep a customer. In LBS terms, over-rewarding customers that would have shown up in your store anyway.

New meet old

New technologies pose new challenges, opportunities, processes, and best practices. Location Based Marketing solutions in general and Geo-Social games and apps in particular can be a powerful addition to your marketing mix, when implemented correctly. Just remember that technology is the mean to reach an end, not the objective itself. Technology can perform tasks in a smart way but that doesn’t make it intelligent. In order to make it work for you, you need a professional marketing team that understands consumers and technology.

I invite you to continue our conversation, or approach the marketing professional closest to you. And this time “closest” doesn’t necessarily have a geographical connotation.

“2010 will be the year of LBS”. Well it’s about the end of November and we can start changing the song to “2011 will be the year of LBS”. And as if Location wasn’t enough we added Indoor LBS to the mix. Everybody speaks about Indoor Navigation, and most of them refer to a completely different concept

The business opportunities

Most of the Interactive Maps apps are primarily themed for Malls.

From the marketing perspective and looking at the “mall potential users” we see that only 17% of the population has a smartphone, and close to 31% of mobile internet services users are female. That means only 5.27% of the population are females using mobile internet services. From the total of female smartphone users only around 21.5% use some kind of location services. That leaves us with target market of 1.1% of the mobile phone owners. Mall demographics show that females outnumber males 2:1, and in most cases they shop in places that are familiar to them. That means that about 1 out of 100 customers entering a mall is a POTENTIAL user, and if you consider that these apps are only available for certain phones, the target market is even smaller. Can you imagine a customer that visits the same mall every week, turns on the wi-fi to navigate to a store he/she knows?

From a mall application I would expect more. I would like to be able to enter a specific product, and have the app connected to the stores’ actual inventories. Look for prices, show me the places where I can have it now, and even offer alternatives. It’s not about finding a store; it is about helping the users to find their way to the products they want.

At this point of time, Indoor Navigation shouldn’t be the focus. Positioning interactive maps as such is a much better strategy, as the users receive what they have been told, and a small commercial ecosystem can be built around that concept.

Interactive maps can better serve other indoor venues. A clear example is trade shows, where there is a larger concentration of Smartphone users, there is a need to locate places in a venue that is totally unfamiliar, and the opportunities for advertising are larger.

The Boy Who Cried “Navigation”

I was recently putting in order my library and I found a very old book with Aesop fables. It was one of my favorites as a kid. Here is an adapted version of one of them:

“…There once was a developer boy who sat on his Mac, sipping a latte and watching the village customers pass by. To grab their attention he took a great breath and sang out, “Indoor Navigation! Indoor Navigation! We have Indoor Navigation!” The villagers came running and installed the app. But when they arrived to the mall, they found there were interactive maps only. Later, other developer girl sang out again, “Indoor Navigation! Indoor Navigation! We have Indoor Navigation!” To her delight, she watched the villagers installing the app again. When the villagers, familiarized with their TomToms and Garmins, saw they have turn by turn directions but not the same customer experience sternly said, “Save your happy song for when there is really navigation, like in our cars!” Later, a third one released an app that worked exactly like the GPS in our cars. Excited, he leaped to his feet and sang out as loudly as he could, “Indoor Navigation! Indoor Navigation! We have Indoor Navigation!” But the villagers thought they will not receive what they expect, and so they didn’t install the app at all. The End.”

Let me be clear at this point. I have seen amazing apps coming to the market during the last year, with huge investment, lot of work behind, and some of them with a real value proposition. My point is that we need to create a common language that will allows us approach the market without confusing the users and the customers, and in a way “killing the golden goose” (as Aesop would say)

Can we agree on the definitions?

What do I expect to receive from a basic Indoor Navigation app? 1) An app that automatically identifies where I am and shows me an updated layout 2) After determining my destination the device will find the best route 3) While moving towards my destination the map will show my movements without my intervention 4) If I take the wrong route, the device will notify me and create a new path 5) The device will notify me when I arrived to destination.

If your car GPS device would require from you to input where are you, move the map manually, figure out if you are in the right path, guess if you arrive to destination, etc. we would agree that by today’s standards, we will not call that navigation. So why call that user experience “navigation” indoors?

The best way to describe what we have today is “Interactive Maps”. Interactive maps include all the features you can find in apps today. Search and discover, turn by turn directions, locate products and services, identify facilities, ATMs, and other POIs. Look for an exhibitor in a trade show. Find your gate in the airport, and the eateries in your way there. Trigger promotions to consumers when they enter the vicinity of a store, and many more. In a stretch you can call it “Indoor Location Services”, just don’t call it “Navigation”.

Crossing the chasm to real indoor navigation

Are we ready today to provide indoor navigation? Technically maybe. Practically?… I doubt it. For real indoor navigation, as defined above, you must have certain hardware infrastructure. In order to approach a mass market, there will be a need to create a hardware infrastructure for each site, which will most probably be based on Bluetooth.
You need to identify the right venues, analyze if users will have a compelling reason and benefit from the use of indoor navigation, and create a business model that will maximize the profits.
The third component is accuracy. If I’m looking for an exhibitor in a tradeshow, I need at least 10 foot accuracy.
The most viable way to make this happen is having companies like Google, Motorola, Cisco, Nokia, etc. take the lead on developing and providing the required infrastructure. Companies like AT&T, Verizon, etc. may take the installation and maintenance of the infrastructure. There resides the real market opportunity. When this happens, the interactive map applications will get an additional layer of relevancy. Most probably at that point of time the companies that develop, install, and maintain that infrastructure will claim the larger share of the benefits

Last Aesop reference

If Location Based Marketing is in its infancy, Indoor Navigation is in the gestation stage. We don’t know what it will look like, or who the leading players will be. We know not what the standards will be or who will determine them. What I know is that today we have high-quality interactive maps and we can enjoy them in many places. Those apps, while presented and sold correctly, can provide a very good income stream.
At the end of the day, to make Indoor Navigation possible and profitable, we need to create an environment with a compelling reason for users to adopt this technology i.e. users that receive a real benefit; it should 1. Be targeted to a mass market; 2. Provide a product that is comparable to our standards for outdoor navigation, and without a doubt 3. Be based on some kind of external infrastructure. Those that claim you don’t need any of these may fall in the category of “sour grapes” (and that was my last Aesop reference).

Location-enabled social networks are not new. As a matter of fact, there are more than 100 companies providing some type of social networking with location features. Some of them have been integrated with Facebook for a long time. So why are these changes important for marketers and business developers?

What

During the last six months, I’ve had the opportunity to speak at many forums and conferences about Location-Based Services in Mobile Marketing. I try to keep my presentations updated to new developments in the industry, but sometimes it’s a challenge. On the use of location in social networks and business intelligence, I have to change my presentation every 10 days.
Why? During the first weeks of March, USA Today published an article on how geo-location applications would be the hottest tech trend at South by Southwest. ReadWriteWeb featured a blog about Google patenting location-based advertising. During the last weeks we read about FourSquare passing the 2 million users, and Facebook acquired Hot Potato mobile check-in startup and released Facebook Places aiming to bring Location Based Services to the masses. Twitter officially became a location-enabled application last November.

“…Mobile advertising is only one part of your marketing mix. Mobile marketing is broader and includes not only delivering ads or coupons to the customer, but also other activities like collecting information that will feed your strategic marketing decisions…”

Why

If we look at the raw numbers, there are around 1.3 billion phone lines in the world. The number of TV sets and personal computers is higher, around 1.5 billion of each. On the other hand, the number of mobile phones has surpassed 4.6 billion globally. Look around you during the day — on a bus, at a restaurant, walking on the street, or sitting in your office — and try to answer the question: If I want to reach that person right now, what should I use? A telemarketer, a TV ad, direct mail, or a notice to her phone?

“…WHERE is an inherent question in your mobile marketing strategy, and location-based information is a key component of your solution…”

Where, That is the question

It’s important to know the difference between mobile marketing and mobile advertising. Mobile advertising is only one part of your marketing mix. Mobile marketing is broader and includes not only delivering ads or coupons to the customer, but also other activities like collecting information that will feed your strategic marketing decisions. As a marketer, you may need to answer these questions:

• Where do my customers live, and where do they buy?
• Where are my competitors?
• Where are my marketing efforts invested?
• Where are my opportunities? i.e. Where should I put my next Point of Sale?
• Where are my sales representatives?
• To what advertising medium do my customers respond? Billboards? Mobile coupons? Where were they when exposed to my campaign?
• Are products sold better in particular zones? Where and why?

