Again, this is a Guest Post of an excellent piece written and posted by Michael Koploy, ERP Analyst, Software Advice (an online resource on retail technology), on his blog.

Over the last 4 or 5 years there has been vigorous debate regarding when, exactly, the true potential of mobile will be realized. Mobile mapping, mobile TV, check-ins, mobile payments, push ads, games, QR Codes, NFC, Daily Deals, SMS, virtual mobile currency, pop-up ads, barcode scanning, coupons, and a litany of others have had their moment in the sun, but none have generated commerce upside at a truly transformational level.

Turning Point 2011

Finally, as 2011 came to a close, we saw real, tracked and reported numbers that were far too numerically impressive to be dismissed as a fad or trend. These numbers were tied to Mobile Commerce.

When I say mobile commerce, I do not mean mobile payments, which I define as paying for items at checkout, using your mobile phone. I an referring to online sales converted on mobile websites specifically designed and formatted for this purpose. Example: m.finishline.com

Retailers & Brands Lag Behind, Fueling The Opportunity

For years, online retailers and brands waited, while their customers flocked to web-connected smartphones and, as a result, small screens are now crammed with large format websites never designed for this purpose.

In late 2011 retailers and brands finally started waking up and launching mobile optimized sites, and this fueled explosive growth and big profits for those still out ahead of the curve.

Mobile consumers can finally land on mobile-optimized commerce-enabled websites and the traffic to these sites can be converted into transactions in a trusted, secure environment. These mobile conversion metrics are the key and the resulting revenue numbers are real, undeniable, and impactful.

Changing Expectations

As more brands and retailers launch mobile commerce sites, consumer expectations have changed rapidly. In fact, most consumers surveyed now expect mobile sites to not only function, but to work better than  standard e-commerce sites.

Retailers and big brands are finally realizing that mobile commerce is not some fringe distraction to their e-commerce team, but, rather, a way to add 10-20% to their bottom line in incremental revenue. That’s right, retailers and brands are not stealing from Peter to pay Paul, and most see no drop in “traditional” online sales. It’s all upside.

For athletic shoe retail giant Finish Line, their mobile site now makes up 14% of their total online traffic. For adult online retail leader Adam & Eve, mobile commerce accounted for a whopping 8% of their total revenue, only 2 weeks after it was launched.

Still not convinced that mobile commerce has ushered in a revenue-fueled turning point that should/will change the entire tenor of the mobile space? Here are the numbers.

2011 Mobile Commerce Stats

-PayPal saw a 397% increase in consumers shopping via PayPal Mobile on Cyber Monday 2011, vs 2010.

-Rue La La saw an almost 200% increase in mobile sales on Cyber Monday 2011 vs 2010.

-Ebay’s mobile commerce doubled to $5Billion+ in 2011

-Ebay’s Black Friday mobile commerce sales were up 516%, over 2010.

-2011 mobile commerce sales were up 91.4% over 2010.
- In 2012, mobile commerce is expected to increase another 73.1% to $11.6 billion.
-The average mobile commerce purchase was $123 (vs. $87 for purchases from desktop PCs).
-Shopping by mobile users doubled from 1.87% to 3.87% of all online purchases in the past 9 months!

-During the 2011 Holiday season, 44% of all Google searches for last minute gifts and store locator terms were from mobile devices

-Of consumers surveyed, 70% use their smartphones in stores and 77% have contacted a business via mobile.

-64% of smartphone owners age 18-24 used a smartphone to find a deal this Holiday season.

-There were 20Million mobile bar code scans in Q3 2011, a 40% increase from Q3 2010.

-According to IBM, mobile traffic made up 18.3% of all online traffic on Christmas day 2011.

Conclusions

Mobile commerce transactions can occur anytime, anywhere and are being initiated on smartphones carried religiously by almost 50% of Americans. Online sales are no longer occurring only in front of a desktop or laptop, but anywhere and anytime. Retailers and brands should take notice.

Even more importantly, mobile commerce sales can be triggered by real world interactions with marketing initiatives most retailers and brands are already paying for! Printed mailings or catalogs, in-store point of purchase displays, peer to peer recommendations, signage, social media campaigns, emails, etc can all serve as mobile trigger points, when they are accessed by mobile consumers. The (largely untracked) digital media marketing spend already occurring can be tapped to drive mobile commerce, with tracked results. This means that smart brands (or their agencies) can (and should) be able to adjust these campaigns on the fly, to maximize ROI, in the form of tracked incremental mobile commerce revenue.

