Southwest Spirit Magazine | January, 2012

By analyzing data cultivated from location-based apps, companies will soon be able to know what you’re going to do before you do.

In his exhilarating 2002 thriller, Minority Report, Steven Spielberg conceived a future powered by what, at that time, seemed to be wildly advanced technologies. In one memorable scene, Tom Cruise’s character, Chief John Anderton, who has just been identified as a murder suspect, walks through a mall and is bombarded with highly individualized forms of advertising that reflect his current, frazzled frame of mind. “John Anderton! You could use a Guinness right now,” says one advertisement from the Irish beer brewing company. “The road you’re on, John Anderton, is the one less traveled,” says another from Lexus.

While this kind of neuromarketing, which anticipates your buying mood and needs by measuring things like blood pressure and heart rate, hasn’t quite hit the masses, we are rapidly moving into the next stage of the digital revolution that will help companies guess what we will most likely buy, eat, or watch next. And by using data collected from our increasing appetite for mobile technologies and location-based apps, they’re going to get it right.

This type of business strategy is called predictive marketing, and it happens when a brand overlays information it knows about you with smart predictions about what you might like or need. Just as Amazon and Netflix anticipate what book or movie we might like based on what we’re already browsing, smartphones are about to become more concierge-like as well. In effect, our mobile devices will divine what’s going to happen next and manage our schedules, suggest actions, and generally assist in everyday activities derived from the real data we’re already providing them.

Today, my iPhone 4S Siri personal assistant can set a reminder that I’m having coffee with you in 45 minutes. But probably in the not-too-distant future, it is possible that Siri will start making predictions that are spot-on about what I might need for that coffee date based on what it has gleaned from all of our past interactions. That means the popular app with the friendly female voice might someday recommend restaurants we haven’t yet tried, pull up OpenTable or Yelp reviews and, for reservations, map my route or direct me to a nearby stationery shop because today is your birthday. Siri will know all of this by pulling up documents, photos, emails, and text messages you and I have shared since our last get-together. And because it’s raining, the app will even call me a cab without my asking because it has figured out from all the previous times that it has rained and I’ve had to leave my apartment that I never walk to the subway during a shower.

“Hypothetically, Siri could one day find relations,” says Chuck Martin, author of The Third Screen: Marketing to Your Customers in a World Gone Mobile. “It could look at how many people over time do the suggested activity versus something else. Consumers are leading what is truly a behavioral revolution,” adds Martin. “They’re doing this by using location-aware apps such as Siri, as well as Google Maps, Yelp, and Foursquare. And soon brands will be able to predict and strategize more accurately about the behavior of crowds. Serious data is being churned by all this activity. While a lot of people worry about privacy, the data doesn’t look at individuals. It’s looking at aggregate behavior and calculating probabilities.” 

Companies are now trying to tap into that wealth of information provided by consumers when they use these location-based cell phone apps. With 5.6 billion mobile phones already on the planet and smartphone penetration at around 1 billion and rising rapidly, innovation based on consumers’ location and behavior will continue to soar, as will mobile marketers’ efforts.

By now, most people are familiar with Foursquare, whose 15 million users check in when they enter a participating retail outlet or restaurant, often receiving rewards or honors like Mayor status in return for their location activity. By checking in via a smartphone app or SMS, you are saying, hey, I’m at Best Buy, and your friends reply, great, I’ll see you inside. Currently, Best Buy isn’t in on this cyber conversation, but more and more companies are starting to home in by innovating with location, says Location-Based Marketing for Dummies author Aaron Strout, who is developing this capability for the San Francisco-based global marketing firm WCG.

“MX and Starwood Hotels are doing something forward-thinking in loyalty marketing by allowing you to attach your Foursquare account, which earns you loyalty program points when you check in at a Starwood property using MX,” Strout says.

Ditto, a new location-based app, implements predictive marketing to help its users plan what they’ll do next. Users can incorporate instant feedback from their existing Facebook and Twitter friends into this Foursquare-style service. The service not only incorporates, for example, where you might like to eat based on feedback from your social circle, it also relies on algorithmic results based on your previous behavior. This helps the app coordinate planning via related offers shared through users’ mobile, social, and local information.

To be sure, as more location-based data becomes modeled, companies will be able to gain a very clear understanding of how certain consumer behaviors may be linked. For example, they will be able to see that when a certain number of consumers buy premium gasoline at a specific time and place, there is a large probability that another behavior will now occur as well, such as purchasing the combination meal at an adjacent sandwich joint if it’s around lunchtime, or heading over to the nearby car wash if the weather is warm and sunny.

Predictive marketing also hinges on recognizing what mode consumers are in at any given time of day. Because we watch and consume what we want, when we want, savvy marketers must be able to anticipate customer context. The where, the when, and the who we are, which is referred to as persona shifting, and act accordingly. Advertisers will be able to use that information to gain greater contextual understanding and target messages more effectively.

Imagine, for example, that it is 6:30 p.m. and you have just begun to prepare the family dinner. Not only will companies know that you are wearing your mom or dad hat at that hour, they will also know that your eldest child is about to hit college age, and voila, a college financial aid advertisement will pop up on your smartphone. Which, like most of us these days, you have sitting within arm’s length at all times. Or perhaps even stranger, if you happen to have the television or radio on during dinner, just the right ad will queue up especially for you. Cool but creepy, right?

If a retailer can hit you with the perfectly timed pitch, and let’s be clear, this rarely if ever happens, you will jump all over it.

“Say I’m on my way to meet my wife for dinner at a mall,” says Dan Schust, executive director of the Innovation Lab at the digital marketing agency Resource Interactive. “As I enter the grounds, my favorite clothier notices I’m near and sends a text informing me of a special sale. I enter the store, checking in using my smartphone and the store’s app. Now the app knows I am there, and it informs the sales staff. I receive a warm greeting from them, while behind the scenes the app gathers my buying history, purchase motivators, am I here for myself or more likely to buy a gift, and makes some recommendations that are amazingly on target for my needs. More importantly, it knows what motivates me and bundles for me an individualized offer. The staff collects these items for me to look at, and by the time I get to the reception area, I am ready to check out using my smartphone and the store’s m-commerce app to pay electronically. I walk out with plenty of time to make the dinner date.” 

So while it’s not quite the same futuristic mall experience as laid out in Minority Report, in which a scanned retina can animate digital billboards that enticingly incorporate your name into their ad campaigns, it is a shopping experience that does still feel customized. And as location-based data proliferates, as well as the ability to purchase items through your mobile phone, companies will gain a much clearer understanding of how behaviors may be linked.

“If you’re a company and 20% of your purchases nationwide are through mobile devices, you’re capturing behavioral information,” says Martin. “It might actually take less money to be more effective with advertising. You’re dealing with the subset of your absolute best customers who really want to hear from you.” 

Martin’s research also shows that both in-app advertising and short video clips are highly effective formats. “People will watch advertising-oriented short videos on a smartphone.” Martin, who has more than 200 apps between his two smartphones, also realizes marketers soon will battle one another to win a coveted spot for their app on your smartphone’s first two screens.

“We’re only now just starting to hit critical mass with smartphones,” adds Strout, whose research shows that around 25% of mobile users have tried location-based service. “A lot of people out there are geo-curious. They realize the power of things like Google Maps and Yelp. And even Facebook has location-aware aspects to show where we’re checked in. Companies are figuring out logical ways to use these cool technologies to interact with us.” 

But still, all this wizardry so you can finally find, say, that elusive pair of gray cashmere socks? Yes, and you will buy those cashmere socks, just as predicted.

Stuart Wade is a freelance writer based in Austin, Texas.