WHERE is an inherent question in your mobile marketing strategy, and location-based information is a key component of your solution.

The hidden power of location information

Location plays a role in every critical area of your business — marketing, distribution, logistics, sales, finance, customer care, and more.
Twitter added location capabilities to their platform late last year, meaning that if your customers or target market opt-in, every single message will come geo-coded with the location from where that message was delivered.
Imagine you are in the shoes of one of the most famous customer service managers in the U.S., Comcast’s Frank Eliason, and now you can map the location of every single tweet. Very soon, you will be able to elucidate where the most troubled areas of your network are located, where you should invest in improving your infrastructure or where should you focus in an image improvement campaign. Now extrapolate that idea to a politician or rock band. Wouldn’t you want to know where to focus your political campaign according to “mood maps”? Wouldn’t you want to know where your fans are and organize your concerts to maximize your revenues?

Facebook added location to their platform, so what?

Not long ago, my login page on Facebook changed. A mobile phone is displayed and a title asks me “Heading out? Stay connected – Visit facebook.com on your mobile phone.” Over 100 million users access Facebook through their mobile devices. Facebook now start using location information, but it seems they are collecting it for a long time. In the privacy policies section, you see this: “When you access Facebook from a … mobile phone … we may collect information from that device about your … location…”– no opt-in, no opt-out.
Let’s take a look at the power of ad targeting inside Facebook. Today you are allowed to create a marketing campaign and create segmentation by location (where you live), demographics (age, sex, sex interest, type of relationship, languages), likes and interests, education, work, etc. Imagine if you could add the ACTUAL location of your target market.
If this option is available, you could create a marketing campaign targeted not only by a certain demographic but also to customers that at the time of ad delivery are close to your business, or close to a competitor, or located in a certain place at a certain time. During the football season you could offer discount tickets to fans who are close to the stadium minutes before the game. You could send a beer coupon to New Orleans Saints’ fan page members who are located at the stadium every time the team scores a touchdown. And after the game, you could send to more than 500,000 of those fan page members a coupon with an address and map to their closest TGI Friday’s.

“…We live a mobile lifestyle in which immediate contact is important. Place and time matter. Location makes the occasion, and in the occasion lays the opportunity. Are you ready to seize it?…”

Where occasion meets location

The availability of your customer location allows you to create powerful tools. Companies like Foursquare and Gowalla are redefining what it means to be a “regular/patron;” others like SenseNetworks provide you with tools to dissect location information and give you human predictive analysis. Companies like Waze offer users free navigation and redefine the concept of “driving” customers to your business, and there are those pioneering location-based mobile marketing, advertising and content management like 1020 Placecast.
We live a mobile lifestyle in which immediate contact is important. Place and time matter. Location makes the occasion, and in the occasion lays the opportunity. Are you ready to seize it?

Is Indoor navigation a viable business? What are the main business factors that will determine the broad adoption and success of indoor navigation solutions?

A few months ago I wrote an introduction about the opportunities in indoor navigation. Please read the comments as every single one adds an additional piece to the puzzle. My question today focuses more on the business perspective and less on the technical solutions. Who can make it happen? What can we learn from the evolution of Location Based Services in general and Personal Navigation in particular?

Inferences from the LBS industry

If you look at the automobile industry, you will find a defined ecosystem with clear roles and niches. There are auto makers, spare parts manufacturers, dealers, authorized shops, independent mechanics, parts distributors, etc. There are also customers that know exactly what they want. You, the customer, can actually enter any dealer and leave driving.

While comparing the LBS industry with the Auto industry, my impression is that in the LBS industry you have many Auto Parts manufactures, but no Auto Makers. If you want to provide a service (drive anything), you need to buy parts and preassembled kits to build your own car and hope that every piece is compatible with the other. Moreover, when you need a “LBS mechanic”, they usually know how to fix specific parts for specific models. Does a LBS ecosystem actually exist?

“…While comparing the LBS industry with the Auto industry, my impression is that in the LBS industry you have many Auto Parts manufactures, but no Auto Makers…”

James Moore introduced the concept of business ecosystem in 1993. In his book “The Death of Competition” (1997-p26) he defines ecosystem as:

“…An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world. This economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organizations also include suppliers, lead producers, competitors, and other stakeholders. Over time, they co-evolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments and to find mutually supportive roles…”

Can we include the LBS industry into this definition? Are there any organizations that foster the “LBS world inner laws of nature”? Are there any central companies that the community look as leaders and is aligned to? Are those companies leading us to a shared vision? Is there any shared vision?

“…Are there any [LBS] central companies that the community look as leaders and is aligned to? … Is there any shared vision?…”

In his 1993 paper “Predators and Prey – A new Ecology of Competition” published at the Harvard Business Review, Moore identifies 4 distinct stages for an ecosystem: birth, expansion, leadership, and self-renewal or death. During the birth of an ecosystem the companies try to figure out what customers want, the value proposition, and how to deliver it. After so many years the new LBS industry is in the dawn of the birth stage, trying to figure out the differences between users and customers, how to create cooperation channels and dreaming about certain standards that can unify the community to the second stage (expansion) where suppliers and partners work together to achieve a mass market profitable for all.

Indoor Navigation – The Big Bang

The indoor navigation is – literally – an uncharted territory. There are a few companies that started to produce small components, filling localized and specific needs.

In order to materialize as a profitable business a leader must emerge. This leader will set the roots of the indoor navigation ecosystem, provide the platform technological direction and create the conditions where developers, providers, consultants, contractors, customers and others can gain some benefit.

Going back to Moore, there are two conditions for an ecosystem to expand “(1) a business concept that a large number of customers will value; and (2) the potential to scale up the concept to reach this broad market”. I’m convinced that condition number 1 already exists. The challenge is to identify the organization with the capability and willingness to scale up the concept to a mass market.

There are many companies in the market capable to implement core technologies, foster innovation, attract partners to cooperate and support the right birth and growth of the indoor navigation ecosystem. The only question remains, as usual, where is the money? What are the business models that will support the ecosystem? This is the topic for a third article; and if you consider your company as a viable candidate to lead this new business opportunity I’ll be glad to exchange some ideas with you.

@schapsis Indoor Navigation: The new Gold rush? Part-2 – Ecosystem and opportunities. www.bdnooz.com http://ht.ly/1Q6EP

Comparing D LBS & D Auto industry, my impression is: D LBS industry have many AutoParts manufactures, but no Auto Makers http://ht.ly/1Q6EP

Are there any LBS companies that the community look as leaders and is aligned to? Is there any shared vision? http://ht.ly/1Q6EP

Is Indoor navigation a viable business? What R D main biz factrs that will determine D adoption of indoor navigation? http://ht.ly/1Q6EP

Over 120 persons RSVP to the VBC event in Miami

I’ll post my comments here after the event.

If you had the opportunity to participate, I’ll appreciate your feedback. What do you see in this map now?

Thank you!

Claudio Schapsis

Why is location changing the business of social networking? Because it is the missing link between virtual societies and the real world. Once I can identify the location of each member of my community, I can easily find ways to make money from it.

The value of Location

Location will open the door to a new level of hyper-targeting. Not only can I target customers who answer to a certain demographic profile, but I can do it based on their location, and I can predict their behavior based on past locations. I can be confident in sending an invitation to a football fan who is close to a sports bar, because I know he likes sports, there is a game and he is not at the stadium. I’ll also extend that invitation to the usual friends he meets on game days. Everyone wins — My users enjoy the opportunity to meet in a place and receive a discount; my customer (the bar) will pay me for having my users coming to their establishment.
Location can make money, but it also costs money. Companies that collect location information will need to figure out how to access, collect and provision location data, as well as put systems in place that secure users’ location and identity and provide them with a clear understanding on how their location is used.

But, who is the customer?