The biggest takeaway here is directed toward online retailers or brands who still do not have an integrated mobile commerce solution. Read and digest the numbers above and ask yourself this simple question, “How easy it is for a mobile consumer to visit my website and convert a sale?” (Hint: Try it!).

If you do not have a mobile site, the answer will be painfully obvious. Make fixing this your 2012 New Year’s resolution!

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Wilson Kerr (@WLLK) is a mobile LBS marketing expert, and VP of Sales and Business Development for  Unbound Commerce.  Contact Wilson today to learn more. Mobile: 303-249-2083.

Some of the stats in this post were compiled from various sources by Gabrielle Kalika of Mobile Marketer. I have added added more my own, also compiled from various sources. All stats can be verified, via Google search.

Mobile Marketer Senior Editor Giselle Tsirulnik recently interviewed me, regarding the role that SMS can play in mobile commerce. I am re-posting this interview and expanding some of my answers.

I hope this post gives retailers and brands insights into ways that “Trigger Point Marketing ™” like SMS can be used to link tracked mobile commerce sales with the social sharing of the specifics of  a product or price, by customers. When consumers share the news about something they recently bought among their social network, the effect can be powerful, as long as retailers can track the resulting lift via mobile commerce transactions.

Here is an extended version of what I said:

Q: What is the benefit (for a brand or retailer) of having a consumer SMS/MMS a product they are viewing via a mobile commerce site,  to a friend?

A: This sort of social sharing means the retailer or brand has a new touchpoint delivered instantly to a highly prequalified audience. Since the text arrives from a trusted friend, the person who receives it is very likely to open the text, read it, and click on the link. It stands to reason that the conversion rates for the recipient of the SMS would be many times higher than traditional marketing blasts.

By providing the tools needed for consumers to repackage and redeliver a marketing message to a highly prequalified audience within their own social graph, retailers can tap into a very potent mixture of personal referrals and siphon off additional mobile commerce sales.

Q: How could this potentially drive sales for a retailer?

A: Smart retailers are increasingly offering their customers tools whereby they can share the deal they just got. Word of mouth and personal referrals consistently ranks amongst the highest-ranked reasons consumers visit a store or retail website. If the retailer has a mobile-optimized site, an SMS sent by a customer can serve as a delivery mechanism for a deep link right into the section of the mobile commerce site where the exact product that was purchased (or product grouping) is queued up and ready to buy for the text recipient. This can directly, positively impact mobile commerce sales and, more importantly, can be tracked, measured and even used as a way to reward consumers who have spread the word.

Q: Do you think more retailers will be incorporating SMS into their mobile sites in 2012?

A: Yes, retailers interested in stay relevant will utilize a variety of new ways to have hyperlinked touchpoints spread by pleased, loyal consumers.  In a few clicks, the recipient of the text message can buy the item their friend bought and also have the opportunity to pass the word along. By adding this option pre or post-purchase, retailers can infuse their mobile commerce sites with

As SMS starts to replace email with younger generations and more and more retailers build and launch mobile commerce retail sites, this method of “Trigger Point Marketing(tm)” is a great way to drive tracked ROI. SMS is alive and well and retailers should certainly add it to their marketing mix, in support of mcommerce.

Q: Why is SMS a good medium to encourage sharing?

A: An SMS text message is instant and it is personal and it generally comes from a known, trusted sender. For these reasons, a whopping 98% of all text messages sent are opened by the recipient. No other form of digital marketing even comes close.

SMS also opens up a new channel of communication between the retailer and the consumer and builds a retailers database of contacts, since the mobile commerce platform captures the mobile phone numbers of both the sender and the recipient.

Q: What are some other ways SMS can be incorporated into a mobile commerce site?

A: When integrated into a mobile commerce site as a “social share feature”, SMS can also be tapped to distribute pre- and post-purchase links to a product in a mobile commerce site, within the social graph of the purchaser

SMS can also be used, via short codes, to drive traffic to a mcommerce site, when a hot link is sent back to the consumer, by the retailer. Additionally, SMS can be used to sign up customers to loyalty programs or allow them to opt-in for announcements of new arrivals, etc. If a shopping cart is abandoned, SMS can be used to ping the customer who did not complete their transaction, to remind them that their cart is full and they forgot to check out.

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The Final Word: Mobile commerce is no longer an option for retailers and brands that sell consumer direct. Retailers that do not have an integrated mcommerce site are losing sales every minute, literally.

