More than 95 percent of the 500 largest retailers know the answer to the first question, but most companies are "flying blind" about how to answer the second question, according to "How Location Analytics Will Transform Retail," a March 2014, article in the Harvard Business Review.
A relatively new field called location analytics "brings the power of web analytics to the analog world, enabling firms to continuously capture location data on customers in physical venues at an unprecedented scale and focus," says Forrester Research, ." Basically, location analytics companies track people via their mobile devices in exchange for financial inducements such as gift cards and coupons and then sell the information they have gathered to companies that are interested in finding out how customers are shopping. The information can induce companies to change their stores in much the same way that they change their websites based on information they have gathered about their customers' online behavior. The number of Americans with smartphones who use mobile coupons quadrupled to 29.5 million in 2013 – truly a goldmine if retailers can pinpoint customers most likely to respond to special offers as they walk in the doors. The potential goldmine of location analytics is now uniting technology companies and investors.
A survey by Pew Research Center's Internet Project is another piece of evidence that location analytics companies like Placed, Single Touch, RetailNext, Euclid Analytics, Locately, and Swarm could have a bright future. The survey showed that social media users were more than twice as likely to identify where they were posting from in 2013 than 2011 and 74 percent of adults who used smartphones used their phones' location-based services. "Taken together, these trends show the ascent of location awareness and the role it might play in the life of users – and the technology companies that are scrambling to provide more alert-style applications that tell people who and what is near them," says Pew's "Location-Based Services" report.
MarketsandMarkets, a Dallas-based market research company, forecasts that the location-based services market, which includes the kind of tracking services that Placed and its competitors provide, will grow from $8.12 billion in 2014 to $39.87 billion in 2019. The report specifically cites the growing number of smartphones users as a reason for its optimistic projection about the market. "Already, the scale of data collected by early adopters of this technology is staggering," says the Harvard Business Review article. "Location analytics firm RetailNext currently tracks more than 500 million shoppers per year by collecting data from more than 65,000 sensors installed in thousands of retail stores. A single customer visit alone can result over 10,000 unique data points, not including the data gathered at the point of sale."
Most relevant to media companies and agencies is that the emerging use of location analytics will increasingly inform media planning and buying. Once retailers and manufacturers have advanced insights on consumer activation and are able to connect the mobile device to in-store activity and the retail decision-making process, it will be a short step to connecting all advertising exposures – and especially mobile and place-based media advertising – to the actual purchase. While this is the silver bullet of marketing, location analytics is bringing it closer to reality.
PLACED: Seattle-based Placed was founded just three years ago, and has announced it had received Series B funding of $10 million from Two Sigma Ventures and Madrona Venture Group. In its June, 10, 2014, press release, Two Sigma Managing Director David Joerg said his company invested in Placed because the information it gets from the 175,000 people it tracks "yields a depth of insight nobody else can offer" and Placed has "become the standard for location intelligence." Yet RetailNext tracks more than 500 million people and Single Touch System Inc.'s location-based mobile app has 400 million consumers, delivers about 1 million messages daily to mobile phones, and has more than 60 million unique users. Placed has the advantage of having "agreements" with its 175,000 users. Placed's current clients include AdTheorent, InMobi, Millenial Media, Pandora, PayPal, Rocket Fuel, The Weather Channel, Thinknear, Undertone, Verve, and xAd. The fact that no retailers are listed among its clients certainly calls into question the viability of the business, but the company appears to recognize the relevance of its data for media sales purposes.
The Harvard Business Review article identifies Euclid Analytics and Locately as other location analytics companies, and reports that "multiple location analytics firms are tracking customers at hundreds of new venues each month." Euclid is tracking 6 billion visits by customers to thousands of locations every day. "Billion" is not a typo. In its article 10 Tech Tools to Boost Your Bottom Line," Business News Daily identifies RetailNext and Swarm Portal as two location analytics companies that "can show you the number of customers who came into your store, conversion rates and other important information that will help you make strategic, educated decisions about your business"
EUCLID ANALYTICS: The San Francisco-based company says on its website that its technology measures in-store visits, engagement and loyalty easier and faster than any other technology. Euclid reports that its technology "senses" smartphones' anonymous Wi-Fi signals, captures and analyzes those signals, and delivers its reports on its analysis to its clients via e-mail. Euclid's website lists its technology partners, but not its financial or investment partners.
LOCATELY LOCATION ANALYTICS: The Boston-based company lists an article on its website that reports it received a $500,000 grant from the National Science Foundation that would help it collect and analyze GPS data, but there is no information about private companies' investments. The Harvard Business Review article compares Locately to Placed, saying both companies "use opt-in apps on customer devices to track everywhere customers go 24/7.
RETAILNEXT, INC. : The San Jose-based company claims on its website that in 2007 it pioneered the use of retail in-store analytics. There isn't any information about investors on its website, but there is plenty of information on the company's clients, which include Bloomingdales, Family Dollar, Frito Lay, P&G, PepsiCo, and Verizon Wireless, as well as endorsements by those clients.
SINGLE TOUCH SYSTEMS, INC.: The Jersey City, N.J.-based company delivers information on the shopping habits of people who use mobile apps to several prominent companies, including CBS, Hertz, MTV, RadioShack, Wal-Mart, and 3M Company. These clients have helped the company's annual revenues soar from less than $1 million in fiscal year 2010 to $8 million in fiscal year 2013.
SWARM SOLUTIONS, INC .: Several of Swarm's clients endorse the company with one praising Swarm's visitor conversion tracking and closed loop marketing and another praising Swarm's commitment to measuring offline foot traffic as well as online traffic.
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