For the last two years I’ve been following the rise, shine and in some cases the fall of many location-based social networks (LBSNs). Last year, at the Metaplaces conference, I had the opportunity to speak to an important panel featuring people from leading companies in the LBSN market. I asked them “Is location a feature or you can build a full concept around it? What is the difference between your social network and Facebook plus location?” The general answer I received was that location is an enabler, and that it should be used to provide some compelling value to the customer.
When I build a business model around an intangible technological concept such as a LBSN, my first question is: Who is your USER and who is your CUSTOMER? Usually they are not the same person. A user is a person who will engage your company service because they receive some value back. This value can be manifested in different ways: fun, information, socialization, discovery, access to content, augmented reality, etc. Bottom line, the user is looking for an enhanced experience. A customer is a person who provides you with income.
Sometimes the user and the customer are the same person, and “subscription fees” are the usual business model. That is the case of many family and friend finders sold by mobile operators. There are also “freemium” services, where users can access a subset of features for free but they need to pay for full site functionality. This is common in dating sites.
But models where users become customers are seldom found. Mainstream social networks are providing full site functionality for free and therefore their users are NOT their customers. In this case, the business model is different because we need to find a compelling value for users to continue to utilize your services and find customers who will pay for it. But what is it they will pay for?

“…At this point the users should be called by their real function — “data collectors” or “content generators.” The real value of the social network resides in the data users can generate and in the ability of the company to monetize it, and in the case of LBSN, the idea is to monetize the user’s current location…”

Human Mobile Probes

When LBSNs enable a platform for people to interact for free, they need to find out who is going to pay the bills. There are companies betting on location-based advertising models. There are many question raised here:

• Who has access to and control of the location information?
• Who is servicing the ads?
• Who has the relationship with the advertisers?
• Do I need to give the user the capability to opt-out?

At this point the users should be called by their real function — “data collectors” or “content generators.” The real value of the social network resides in the data users can generate and in the ability of the company to monetize it, and in the case of LBSN, the idea is to monetize the user’s current location.
Recently I read that Facebook will allow users to share their current location. Reading Facebook privacy policy you can see that “…When you share your location with others or add a location to something you post, we treat that like any other content you post (for example, it is subject to your privacy settings). If we offer a service that supports this type of location sharing we will present you with an opt-in choice of whether you want to participate…” Nice! But keep reading “…When you access Facebook from a computer, mobile phone… we may collect information from that device about your… location”
At the user level, you will be able to decide if you want to share your location with other users, but what is implied here is that in any case Facebook will collect your location, along with other information. Why?! To make money, of course!

Probe data for sale

Who wants to buy probe data? Every single company that understands the power of location should. You need to get used to thinking location = business = money. Let’s take Twitter+location as an example. Comcast provides customer care through its Twitter account “comcastcares”. If now I can map where complaints are coming from, I can easily visualize where the company should invest in improving its infrastructure (and their image). Extrapolate this same concept to an artist pushing a new record, a political campaign, a company measuring its advertising effectiveness by mapping its buzz according to local advertising efforts, or a PR company looking at real time mood maps and analyzing trends in specific areas. The accessibility of dynamic location information creates an invaluable tool in real time business intelligence. Can you see the monetary value for companies like Ogilvy, Arbitron, and Nielsen if they can measure in real time the effects of events? If they can give their customers the capability to make informed decisions on where to invest their PR efforts, and later measure their effectiveness?

“…when we introduce location into the social networking business, we may prove wrong the idea that friends and money don’t mix…”

Beyond the Blinders

Horses are just like people — they tend to travel in the direction they are looking. Blinders keep horses looking straight ahead, instead of looking around at their surroundings. Like horses with blinders, many companies run in the same direction of the big ones, missing a lot of opportunities outside of their vision.
In their book “Throwing Sheep in the Boardroom” Matthew Fraser and Soumitra Dutta identify three forms of interaction: personal, organizational and consumer/civic. Social networks are not only about friends, they are also about colleagues, coworkers, members of a political party and others. Many social networks are looking at the power of harnessing personal location and try to fight each other in a very crowded place – the friend space. Think about the possibilities in terms of business intelligence when introducing the concept of location to task forces and large organizations; then make an additional step forward and think in terms of the influence that location can have in other social/civic associations.

A long time ago I coined the saying, “Location-based service is the art of transforming location into money.” In business, money is not everything. It is the only thing. And when we introduce location into the social networking business, we may prove wrong the idea that friends and money don’t mix.

NOTE: This article was originally published at www.thewherebusiness.com

In the course of the past months I spoke many times with Monica Zlotogorski, Vice Chair, Latin American Advisory Board & Editor, “Inside Latin America“  TM Forum, and the topic and importance of location services in CALA came up several times. They  just published  my article about LBS in Latin America in their newsletter  (in Spanish) – Translation to follows.

For the full article please visit the TMF website

Location Based Services: El Nuevo Mapa del Tesoro Móvil en América Latina

Excerpt:

“… En los últimos 6 meses hemos visto como Twitter agregó la capacidad de incluir datos de localización a cada “tweet”, Google recibió su patente de publicidad basada en localización, Apple informó a desarrolladores que no podrían incluir el envío de promociones geolocalizadas, y recientemente Facebook comunicó que muy pronto habilitarían la capacidad de compartir localización personal en tiempo real para sus usuarios.

Los servicios basados en localización que se asociaban tradicionalmente con el rastreo de automóviles y flotas comerciales están migrando a soluciones personales y de inteligencia de mercadeo. La facilidad de generar y obtener datos de ubicación de teléfonos celulares, crea nuevas oportunidades de negocios y agrega modelos de monetización que mejoran el ARPU. LBS provee a los operadores móviles un diferenciador cardinal  respecto a soluciones IP, fomenta la adquisición de planes de datos, fortalece la imagen de marca, aumenta la retención de usuarios de alto valor, y abre las puertas a oportunidades de ingresos a través de publicidad, comercio móvil y distribución de contenido…”

Please leave here your comments or contact me for further information.

About the TMF: with more than 700 corporate members in 195 countries, the Forum is the global trade industry association focused on enabling best-in-class IT for service providers in the communications, media and cloud service markets

Twitter announced the Geotagging API back in August and officially released it by the end of November Twitter applications like Birdfeed, Seesmic Web, Foursquare, Gowalla, Twidroid, Twittelator Pro already support this API.

Three weeks after of the official Geotagging API release I made a quick search looking for applications that use a combination of Twitter and maps. Note that these applications are not necessarily using the Geotagging API. My main interest was to find integrations of twitter and location/maps. SOME of the results are attached to the end of these notes. Note I didn’t try them or endorse here any of those applications. I hope you can leave a comment if you are using any of them.

Looking for answers

After a few days of looking at my word processor’s empty page I remained only with questions (and very few answers). Instead of continuing to look for some insights, let me share with you what I’m trying to understand, may be together we can come up with some logic.

1. If we consider that the reason to put a business, or invest time in development, is to generate revenue, how are those companies going to monetize this map integration?
2. I can understand the business side of collecting information for data mining, but what is the actual added value for a user to see tweets in a map?
3. Twitter makes two things clear. The first is that you can “delete all location data”, and the second is that there is no guarantee the information will be removed from all 3rd party application’s. What about some privacy standards? Are you aware that 3rd parties are storing, using and maybe selling your location? It might be useful to control where employees are twitting from…
4. Asking for business models for applications around twitter is already difficult. Considering the costs of putting a location application, including maps, data transfer and other LBS components, do you have an idea how to monetize this integration?

As I mentioned, I have many other questions. Once you get bored of seeing windows of tweets opening over a map give me a call. May be we can use these features to develop something useful to the users and profitable for the ones investing the efforts.

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Some of the Apps that integrates Twitter and Location / Maps

Following are some of the Twitter + maps apps I found. The challenge was to describe them in 140 characters or less and where possible I added the twitter ID of the developers.