The linkage between proven, incremental sales and mobile marketing has long been elusive. This fact has kept a barrier up between the ecommerce team and the marketing dept. This is finally changing and the fact that socially driven messaging can be infused with deep links within a mobile commerce page means that these two worlds are finally set to merge. When this happens, marketing will be able to see a quantifiable return on their spend and the ecommerce team will have a whole new revenue stream via mobile commerce that is, in turn, supported by mobile marketing. A win-win. Remember, SMS is but one method, and QR codes and Near Field Communication (NFC) are also viable ways to drive proven, new mobile sales via”Trigger Point Marketing ™”.

The silos between marketing and ecommerce must be demolished. The retailers and brands that realize this and embrace this notion fastest will win. The rest will be left behind.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec, LBS consultant, and now leads Sales and Business Development for  Unbound Commerce.

Contact Wilson today to learn more. Mobile: 303-249-2083.

Sometime this year, 50% of Americans will own a web-connected smartphone, yet less than 20% of online retailers have websites optimized and formatted to serve these mobile consumers.

I am calling this the “mobile commerce gap”. The reason for this inequity between demand and supply, in my opinion, is because the internal resources required for online retailers to properly develop a mobile commerce site have been pulled in other directions, even as smartphone adoption rates have exploded. As a result, a majority of online retailers are offering their mobile customers a very poor online shopping experience. This, in turn, results in poor conversion rates and missed sales, not to mention the fact that consumers are left with the general impression that the retail brand is not serving their needs.

Think about it, how many times have you visited a site on your smartphone and immediately left when you saw it was not optimized for mobile? According to Google, this happens 79% of the time!

Why this “gap”? The first distraction came in 2009 when retailers and brands alike were told they must “drop everything and build  an iPhone app”. While apps are great for some things, a vast array of surveys and studies have concluded that consumers much-prefer a mobile site over an app for commerce. The second was the social media craze of last year, as Facebook, Twitter, and the rest dominated headlines and became “must-haves”. Both soaked up internal IT resources and distracted online retailers from building the mobile-optimized sites needed to serve their increasingly-mobile customers.

So, what are the factors online retailers should consider, as they investigate offering their customers the ability to convert sales from their mobile devices via a mobile commerce site? I hope the following 5 points will clear some things up:

1) There is No “Mobile Web”

While it is true that most “standard” websites are capable of being viewed on a web-enabled phone, few consumers are willing to “pinch and zoom” their way into a converted sale on a standard site jammed into a small screen. Ever tried this? It’s not fun.

While the need for mobile-optimized sites might seem obvious, many retailers justify not investing in mobile commerce by citing low mobile-originating traffic to their  current site (usually 2-5%).  Of course, this low-traffic negative feedback loop is caused by the fact that mobile customers seldom return to a site after being greeted with such a poor user experience. The retailer then concludes there is no need to invest in the “mobile web”. Again, there is no “mobile web”.  There is only the web viewed on a mobile device.

2) Mobile Commerce is NOT Mobile Payments

There is a lot of “noise” right now regarding mobile payments at point of sale, when the phone is used as a “mobile wallet” to pay for coffee and the like. While mobile payments might-well emerge as an issue retailers need to address, this  is not the same as mobile commerce. Mobile payments involve banks, credit cards, investments in point of sale infrastructure, coupons, NFC,  loyalty cards, and a whole array of complex issues.

Mobile  commerce is simply the act of ordering something online, from your mobile phone, via a mobile-optimized version of a website. Retailers should not confuse the two, or delay the launch of a mobile commerce site while trying to understand mobile payment options and what uniform technology may or may not emerge victorious.

3) Mobile Commerce “Actualizes” Mobile Marketing

Remember, every time a consumer clicks on a marketing or advertising link to your website on their mobile phone, they should land on a site that is optimized for the device they are accessing that message on.  Whether a tweet, a Facebook post, a banner ad, a QR code, an SMS message, or an email,  the mobile consumer who acts upon the message should be able to convert that action easily into a sale, via a mobile commerce site. If you are a retailer and do not have a mobile commerce site and are spending money on social media marketing or mobile advertising, you are likely paying to promote links to a very poor customer experience.

4) Integrate, Don’t Duplicate

There are several options for creating a mobile commerce site. You could use a transcoder to “screen scrape” your standard website and shrink it to fit a mobile screen. You could “sub-out” your mobile commerce efforts to a third party, by letting them “handle it” with their own separate and duplicative mobile store. OR you could leverage and extend your current, proven and trusted  e-commerce operations into mobile via an integrated solution. This is a superior approach, in my opinion, as it means you are avoiding duplication, while also maintaining full in-house control and fueling mobile commerce from the same infrastructure you trust today for your e-commerce operations.  A software-based integration approach takes a bit more effort on the front-side, but the long-term benefits are significant, as this single effort, if done properly, can serve as the foundation for not only mobile commerce, but also Facebook  commerce and commerce-enabled iPhone and Android apps, as needed.

