One of the enduring myths about Location Based Services is the so-called “Starbucks Scenario”. You know the one - people write about how you’ll be going down the street and your phone will beep and you’ll see a Starbucks promotion offering you a half price latte if you pop into the store right next to you.
I’ve no idea who first thought of this example, but it’s a very poor illustration of Location Based Marketing. For a start, unless the transmission of the message is free, the promotion would be unaffordable as the redeemed messages would also need to cover the transmission cost of sending of the non-redeemed ones. This means tnat for most low-priced products, like Starbucks and fast food retailers, this type of promotion is little more than a fantasy.
The other issue is how a company like Starbucks would manage the logistics of this type of promotion. It only really makes sense if that particular Starbucks is not very busy. If there’s already a queue, there’s no point in adding to it. But how would a centrally controlled system know about local conditions? And if locally implemented, who is actually going to manage it? While the obvious answer is “the manager”, delegating local marketing initiatives is going to be resisted, for understandable reasons, by head office. And anyway, HOW would they implement it?
And if that’s not bad enough, we have the issue of perceived spam to cope with. Such a promotion would clearly need to be opt in and many Starbucks customers might be happy to get the odd offer. But on those days that they’re in the wrong mood, or have just paid full price for that latte or are just in a hurry, the value offer becomes annoying and suddenly perceived as horrid spam.
Anyway, if you’re interested in Location Based Marketing like this, drop me a line and ask for a copy of my free white paper on this area.
What brought this to my mind is another Starbucks’ initiative around Location. Namely a “find my nearest” service, inviting people to text in their Zip code to totally the unmemorable “MYSBUX” (short code 697289) and they’ll get an sms with the address of their nearest 3 Starbucks stores.
This is about as likely to work as the Starbucks Scenario I just wrote about above, which is sadly, very, very, very unlikely to work, in case I wasn’t quite clear.
Why?
Well, most of us spend most of the time in an area we know already - we either work there or live there. So if you’re a Starbucks’ fan, you won’t need to ask where the nearest on is, as you’ll know.
And the tiny percentage of the time most people spend outside their known area, they’ll just forget that the service exists, or they won’t be able to remember how it works or the number they need to send it to. Oh, and they won’t know their Zip Code either, coz they don’t know the area. And in the event that they overcome all these hurdles, the address won’t mean anything to them anyway, unless they ask someone. Which is what they’d probably have done in the first place if they’d really, really wanted to find their nearest Starbucks.
This all reminds me of a friend of mine, who I shall call Nick, because that’s his name. When he gets very drunk and happens to be in a restaurant, he calls the waiter over and asks for 15 eggs and 15 wine glasses. The bemused waiter normally brings them and Nick spends about 20 minutes building a complicated pyramid of eggs and glasses. By this time, most of the restaurant are watching in suspense.
Nick then announces that he’s going to pull the table cloth out and all the eggs will break and fall neatly into their corresponding glasses. The suspense is palpable as it would be truly amazing if he managed to pull this trick off. With much theatre, Nicks grasps the table cloth, (even the kitchen staff are watching now) and with a flourish, he yanks it hard.
Glasses and egg fly everywhere, coating the immediate vicinity in broken glass and yolk. It’s also noticeable that not one egg has broken cleanly into one glass. The restaurant is hushed in shock and Nick stares at the wreckage. He then shakes his head and says, after a 4 second pause:
“It never works….”
Another 4 second delay happens and then the diners burst into laughter and applause.
So what’s that got to do with Starbucks and their “find my nearest” initiative? Stealing Nick’s punchline, it just never works.
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Russell - good points and I too have been guilty of using the “Starbucks example” to explain LBS.
You may be interested to know that I will be using again it on Monday night at Mobile Monday Munich (http://www.mobile-monday.de/web/guest/munich) on April 2nd to explain why location triggered advertising has not worked to date - and how we may have the answer!
See you then.
Andrew Grill
General Manager, Sales & Marketing
Seeker Wireless
http://www.seekerwireless.com
How about “find the location of the nearest Starbucks and send me a coupon - good for the next 2 hours”.
It’s not about the example it’s about the technology to solve the problem of transmitting real time GPS information from inside the browser.
Let me give you a better example. How about live local search base on your current GPS location. We’re already doing it.
The key element is getting the data inside the browser. Once you do that then the cost of the transmission is paid for in the data plan. Throw in some additional data about Me and you have the ability to really deliver targeted relevant advertising.
You need to log in to the Oxford Forum and see what’s going on… GPS and LBS is coming and I bet AdMobs will be using it.
Peter
http://www.5o9inc.com
I’d like to check out that paper. Thanks.
I agree that the SBUX example simply won’t work. For any type of advertising to the phone to work, it must be highly relevant. Due to the relatively high cost of each SMS charge, there has to be an almost 100% probability that the user will act upon that offer delivered to the phone - it simply must be perfectly relevant to that unique user. This is not easy to cost-effectively achieve. Forget GPS because one bad apple will spoil the bunch and nobody will want to be “tracked the the ad fairy” anymore. Again, is it relevant that I’m near the SBUX or is it more relevant that I’m a Prius driving local and I go to SBUX every morning and they send me a text message to go to a merchant around the corner to purchase fresh organic food with my SBUX Visa. If I go to SBUX every morning, why do they want me to spend less money by giving me a compelling SBUX offer? Realistically, SBUX will never get me to spend more money at SBUX, they must look elsewhere and their surrounding merchants are a great start.
Russell, count yourself lucky that you only deal with the Starbucks example. When it comes to LBS & proximity marketing I always seem to get people who start conversations with ‘you know that bit in Minority Report when Tom Cruise is in the mall and all the posters and shops speak to him……..’
Sadly this fits hand in hand with your example too and will never work.
[...] mobhappy hat eine witzige Sammlung von Fehlannahmen bei Location Based Services, die zwar vom vermeintlich klassischen Starbucks-Szenario ausgeht (”find my nearest Starbucks”). Mein Highlight ist aber die Feststellung: “And the tiny percentage of the time most people spend outside their known area, they’ll just forget that the service exists, or they won’t be able to remember how it works or the number they need to send it to.” [...]
Hi Russel
I’ve seen the future, and it’s an HTC P3300 (or a Nokia N95 depending on your religion). Built in GPS on a decent sized handset is a real killer application and is provided by TomTom. But if you could ‘opt-in’ to receive offers while walking around with the GPS activated - so much the better.
Whatever the future holds, you can bet that LBS marketing will require opt-in. The very thought of being blasted with a Starbucks deal every time I pass one of their shops scares me. In most parts of London and NYC there is an SBX on every street corner - my inbox would be full every time I ventured out.
Have fun,
marc
[...] SMS is ubiquitous and SMS based ad campaigns appear likely to be rewarding - but there are some things they just aren’t suitable for as Mobhappy’s Russell Buckley amusingly explains in What is it about Starbucks. [...]
It seems like Starbucks already has LBS worked out pretty well. It goes something like this: “Is this place a location? Ok, then we’ll open a Starbucks here.” At one office I worked there were 7 Starbucks within a 2-block radius of the office. One intersection had three.
For LBS it’s tough to beat good old fashioned line of sight.
What’s the point of locating Starbucks on your mobile phone when there are 3 on every bloody corner!!!
Starbucks proliferates like rats to corporate monoculture …
Russell, if Nick ever comes to Corvallis please let me know, I’ll pay him dinner and lots of drinks. I’d love to the performance.
[...] April 8th, 2007 Reading Mobhappy just now I stumbled upon a great story hidden in a Russell Buckley’s post. I thought I had to share it. [...]