Feel free to “cut and tweet”

Continue reading and see the full list of Twitter and Maps app here

Add-on for Browsers

RT @schapsis TwitArea Tweet the address, phone number and location of any place worth tweeting in seconds http://bdnooz.com/i2n

Download

RT @schapsis TwitterLocal is going 2 be smply an Adobe AIR based application that allows u 2 filter Tweets by location http://bdnooz.com/s0d

Websites (Mashup)

RT @schapsis Boarding helps U find other stranded travelers by simply tweeting #boarding along w/ yr airport code http://bdnooz.com/4dt

RT @schapsis GeoChirp helps you search for people Twittering for specific things in a specific area. http://bdnooz.com/7ua

RT @schapsis Geo.ly is integrated w/ twttr – just tweet an address 2 @geoly & receive a tweet back w/ yr map url http://bdnooz.com/pkg

RT @schapsis GeoTwitter The most recent updates are fetched from the public timeline and mapped http://bdnooz.com/zez

RT @schapsis Happn.in | Local Twitter Trends – Twitter with a local focus http://bdnooz.com/ktf

RT @schapsis MyTweetMap|PLace your friend tweets on a map http://bdnooz.com/j7u

RT @schapsis Nearby Tweets geo-centric tool 4 social networking, customer relationships, & monitoring real-time buzz http://bdnooz.com/17e

RT @RoadTweets is an iPhone app that makes it easy to share trip updates from the road http://bdnooz.com/b96

RT @schapsis Use SadakMap to post Location aware Twitter udpates http://bdnooz.com/16o

RT @schapsis tmeet is a tweet 2 meet. U cn send a tmeet abt yr location 2 tell yr friends whr U R, wht U R doing, etc http://bdnooz.com/qfb

RT @schapsis Tweetervision see tweets in their geographic context! http://bdnooz.com/pqm

RT @schapsis Tweetmondo allows U to find other Twitter users based on their geographical location http://bdnooz.com/h9g

RT @schapsis TwittEarth :: Live Twitts all over the world  http://bdnooz.com/v74

RT @schapsis Twibez is 4 everyone who is interested 2 C all twitter messages in western europe in realtime on a map http://bdnooz.com/wyl

RT @schapsis TwitterMap is a geographic visualization of posts to Twitter, using Twitter Feeds and Google Maps http://bdnooz.com/ouo

RT @schapsis TwtMaps allows U 2 enter yr twttr name & get a map that shows all yr friends locations,& info abt friend http://bdnooz.com/sp0

Yahoo Pipes

Yahoo Pipes is a powerful composition tool to aggregate, manipulate, and mashup content from around the web. The following are some of the Pipes that combine tweets and maps NOTE: If you know the twitter name of any of the pipes’ developers mentioned bellow, please send me a note and I’ll include them here.

RT @schapsis geoTwitterous A pipe to augment your twitter feed with info from the twittervision API http://bdnooz.com/te8

RT @schapsis Twitter Map Search Search a keyword on Twitter and view the result on a map! http://bdnooz.com/tw1

RT @schapsis Twitter What Where This Pipes app shows where people are tweeting on a particular topic Pipe Web Address: http://bdnooz.com/w1c

RT @schapsis Tweets Nearby See the tweets happening near a Twitter user’s location. Pipe Web Address: http://bdnooz.com/u1m

RT @schapsis GeoStatus Converts emails in2 a feed wth a LNK 2 Google Maps. Subject bcms a Twtr msg wth a LNK 2 a map: http://bdnooz.com/2pq

RT @schapsis Tweets on a Map Shows posts to Twitter by a location you choose. Pipe Web Address: http://bdnooz.com/eku

RT @schapsis Twitter Locate adds the location of each of your followers to the updates. Pipe Web Address: http://bdnooz.com/omr

RT @schapsis Your Twitter Followers Location Enter your Twitter ID 2 find out where your latest followers are located http://bdnooz.com/h1f

RT @schapsis Twitter Friends Show your Twitter friends on a map that can be easily added to your blog’s sidebar  http://bdnooz.com/uef

There is a Rabbi Hillel aphorism that is always in my mind “If I am not for myself, who will be for me? But if I am only for myself, who am I? If not now, when?”

For a year now, we are exchanging ideas about LBS and business models. From my first post I insisted that the reason of putting a business together is to make a profit. Foursquare and Techies Give Back joined forces and elevated the “profit” concept into something more meaningful. They transform profit into Value for their Community.

On December 13th, they’re organizing NY Tech Gives Back on behalf of a non-profit called CampInteractive – which empowers inner-city youth through outdoor activities and tech workshops. It’s a day where people can give back to the community by volunteering and donating.

While there are many ways to get involved, they are looking for sponsors for the foursquare leaderboard to help raise money for the cause. I urge you to contact Simon or Adam at info@techiesgiveback.org to learn the details and how you can help.

Final Notes

Ec3:1 “… Everything has an appointed season, and there is a time for every matter under the heaven…” Spread the word, participate. This is the season to be for others. If not now, when???

Have a Happy Thanksgiving.

The navigation ecosystem is changing rapidly. I’ve mentioned in previous posts the consequences of the commoditization of GPS devices. During the last two weeks, I had the opportunity to read many articles about how the navigation market is changing.

This is a time of WAR.

The New York Times published in October Stops and Starts of GPS Apps “… those portable devices [GARMIN TOMTOM etc] are under attack from a new source: the smartphone, and particularly Apple’s iPhone. The newest version of the iPhone’s operating system supports turn-by-turn navigation …  According to a report from the iSuppli research firm, GPS applications for smartphones are about to explode, growing from 2.5 percent of users today to 10.5 percent in 2013. And half of those will be iPhone owners…”

Even Forbes Magazine refers to this trend in warfare terms Google’s Navigation Bombshell “…Location-based service providers suspect the search giant is working on a free navigation app… Google, which generally gives its software away for free and recoups its investment through advertising, would likely sell ads within the navigation application rather than charge users… In early October, Google decided to use this data for its U.S. maps, ending a licensing agreement with map provider Tele Atlas…The shift is telling because companies like Tele Atlas require partners (such as Google) to pay fees for each person who uses their data…”

Having Google in the market with free navigation applications redefines the battle. Companies will need to be really brave to fight this giant. Without any doubt Google gave a completely new meaning to “The Land of the FREE and the home of the Brave”…

If War is what we are speaking about, Sun Tzu teaches us three valuable lessons. The first is that “…in war, numbers alone confer no advantage…”.  The second is that “…as flowing water avoids the heights and hastens to the lowlands, so an army avoids strength and strikes weakness…”, and the third is that “… those skilled in war subdue the enemy’s army without battle …. They conquer by strategy…”

If this is about strategy, this is my game!

Avoiding the competitor’s strengths and striking at their weaknesses

All (accurate) navigation systems are based on GPS data. If the weakness of GPS receivers is that they need a clear view to the sky to successfully determine location, the strategy is to attack the indoor world. Additionally, the GPS accuracy lies between 50 to 500 feet, the strategy then is to find customers that need higher accuracy (~10 feet). The third, but not the last weakness, is the need for maps. As we saw before, Google has generated large amount of map data, and in general the market is dominated by TeleAtlas and Navteq. The strategy is to navigate to “uncharted territories”.

Redefining the Battleground – Embracing indoor navigation.

A few weeks ago I was approached by an inventor with a (published) patent. The general idea calls for an indoor navigation system that uses no GPS data. His idea is very good and to my judgment relatively easy to implement.

The system automatically detects a signal directly from sensors, without requiring the communication with a central system, data plans, or even cellular communication. These sensors are small pocketsize Bluetooth transceivers. There is no need for pairing as every Bluetooth device’s tag has a unique ID. This ID can be used for locating the tag.

Indoor navigation – A winning strategy that redefines the navigation ecosystem?

There is infinite number of indoor navigation applications. The most intuitive one is a person walking into a mall that wishes to locate a specific store, or a particular aisle in a department store or even a specific item on a shelf! From here, you can apply the same principle to a customer looking for a specific conference room, a particular booth in a tradeshow, a ride in an amusement park, or a known piece of art in a museum. If not for the convenience, do it to save a tree. No more printed maps. Go Green!!!

The advantage of using Bluetooth is that this technology is ubiquitous, it’s implemented everywhere. Additionally, is a low cost, low power technology, and when it’s relatively free of obstruction it can provide a ~2 meter error range. Furthermore, a Bluetooth infrastructure can be used for purposes like remote monitoring and control among others.

The ecosystem is completely redefined. An architect with CAD drawings is now a map provider. Every single facility is now a navigable site. Every big retailer willing to drive customers to specific products is a potential customer (they can “route” them through the sales isles if they want).  Every shopping property management firm is a customer, as well as convention centers organizations or associations like the Global Retail Executive Council.

