Getting Consumers to Buy In to Geolocation Apps - eMarketer

Mobile location-based applications get media attention and marketer buzz, but for the most part, users aren't on board. What is the biggest obstacle to more mobile owners adopting the check-in? If you guessed privacy, you're mostly right

Privacy a major obstacle for location-based marketing

Many marketers find location-based services exciting because of the possibilities for local and loyalty-based initiatives, and the tech media lighted on check-in apps as a shiny new game. But the average consumer still has not found a real reason to check in—especially not one that overcomes their concerns about mobile privacy and security.

Even knowledge of the apps has not reached many smartphone owners yet, according to digital marketing agency White Horse. A February 2011 survey of US smartphone users ages 14 and older found that fewer than three in five knew about location-based mobile apps, and just 39% used them.

Even that level of awareness has likely risen significantly due to Facebook’s entrance into the market. Earlier market entrants foursquare and Gowalla have been quickly passed in usage by Facebook Places, which can be credited with introducing check-ins to the masses, if not leading to mass adoption.

The tools that marketers typically use to entice check-ins, deals and discounts, did not hold much appeal for respondents to the survey. Most smartphone users believed social connections were the biggest draw to location-based apps. Among those who were familiar with them, 41% said connecting to people they knew or could meet was the main benefit, followed by finding places their friends liked (21%) and being able to keep track of their movement patterns over time (17%). Just 8% thought discounts and rewards were the most important benefit, and only 4% cared about the gaming elements of checking in.

Meanwhile, privacy was the biggest problem with adopting the apps.Nielsen surveyed US app downloaders in April 2011 about their feelings around location-based apps and privacy and found those fears ran throughout the population. In every age group broken out, at least half of respondents said they were “concerned,” with no more than 13% saying they were “not concerned.” Analyzed by gender, the results were the same: Majorities of both men and women were concerned.

Marketers have a lot of work to do to convince consumers that location-based apps are worth using, and must come up with ways to make them more relevant while assuaging privacy and security concerns. A simple coupon will likely not be enough of a value proposition. Efforts that play off the social aspects of location-based apps could give an extra boost in the minds of users who consider that a major benefit of the services.