You may notice when you install a new app on your smartphone it’s common for the app to request access to your locations. The obvious reason is to provide you with local services, etc. But there’s a stronger, financial motivation in play: business models that leverage location data from mobile devices are part of a growing, multi-billion dollar market. Where you are matters much more than you might think.
Google Maps – Multiple-Billion-Dollar Business Based on a Free Map
Location-targeted mobile advertisement spending is quickly growing. By 2020, it is expected to reach $29.5 billion annually.
Launched in 2005 as a web application for users to locate real world addresses, Google Maps now has over one billion monthly active users. Thanks to accurate GPS inside smartphones, people can use Google Map to plan and navigate all sorts of trips. Over 77 percent of smartphone owners regularly use map services, and Google Maps controls some 67 percent of the market. Google says that over one third of searches on mobile devices are now related to location.
Maps have become one of Google’s most valuable assets, with around US$5 billion in incremental revenue forecast by 2020. The majority of this revenue comes from leveraging locations for recommendations: based on a user’s current location and their intention as revealed in search terms, Google can display relevant shops along with their detailed information in order to encourage a visit. Businesses love new customers, and so are incentivized to advertise on Google Maps to attract these potential customers, for example with an attractive logo or targeted promotions. Google Maps as an online service has shown unparalleled effectiveness in driving traffic to locations the physical world.
Annual location-targeted mobile advertising spending is growing by 24.6 percent and is expected to reach US$29.5 billion in 2020. The trend is fueled by the wide-adoption of mobile app-based services such as Google, the lifestyles of millennials, and the growing availability of users’ detailed preference data. Knowing precisely where you are and what you want — be it an Indian restaurant or a diesel gas station — Google Maps and similar platforms can immediately recommend relevant nearby locations and profit through successful conversions.
Foursquare – A Gold Mine of Users’ Location Data
Based on its users’ 12 billion check-in data points every month, Foursquare accurately predicted the amount of new iPhone sales and has attracted 125,000 developers to work on its platform.
When consumers check out new places they typically consult not only location and navigation services, but also customer reviews. Foursquare began in 2009 as a simple social media site where users could share reviews on places and discover places their friends had checked-in and/or recommended. It now has over 50 million active users and amasses 12 billion “check-ins” at physical locations every month.
This data is a gold mine for Foursquare and has enabled the company to build multiple services. In addition to location-based advertisements in Pinpoint, which is similar to Google Maps, Foursquare can also provide brands with unique customer insights. The company can track foot traffic data within physical locations, measure business health, and monitor the effectiveness of marketing campaigns. For example, by using foot traffic data at Apple stores, Foursquare was able to accurately predict sales totals of new iPhones on launch weekend.
Foursquare offers paid access to their data through an API, enabling any organization to leverage the massive location-based data to empower their own services. Uber for example uses Foursquare data to improve their passenger pick-up directories, while Samsung uses the data to display location details in their Bixby AR street tour. There are now more than 125,000 developers building services on the Foursquare platform. Countless possibilities are emerging from this rich data which can ultimately benefit users in their daily lives.
Most of us have come to realize that our behaviour and movement data in the digital space is being commercialized via ads, paid services, sales promotions, and so on. And now the same trend is quickly spreading to physical spaces. Our location data is being tracked, traded and even built into products. Although we may enjoy the convenience created by this connection between the digital and physical world, there are also potential problems. As location data becomes more valuable and transactional, there are more chances it will be misused. Location data may become one of the new battlegrounds for privacy protection.
Author: Ivan Zhou | Editor: Michael Sarazen