We have an ecosystem where the traditional navigation giants are not necessarily present, and there is no defined leader (yet-11/09).

The business opportunity – define a new market

Indoor Navigation redefines Location Based Services as we know them today. The first companies to enter this market will be able to define, create, implement and license ($) new standards and applications. Imagine this: I installed an indoor navigation application in my phone/PDA and subsequently downloaded the map of the mall I usually go to. Next week I’ll visit San Francisco, and upon arrival I would like to visit a local shopping center, or use it at the convention I’ll attend. My application will be useful ONLY if the map of that SF mall or convention center is compatible with the one installed in my phone. For sure I’ll NOT install an additional application per site I visit. This is just the tip of the iceberg.

Sounds interesting? Ring a bell? Would you like to exponentiate these ideas?  Maybe invest time AND money?

Give me a call! (And leave your comments).

LBS LATAM – The First Location Based Services Conference for Latin America in Miami – 09/17 Miami, FL
Metaplaces – How to Monetize Location Data and Services 09/22-23 San Jose CA

Almost a year ago in my first post, I wrote that Location Based Services are the company’s effort to transform geographical positioning information into valuable and relevant data for a customer, to make a profit. Since then I had the opportunity to talk, work and advise leading companies in the industry regarding new products and services in the LBS arena.

LBS are very similar to other businesses in the sense that in order to succeed you need a solid revenue model and a clear value proposition. Sounds simple; but when approaching the LBS market and trying to understand the dynamics of its Value Chain the troubles begin. Many companies are getting this right and are already making profits. Others try to migrate WEB2.0 applications to the mobile world and discover later that in this environment “Free” is an expensive term. No wonder VCs usually look at maps as a feature and not something to build a whole application around.

That’s why I was glad to know about the TheWhereBusiness initiative to organize Metaplaces. I spoke with one of the main persons behind this effort, Thomas Hallauer, who mentioned that MetaPlaces will be the key place for the enablers of the Location market where key thinkers and players swap strategies to make location pay. MetaPlaces is the first conference to focus on the next wave of innovation and revenue generation for mobile and web-based LBS.

When I asked Thomas who is coming and what are their expectations he said “…over 150 location business developers are coming to MetaPlaces to analyze the changing dynamics and revenue models of the LBS market now that the worlds of location content, interactive advertising, Geo enabled web services, and traditional carrier-driven mobile LBS solutions have collided…”

As part of my contribution to their efforts I’ll be moderating the Location Based Social Networks panel composed by Abaqus, Alcatel-Lucent, Loopt, Skout, and Socialight. We’ll have the opportunity to talk about topics like: revenue business models, how to build a community from scratch, how to use existing ones, and how brands can monetize their mobile extension. What would YOU ask those companies? I urge you to add your questions here as comments – I promise to bring back some answers.

The second conference is LBS LATAM in Miami. For many years I worked in the telecommunications market in Latin America and when the Frecuencia Group asked me to chair this event it put together my past and my present in something I see as the future.

Not many people know that the penetration of mobiles phones in Latin America is around 80% and in some countries in the territory over 100%. America Movil (Telmex) and Telefonica Movistar share around 65% of market, meaning almost 10% market share of the whole world mobile market! Besides the traditional fleet management and AVL applications, we start seeing Location Based Services made in CALA i.e. Location Based Social Networks, Friend Finders, Bus routes notifications, and others. However, this is a completely different market with particular value chains and different user profiles in terms of usage and consuming behavior in each country.

I was surprised by the response in terms of registration from the region and vendors interested in this market. You can see companies like Telefonica, Globalstar, Nextel, Ancel, Tele Atlas, OpenWave, AnyData, Position Logic, Xtify, and many others coming to meet their prospect Latin American partners.

Two busy weeks, two chances to meet key executives in different regions, two coasts, and two events with many opportunities to talk business. That’s why you can’t miss them.

In one of my first posts, I noted that one of the main components of the LBS Value Chain is the ability to acquire and transport a user’s location and give access to that data to many service providers. Getting this information is, in many cases, expensive and presents obstacles to online service providers who would like to develop services based on mobile a user’s location. I was looking for the missing link between the mobile and the web world.

While there are many different approaches (and we might present some of those in the future), Xtify, a company based in New York City, caught my attention. They are creating a cloud of location information where authorized service providers can make available services using the location of their subscribers.

As usual, I was more interested in the business perspective of their operation. The following is a synopsis of my conversation with Josh Rochlin, CEO of Xtify.

I want to thank again Josh for his time and kindness to open up his business for us to learn. I believe many will have much to comment and say.
Follow up.

What is the difference between Xtify and other companies providing similar services?
We are currently the only company that is deriving location persistently from mobile devices and then building business rules around it. We source the location directly from the mobile device, rather than through the wireless carriers. This allows us to make location information available on a persistent and affordable basis.

Normally, you will need to pay per dip if you source from the carriers themselves – currently in the US, this is only possible from Sprint – with other carriers working on their own solutions). This approach can only work when you require location data occasionally. If you want to take advantage of persistent user location, a per-dip model becomes unaffordable.

“We are …deriving location persistently from mobile devices and then building business rules around it…We source the location directly from the mobile device…This allows us to make location information available on a persistent and affordable basis”

Xtify allows the mobile user to (1) persistently publish their location to a “cloud” and then (2) provide permission for a third-party to access their data in order to provide location-related information and services.
An example on how Xtify can be implemented is at http://www.seemywhere.com – which requests the latest location of the user.

So I can see your position all day long without your permission?
No! SeeMyWhere is designed to expose my location only to those with for whom I choose to share it.
Another example can be seen in at http://www.myeverymove.com. This application keeps a diary of your locations throughout the day. Because Xtify sources persistent location, I can choose to have the diary automatically update, without any user input.
These applications are only examples of services leveraging our push and pull API’s information from the “cloud”. A typical implementation using Xtify might not provide this level of visibility into my whereabouts. The location information would simply be used by an algorithm to inform a service, message, or advertisement.
To try www.seemywhere.com or www.myeverymove.com you can point your smartphone browser to either of these sites and download the applications.

Can you give me an example of a commercial application
Take, for example, companies that provide text-based mobile content (i.e. www.4info.com, www.chacha.com/, and http://pingmobile.com/). The way they work is that the user sends some these services a question, and the service replies with an answer, usually through SMS. I was trying out one of these services recently and I received strange answers to my question “Hotels in Manhattan.” The “IN” was interpreted as Indiana (a state in the USA) and the results came for hotels in Manhattan in Indiana. Then I asked for “Hotels NYC” and the results where close – I received hotels in Upper East Side of Manhattan. But at that specific moment, I was in the SoHo district of Manhattan, several miles away.
What Xtify can provide today is the capability to geo-tag an SMS that comes to the system and do this in such a way that the system will know where I am; replying with answers (and advertising) that are geographically-relevant and will therefore garner higher advertising rates.

“What Xtify can provide today is the capability to geo-tag an SMS that comes to the system and do this in such a way that the system will know where I am; replying with answers (and advertising) that are geographically-relevant and will therefore garner higher advertising rates.”

Can you elaborate on the implementation?
As I mentioned before, Xtify sources location from the mobile device. We use the best available source, GPS, Cell Tower and Wi-Fi information to determine your position and push that information to our secure servers. When a user sends a question to an SMS service, they could route that message through the Xtify database, then correlate a location-relevant advertisement to be included in the response. Xtify can communicate that “this phone is currently in SoHo, NY” and that service provider can associate an advertisement that was paid for by a business in SoHO, New York. Now the answer and the advertising have complete geo-awareness.
The market has been waiting for a solution that adds location context to their service – a solution that Xtify now provides.

So how do you make money?
We charge based on the value we bring to a customer and on the basis of the volume of transactions or processes. Let me illustrate this with another example. On many occasions, Madison Square Garden (MSG), an arena in New York City, could have unused tickets before a concert or a game. We could provide a service to MSG to set up promotions based on time before the concert and distance from the MSG arena. We can set radii around MSG (i.e. 5 blocks, 15 blocks, 1 mile). We then set time intervals (i.e. 3 hours, 2 hours, 1 hour before the event). Xtify can then push a promotional message to the people who are proximate to the venue and who have asked for a discount ticket promotion from MSG.

