The iPhone's on-demand positioning may soon connect developers to an entirely new revenue stream: Geomarketing. New vendors are developing "location-aware ads" that leverage your user's location. Geomarketing bring offers for goods and services directly to the consumer, wherever he or she is, in a way that traditional ads cannot.
Intrusive, pushy and annoying? Perhaps not. If you were standing right outside Starbucks, you might welcome an instant "50-cent off two drinks" coupon. How about a free appetizer offer when next to your favorite restaurant?
For the iPhone, it's early days yet. Location-aware advertising streams are just now being developed. I was able to track down just three vendors who are jockeying into place to deliver these advertising services.
The newest is AdSpeek (site still under development). They plan to mix location-based ad sourcing with deal finding crowd-sourcing: users who find deals ("Oh look, 50% off Guitar Hero Today at Target") can snap photos and share it to the community. This enriched advertisement stream will be available to developers.
AdSpeek has finished its preliminary internal development but it hasn't yet opened its doors. Its founder, Roger Smith, says he's just now putting together the company in San Francisco before branching out to other major US markets.
In contrast, Lat 49 is already signing up developers and advertisers on their website. They offer map-based ads that work with most standard Maps APIs like Google Maps and Yahoo! Maps. You bring the location, they bring the advertisements.
With that in mind, I signed up for an lat49 account. Seriously, it took me all of 5 minutes to create an application that threw my current location into the sample web code provided by Lat 49. I replaced their hard-coded latitude and longitude values with "%f". I then passed that as a format string to NSString, along with the actual values and my lat49 id. Presto, an ad-supported map.
Perhaps the biggest player in this group is Quattro Wireless. Quattro offers an active location-based initiative. Eswar Priyadarshan of Quattro writes that they've partnered with Skyhook Wireless (the built-in iPhone Location Service provider) on a double-play offering - integrating with Skyhook’s Location API and getting QW ads built-in - for location functionality and ad revenue in a box.
I wasn't able to track down a specific web page to link to for iPhone location-based ads. I have a request into Quattro to let me know if and when such a page goes live. In the mean time, they invite you to contact them for more information. Their current SDK provides location aware ads for various non-iPhone platforms.
These three businesses represent just the beginning of location-based advertisement opportunities. As location integrates further into the smart phone platform expect to see more vendors and more mature APIs.
Thanks to Tiffany Chester of Lat49, Roger Smith of AdSpeek, Dierdre Sena of Global Results PR, and Eswar Priyadarshan of Quattro Wireless for their help in the preparation of this article.
Are you working in the location space? What do you think of location-based advertisements? Drop a comment and share.
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Erica, terrific post.
Pinch Media does geolocated advertising for iPhone SDK applications - it's a component of our Pinch Advertising product, although at the moment we're only working with select partners. We'll be rolling out Pinch Advertising to the full developer community at some point in the future.
A couple of thoughts on geolocated advertising:
* it's still early, and we have to be careful to respect user privacy and the overall user experience. Apple's built-in safeguards are excellent start, but they're only a start.
* developers will likely hesitate to add advertisements to paid applications, and rightfully so - what person, having already paid for an application, wants to see the developer 'double-dipping' by adding advertisements? But developers have to be sure free applications with advertisements make economic sense. No matter what the cost of the advertising, if the advertiser base is small the developer's unlikely to recoup even the revenue from a $0.99 download.
* on the advertiser side, reach remains an critical issue. Brand advertisers want to reach millions of people with a single campaign; local advertisers will soon learn that a service that brings in only one or two people isn't worth the administrative overhead. To get interesting rates, a whole lot of inventory needs to be pooled.
There's no doubt that geolocated advertising *is* coming, but in order to be an effective way for developers to make money I suspect it needs to be a piece of a broader, not-just-geolocated advertising program, perhaps not even confined to the iPhone or mobile in general.
The next few months should be fascinating - I predict a lot of activity in this space, and developers interested in finding ways to make money off their apps are going to have a lot of services to choose between.
Note that there are very specific and strict restrictions in the SDK license agreement about collecting and transmitting the users location information from the iPhone.
According the the license an application must query the user EVERY TIME it collects or transmits location info.
This is going to be a major nuisance to the user if all you are doing is targeting ads.
Gong!
Check out the PocketBar iPhone App: http://www.pocketbar.vishalseth.com Its an online database of cocktail recipes for the iphone! very cool!