“Xtify can … push a promotional message to the people who are proximate to the venue and who have asked for a discount ticket promotion … This model applies to any business that has perishable inventory such as empty restaurant tables”

This model applies to any business that has perishable inventory such as empty restaurant tables.
Of particular importance to our business model is the way that Xtify is shipped on every Peek device [www.getpeek.com]. This allows developers to create services similar to the one we’ve just discussed, as well as services similar to www.peekmaps.com.

So, is it fair to say that your business model is only a B2B business model?
Absolutely, we are not a customer facing company. We provide persistent user location information for use by marketers, business developers, and web application providers. We have products and API sets that offer the ability to take an action (i.e. send a text message) based on the location of customers and users. We also look forward to working with carriers and handset manufacturers in the same way we have integrated with Peek.

How is the location relayed from the phones to the cloud?
We install a small application that pushes location information into our secure servers (“the cloud”) using TCP/IP protocol via your mobile data connection. We have intelligent algorithms that adjust the reporting frequency as necessary. That means, if you are stationary, there is no need to continually resend the same information. This minimizes the data transmitted.
Note that Xtify works today only on smartphones. Xtify requires a mobile device that can run the Xtify process in the background. We currently function on Blackberry, Windows Mobile, Symbian, and Android Devices. Once the iPhone allows background processing, we will run there as well.

“…we need to encourage service providers to rethink the way they collect and access location and realize that a much affordable solution exists…”

Who do you think are your competitors today?
The biggest competitors for us are time and intertia. Meaning, we need to encourage service providers to rethink the way they collect and access location and realize that a much affordable solution exists. Additionally, other companies will soon realize the benefits to our approach and attempt to enter the market.

A question about privacy. How are people reacting to the fact that 100% of their location information is going to be recorded and available somewhere in a cloud?
We believe the user must have complete control of his privacy and location information. Our location servers do not collect any personally identifiable data, and therefore we don’t know who is in the cloud. There is no profile, phone number, or personal email that can identify the person. All we can see is a bunch of secure user IDs running around the world. The user opts to have a trusted relationship with a service or advertiser or any other business. The user then shares their information with that service provider based on the conditions of that trusted relationship.

But the system is prone to misuse, isn’t it? What can block me from installing the application on that person’s phone without their knowledge and track them all the time?
We specifically chose to include a shortcut / link / bookmark on the mobile device so that the owner of the mobile device will know that it is there and can turn location notification off if desired. However, there is nothing that we can do about human nature, any technology can be misused.

“…We believe the user must have complete control of his privacy and location information. Our location servers do not collect any personally identifiable data, and therefore we don’t know who is in the cloud…”

Is your application for domestic applications only?
There is nothing about our business that is only domestic. Our system can work any place a mobile device works around the world. We welcome companies outside the United States to leverage Xtify for their local or global business needs.

So there is a reason for you to come to Miami to speak with the Latin American operators at LBS LATAM 2009
Absolutely! I am looking forward to participating at the event.

Personal Notes after the meeting:
It was hard for me to process during the conversation the concept of “know ALL my personal where” available in a cloud. Then I understand Josh’s point on inertia. I remember then Newton’s First Law of Motion that, when translated to business terms, can be defined as, “The tendency of the market moving in one direction, to remain in that motion direction, unless it is compelled to change that state by forces impressed upon it”

I can see now many forces that can influence this process, but this is a subject for other conversation (and for your comments).

NEW

INTRODUCTION:
For a few months I’ve been writing about Location Based Services business models and how to monetize LBS applications, particularly in the newest area of Location Based Social Networks.
I invited a few companies to share their vision and show how they approach this market. I would say it takes leadership and real confidence in your business to open your company strategy for others to learn. It is not surprising that the first company to accept this challenge was GyPSii. They were recently awarded a core patent in mobile social networking, but GyPSii goes beyond the mobile social networking platform, it is a mobile digital lifestyle application.
I had the privilege to share some time with Shane Lennon, GyPSii’s SVP Market Development (Thank you again!). The result of our conversation is summarized in the following text. In my next post I’ll evaluate the interview, add the full interview on podcast, and comment about their market / business approach. In the mean time please leave YOUR comments

Q: Can you please give me a few words about GyPSii, how it started and your perspective of the company?

GyPSii is a global company, unusual for a start-up. The founders are based in Amsterdam. They had a mobile lifestyle vision that’s more than an LBS vision: “I want to capture my world; I want to be able to share with others”. On the technical level, it translates to creating a searchable mobile index of user-generated content based on the actual world. This is different from what you see on Internet today, which is built by companies, indexed on search engines, and driven more from their perspective and less from that of the user.

We wanted to make it easy to capture what we do in the real world, therefore most of that is text or image based with added contextual information, such as location. That creates context around the user experience. That was the main vision for GyPSii.

During the last year and a half, we focused on a broad strategy: “let’s build a good application that can run on several different devices, but let’s work very closely with people in the ecosystem, particularly with the device manufacturers.” We felt that the adoption and conversion of mobile, location-based applications really needed to be embedded in phones. Then we focused during the last six months on aligning our products while manufacturing bring their devices to market.

“…Some kind of location technology will be standard in every phone whether it is built-in or via a back-end server-based…”

One of the things that is happening to accelerate the market is that the low-end cell phones seem to be disappearing; the mid-end has become the new low-end, and smartphone capabilities are pretty much available in every phone. Some kind of location technology will be standard in every phone whether it is built-in or via a back-end server-based. System Maps will be there, coming free from Nokia and Google. The mobile interfaces are improving, although they still have a long way to go.

We are new starting a promotional phase on building a user base. We see social networking as a tool. If you need to grab location to tie to content, for whatever use in the consumer market, you can get it through the cell ID databases. Traditionally, LBS infrastructure has become commoditized from the consumer market point of view and it is not a necessity to be targeted to GPS chip resolution. Navigation and business-based applications need higher accuracy and there is still a huge market for LBS in that area.

We provide a platform that allows us to build other clients through an API. We provide a “platform as a service” (GyPSii OEx product). The user manages all the content and leveraging the social networking and LBS-based services, integrating their experiences through a single application in their cell phones.

Q: I had the opportunity to list almost 100 location-based services that are social networks. From the customer perspective, what makes GyPSii difference? How does GyPSii stand out from the other social networks with LBS?

Most of what I’ve seen, which are so-called social networks, have evolved in most cases from “friend finders”. The concept was “where’s my friend?”, “Here I am”, “Where I’m going”. To me that’s a very point-based application, it’s not something that’s going to encourage people to contribute, comment and use the application on a nearly daily basis.

We are focused on what users want and in providing user content generation capabilities; the ability to make it easier to create content whether it has to do with video, pictures, putting text or changing your status, actually creating a continuous conversation. We’re integrating user generated content tools with social networking tools – including the capability to add a location context. And yes, if I do want to locate a friend that’s great, I can see them. But that’s a small feature with us.

Q: It would be fair to say that GyPSii is a mobile social network where location is another feature between all the features you offer.

“…making it easy to create and share content…there is a location context to the content… We index that information in a searchable database…That has a much greater value than a traditional search…”

Yes. We actually call it a mobile lifestyle application focused on making it easy to create and share content; facilitating to connect with others in order to share that data or basically to send messages to each other. Of course there is a location context to the content. We also index that information in a searchable database. That’s a user generated searchable index, so depending on your privacy settings people can grab and see what you recommend, the restaurants that you suggest, etc. That has a much greater value than a traditional search, which is always paid for by a third-party. The ability to explore and discover that content is critical as well.

Q: I’ve seen many applications that build their business model based on the premise that they will deliver mobile ads. I don’t see many people willing to receive ads on their cellular phone. Can you comment about GyPSii’s business model?

We have moved beyond the early stage to a market evolving fast (with estimates at $2BN/$3BN in 08) rapidly growing to $10BN plus in the next couple of years. There is a challenge in the industry based on today’s SMS or WAP experiences. Usually the ad is not relevant, has no context to you, is probably an intrusion, and cost you money. On the WAP one it’s just a banner. Even for the marketing person spending money, it’s not accurate, it’s not a captivate read and call for action, and it’s hard to track. If you look at applications like us, when you sign in into our application we actually start to build a profile. We use that algorithm to help serve relevant content, user generated content – to our user base. We also use that algorithm to deliver relevant advertising. We have found that consumers using this kind of application are open to receive advertising if it’s relevant and has context. I think that’s the challenge.

“…We are monetising this via advertising models… We have found that consumers using this kind of application are open to receive advertising if it’s relevant and has context. I think that’s the challenge…”

Companies like us differentiate because of that profiling. For example, we can deliver an aggregated profile of 20,000 students in Shanghai between 21-24 years old that are usually outdoors. 10,000 of them are going out at night, and 10,000 are female doing lot of shopping fashion style. This has real value for marketing people and they are really interested in that.

On the other hand, you have to be careful to serve the advertising in such a way that is not intrusive. We are very careful to serve advertising coming back in a search result that is always related to your search content or refers to other things that are nearby and that are commercial. That is the critic differentiation for both the consumer and the advertiser.

We are in the very early stages of this market.

Q: From the business model perspective, does GyPSii have any contingency plan in case mobile ads don’t work?

Because we have a platform approach, we also have a licensing revenue stream coming from major device manufactures and major brands as they integrate our capabilities into their portals. It’s a combination of software as service revenue.

“..Advertising is going to be a big part of interactive, and lots of mistakes will be made… We’re trying this carefully…”

Advertising is going to be a big part of interactive, and lots of mistakes will be made. We are different. From our testing with marketing people, what we have done with consumers has a minimum negative impact if at all. We’re trying this carefully.

Q: What are the reasons that are stalling consumers to sign up to this type of service?

In China it’s actually the counter of that. They are signing up at a ferocious rate and we’ve just starting a promotion campaign. We have seen multiple spikes on a daily basis. There are networks in China going from 1 to 10,000,000 users in the space of 12 months. One factor to mention is that 80% of these consumers gets to the Internet through their mobile device. They don’t have a PC access or laptops.

“…What is still holding back consumers in the West is a clunky user experience…It all comes down to providing phones that allow application providers to build good simple apps, and apps that can be used on a daily basis…”

What is still holding back consumers in the West is a clunky user experience. Social networking is three times more active on iPhone than any other device. It all comes down to providing phones that allow application providers to build good simple apps, and apps that can be used on a daily basis. I think that’s what the Western market needs in order to catch up.

We are seeing a rapid growth in social networking on the mobile. I think people need to remember that it took Facebook four years to get to the 20-30 million.

Q: What do you think is the barrier entry to this market? Let’s say Facebook is going mobile, how is a company like yours building high barriers to avoid those companies from coming to your market?

Companies like ours are providing an added value service that allow the operators and device manufacturers to share revenue. Currently I’m not aware about any ad revenue share in place to use with FaceBook or Google. On the consumer side, Facebook is pushing a web experience down to the mobile device, but in this case for the consumer every device looks different. So yes, it’s great to check twice a day on your Facebook and see what happened through the day. But if you want to turn it to something that is more real-time I don’t think Facebook has got it there. We watch them closely because they are future competition.

Moreover, Facebook is not picking up in many countries. For example, in Holland they have no penetration whatsoever. Their penetration in China is minimum, same as Google. I think it comes down to that these countries are mobile first.

There is room for several players out there, companies like us that fit into the mobile use case, and to some of the traditional social networks that are trying to push the web experience into cellular phones.

“…I think there will be room for different companies and consolidation is still some long way off…”

I think there will be room for different companies and consolidation is still some long way off.

Q: If we talk about consolidation, who do you think will prevail in this market, and I’m not speaking about names, but what characteristics will have that company?

The market is going to break in a couple of key areas. People need to differentiate between search, “frienders” and directory vendors. There is a crossover going on in Social Networking. There will be one or two dominant search players, and we can guess who the dominant come to be in search. There will be one or two very good directory players who are more likely to be the traditional companies like Yellow Pages that will catch up with companies like yahoo.

In the social networking side there will be two types. There will be regional players and there will be a combination of global players. We fit into the global players. I see that some major players like Facebook will be in there too.

“…The characteristic that is the key is, “Is it contextual to what I do on the move during the day?” Do I need to sit down to view what happen … in the past? … Or is it more interesting to see where I’m going?…”

The characteristic that is the key is, “Is it contextual to what I do on the move during the day?” Do I need to sit down to view what happen on my feeds on Facebook what actually happened in the past? Is this really interesting me? Or is it more interesting to see where I’m going?

Q: The consumers that buy the iPhone have particular characteristics, willing to use all kinds of apps. From your experience, is there any segmentation in the people using location based social networks? Do you identify certain vertical markets?

You have the tracking and navigation apps and the ones that are information-based, like directory/search companies.

A third category is the lifestyle applications with companies like GyPSii, other social networks and friend finders. We see some niche players like dating apps in certain groups.

We certainly see some trends in a very basic demographic breakout: there is probably a group under 20 years old, a group that is between 20 to 30-32 years of age, and the group that is between 30 and 40 now expanding to 45, that are actually the people active in social networks in web and are reaching out to mobile. I’ve just seen some trends that messaging – whether it’s via Facebook, GyPSii messaging or SMS and similar applications – is starting to surpass email. If people get comfortable with daily messaging in their mobile device that will be a major tipping point for applications in general in mobile.

Q: What are the opportunities in this market? What is the big opportunity? How is your company approaching this opportunity?

The opportunity is in creating a tool that is basically about you and your community with the capability of tunnelling the content that is created and is valuable to that community. The capacity to have like-minded people with interesting hobbies actually able to capture the world, and basic searching indexing is critical. Companies that can create an index of searchable content can be very successful applying it to the advertising model. If you can’t make that index, which is made of profiles and content, it will be very difficult to be successful in advertising.

“…The opportunity is in creating a tool that is basically about you and your community with the capability of tunnelling the content that is created and is valuable to that community…”

For “Friend-Finder” only, I don’t see how you can reach above a certain minimum. From what I understand, every friend finder has a tipping point of around 200,000 users in each region. From what I’ve seen early adopters only. Companies that can’t attract the early adopters will struggle in the long term to generate revenues and survive.

People need to listen to the consumer. I hear from many in the value chain “We own the customer”. First of all, the one thing that the Internet did is “The customer owns the customer, nobody else does”. In some meetings people tell me “We are the operator, we own the customer”. AT&T and APPLE – who do you, think own that customer? APPLE does.

I think the reasons why new brands, the digital brands on the web and mobile, are successful is because they continuously innovate based on customer feedback. The ones that don’t innovate, like Friendster for example (because the CEO didn’t like some of the feedback it wouldn’t make the changes), they are the ones running into trouble. We are proud of our application but we are also the first to say we need to improve it based on customer feedback. We can iterate fast. We add features to our web and iPhone version every other couple of weeks based on feedback. That is quite difficult for other traditional players and I do think that the market will change; as a first generation Internet person, it‘s starting to mimic the value chain a little like what happen in the Internet.

Q: Is there anything that I didn’t ask and you would like to add?

“…you need to keep the open APIs. You need to encourage more applications to be built for free, because it’s a commodity for the consumer market…”

I would say to the infrastructure people in the LBS industry – you need to keep the open APIs. You need to encourage more applications to be built for free, because it’s a commodity for the consumer market. I know it has been ten years that required a lot of investment. But for the people who make location available, revenues will come about only if you have more applications built for consumers and business people.

After the long weekend pass and I had the opportunity to summarize many of the emails and twitts received during the last weeks, I was surprised to still find new Location Based Social Networks coming to the market… not. This week I added to my List of Location Based Social Networks:  Match2blue, My Adventures, Snikkr , Mizoon, Nulaz , Toai , and Glympse.

I also found a few social networks closing or going through difficult times and struggling to survive. Then I remembered last Friday I was saddened to find one of my regular lunch places out of business. I just entered the Subway next door and had a sandwich. Today I found a “coming soon” sign at the same place.

Is there any parallel? Certainly there are LBSN for many tastes. There are gourmet types of Social Networks, others that appeal the masses, some that serve particular type of people, some are for dating, some are for business, some you need certain hardware to get in, and others that are by invitation only.

The fact is that in both cases the owners invest a considerable amount of money to get in, they dream to have fun and be unique, and in some cases they understand very little about the business model and end loosing all their savings.

That’s why I tried to contact some of the companies going through difficult times, to understand their process, check if I can help, and see if we can all learn something from their experience. I couldn’t find those willing to share their struggles yet. On the other hand, I had the opportunity to talk with two of the most successful Location Based Social Networks in the market and they shared their vision and experience. This will open a series of notes, that I hope will give some perspective for existing and planned Location Awareness Networks to be.

Not long ago I had the impression this market will soon consolidate to a handful of companies. Now I have my doubts. There is place for a diversity of LBS based networks, and they are as varied as people tastes for food. Now I’m going back to the list of LBSN and I still see much of the same flavor.

What do you have in your menu, how is your business different from the others, how do you make customers to come back, and how do you build a name in a difficult industry. (Am I talking about food or technology now?). Bottom line, there is still a huge space for good marketing work to be done. Power to the marketing department!!!

If you are around here I will invite you to a good restaurant, and we can talk about business, just give me a call or drop an email I’ll be glad to help.

On a final note I wanted to have a restaurant; in fact my friends say I cook very well. I talked with a chef friend about my plan, the environment, marketing, ideas, and he said to me “You don’t understand, the money is not on the tables, the money is in the kitchen.” Yup, I didn’t understand much about their business model…

It has been a while since my last post. Launching a new product line was a tough and demanding task. Nevertheless the break gave me the time to look through a new perspective at the information I was putting together.

Almost 100 Location Based Social Networks after, we start to see the inevitable: consolidation and closings. More interesting, companies are trying to license the accumulated knowledge, without yet finding an appropriate business model to survive. We are still at the same starting point where developers struggle to understand how to migrate applications from Web2.0 environments to the mobile world.

To be or not to be
If we take a look back to my previous notes, one possible conclusion is that for an isolated company it’s almost impossible to succeed in this market. There are many obstacles that need to be solved even before they can try to implement the excellent idea that they have in mind. How are they going to get the location data? How to approach carriers minimizing fees? How to get information from mobile devices without GPS? How to overcome the difference of data between carriers, or even different handsets? and many other.

The good news is that location services are becoming a must. The question is how can we facilitate the go to market process of a carrier/handset agnostic solution without solving again the same problems other 100 companies already solved.

To aggregate or to facilitate that’s the question
In the beginning it was a map – latitude and longitude (a street map of Miami).
Now we add 5 restaurants in the block and by adding data or content to the map the result is Location Based Information.
Now we add context – 2 are Mexican restaurants, 2 are Italian and 1 is Chinese, all of them offer lunch and all close at 9PM. On top we add collaboration – reviews, recommendations, pictures, experiences, etc. now we have created value. If we can share that value and each one use it according to their needs and giving back to the system, we created Sustainable Location Based Intelligence.
We can extrapolate this to any other type of information; weather, news, traffic, advertising, 411, etc.

Now think of a platform that solves all your development and logistics problems, i.e. handsets OS, carrier fees, mapping interfaces and licenses, etc. In exchange you have to share your data, and benefit from other’s contributions. The key is participation and the challenge is to create an open platform where developers can craft on the fly partnerships, and help in building the functional building block that will put together that 13.3 billion dollar market that everybody is talking about. We can call it a Location Based Democracy.

Think of it as a solar system, where each one is moving in its own orbit, some have 1 or more moons revolving around, and all contribute to the mutual equilibrium. In business terms, creating this ecosystem will allow many companies to make a living, establishing micro-LBS-business around others without worrying about reinventing the wheel again and again rather unleashing the real value of “location base contextual valuable information”.

Give them the help and the technology to build cheap cars, and install toll booths
So why will somebody take the responsibility to create this? In the democracy of location based data somebody has to take the initiative to lead. Nobody wins from the chaos, and I believe it’s in everybody’s interest to keep it a “democracy”. It is a give and take game. So what are you ready to give away and what are the core assets you will keep for your company?
And at the end we come back again to the same question “What is the business model?” Is it revenue sharing? Is it success sharing? What is proper compensation for each party? Where is the money? In this case I’ll say “Take a closer look… It’s all over the map.”

In November I started a list of Location Based Social Networks (LBSN) – and in my first post I wrote “The question is how many of those will be alive next year…” Sadly to say, today (February) I started to update the list with those that are already closing or on their way to close.

My answer then was simple, only those with a solid revenue model and clear value proposition will last. Let’s take a first look on what makes a solid revenue model and services that have clear differentiators.

Profit is the only objective. What is the reason we create a new service or put a company together? The only answer is “TO MAKE MONEY”. Any other reason you may think or find is secondary. The source of that money is your customer. The way to get that money (legally) is by providing them goods, services, and solutions. The products and services are not the objective of the company, they exist only as the conduit to get your customers money by providing them something valuable they need and that keeps them happy.

The Business Model IS the differentiator. I may sound extreme here, but what differentiate services and makes them successful is not technology, but their business model. Take a look at the (now) 80 Location Based Social Networks on my list. I don’t believe there is much technological difference between them. Bottom line, only those that will succeed to generate revenues will survive.

Marketing, Business Dev and Sales (MBDS) are a key part of your Business Model. Review the list of LBSN and continue with the following exercise. Cut and paste the message excerpts from their websites WITHOUT the name of the company. Read the document the day after and try to identify who is who. If you are one of the owners of those companies, I dare you to pass the list through your employees and see if they can pick their own company from the list. Close your eyes and imagine taking a goldfish from the water tank and leaving it on the table. That’s your company without MBDS.

Business Models are NOT cross-market portable. Many of the LBSN base their hopes in implementing successful WEB2.0 business models, ignoring that the WEB and Mobile environments are completely different. Messaging in the WEB is free but mobile text messaging cost money. WEB mail has no charge but pushing your email to your blackberry carries its own costs. Even Voice is free over the web (skype, jaxtr, etc) but that’s far from being the reality in the mobile world. Ignoring this and other differences result on a distorted view of customer acquisition costs and wrong operational expenditures estimations that lead to “…We had an amazing and unique technology but we run out of money…”

There are other components in the framework, and each one of the elements here presented has its own subcategories, questions and connectors. Want more info? Quid pro Quo, leave some feedback of value for me and the other readers (or just pay for it). As you may see blogging has also its own business mode

I’ve juggling with the idea of writing about location based social networking privacy issues for many weeks. From any side I tried to approach this issue I remained with more questions than answers.

I considered starting with the Fourth Amendment, even though GPS technology didn’t exist in 1791. Not entering into a legal discussion my first impression is that the emphasis here is on personal security. That’s when I remembered my first digital camera and my wife being terrified to put pictures of our kids on the web. It wasn’t about privacy, but about the reasonable expectancy of keeping our kids secure and avoiding people delving into our lives.

I believe this is the paradox of social networks in general and those based on location in particular. I want to make my information public but at the same time I want to keep the information secured (actually not the information but myself).

Looking over the other side of the table, the value of a social network resides on the information you provide. The lack of privacy is one of the pillars that sustain the business models of many, if not all, social networks. When privacy issues are raised, we usually ask what the companies are doing to protect their customers. Expecting the companies to protect your privacy is like expecting the cat to safeguard the cream; this is the fuel for their business. It’s not the companies that need to protect the information, rather YOU the customer.

I reviewed the privacy policies of more than 20 location based social networks and personal locator devices. I recommend you to do so before you start posting When and Where you are doing your What and with Whom. But if we separate the concepts of Privacy and Security, I don’t think the Location Based Social Networks companies are the problem. Technology is usually neutral, users aren’t.

Personally I don’t mind if a company, in exchange for a service, collects information about my habits, locations, and other details IF before using that information ALL personal identification is completely deleted AND is never used to sell something back to ME. The fact I’m a public person and I share information, is not an invitation to invade my space. My space is on invitation ONLY. Once we agree on this principle, we can start talking about other technological barrier and safeguard such as location acquisition and capture, location notification and accuracy, location information accessibility, location history control, location ownership, etc.

Today as in 1791 Privacy and Safety are really a concern and privacy advocates have a central role in corporate LBS

Without any doubt, the accessibility of GPS technology is leading us to new types of communities and services. People participate in a virtual world without borders; People are part of virtual societies, sometime bigger than the population of many countries. Maybe “We the People” needs to virtually govern ourselves and establish the new social conduct standards for a completely different world.

So, where do you stand?