5) Devote IT Resources, Plan For Growth

The single biggest reason I hear retailers give for not moving on mobile commerce is a lack of IT resources. Simply put, this is a poor excuse. While it may be true that IT is backed up, the measurable, tracked ROI that mobile commerce offers should elevate this to the top of the list. The ROI is extremely rapid, by even the most conservative estimates of the resulting tracked, incremental mobile commerce sales. Retailers and brands that are out ahead of the curve will be the biggest winners, as long as they plan for growth and chose the right approach.

Compelling Numbers

Still not convinced that mobile commerce is a “must have”? In recent weeks Google and other mobile marketing players have begun encouraging retailers to sit up and take notice of this “gap”, since they can’t sell online retailers mobile marketing campaigns if they have no place for the target audience to “land” when they click though a mobile campaign ad/link.

Google and others are pointing to studies and reports that contain numbers that are hard to ignore. Here is a sampling:

• $1.9 Billion: Worldwide online mobile sales in 2009.
• $23.8 Billion: Expected worldwide online mobile sales in 2015.
• 61%: The percentage of mobile users unlikely to return to a site not optimized for mobile.
• 79%: The percentage of Google retailer advertisers who DO NOT have a mobile site.
• 78%: The percentage of consumers who prefer a mobile site over an app.
• 62%: The percentage of smartphone owners who have purchased physical goods via their phone in the last 6 months.
• 2-5%: The typical percentage of mobile traffic coming to a non-optimized retail website.
• 5X: The typical increase in conversion rates, upon the launch of a mobile commerce site.

(Adobe-Mobile Shopper Insights, Google, eMarketer, Shop.org, Coda Research, Unbound Commerce)

Want even more evidence? I recently attended the Mobile Commerce Summit in NYC and the Keynote speaker was Steve Yankovich, VP of eBay Mobile. eBay has quietly become the largest online retailer in the world and were an early adopter of mobile commerce.

The numbers Steve shared regarding their mobile commerce success at the conference were astounding. Some highlights:

• $4 Billion: The revenue eBay expects to generate from mobile commerce in 2011, double what they sold on mobile in 2010.
• 100%: The percentage of eBay’s m-commerce sales they report as being incremental!
• 38 Seconds: The average time someone spends on eBay for a m-commerce transaction (versus 20+ minutes on their standard site).
• 100: The number of people eBay reports hiring for their mobile commerce team.
• 50X: The predicted increase in what eBay will spend on mobile marketing to support the success they have seen in m-commerce.

We are finally at a point where the numbers are so compelling that few can argue against the importance of having a mobile commerce site. The simplest way to put this is, “If you do not have a mobile-optimized commerce site, you are losing money“.

The Time Is Now

Your customers are mobile and they are very likely trying to access your site on their smartphones right now. If they still see your “standard” e-commerce site crammed onto a small screen, you are delivering a poor customer experience and, as such, are missing incremental mobile sales. Try it yourself!

Some experts expect mobile commerce to grow to become as much as 10-15% of online sales. Retailers should weigh the risks of launching a solution that is not integrated with their current operations, since what might not be a problem at first could emerge as a big issue when mobile commerce makes up a significant percentage of online sales. Find the resources, take the time, and consider building/launching a mobile site ASAP that leverages and extends current online sales operations.

You will provide consumers a positive mobile interaction with your brand that also drives significant incremental, tracked revenue. Mobile commerce is here and the time to take advantage via a mobile commerce site is now!

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Wilson Kerr (@WLLK) is a former Tele Atlas exec, LBS consultant, and now leads Sales and Business Development for  Unbound Commerce.

Contact him today to learn more. Mobile: 303-249-2083.

Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of mobile.  Contact him today to learn more.

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Over one hundred billion dollars is spent annually on “traditional” online advertising, and each of the last three years have been prematurely declared the year of mobile advertising. For too long, the promise of mobile advertising has been based on technical, location-awareness-related advances the industry has heralded as beneficial, while these same advances scared consumers away.

This is finally changing and consumers are discovering simple, easy iterations of mobile technology that provide simple, easy solutions for problems they want solved. Saving money via special offers/coupons at known, nearby business locations is the best example and Groupon and their kind have driven socially-promoted savings on purchases that can be measured in increments of $Billions.

The Bridge To Mobile Commerce: Deals and Group Buying

Groupon is the fastest growing technology company in history and Founder/CEO Andrew Mason links their success to providing a “hybrid of local advertising and local commerce”.

Groupon’s unprecedented success should serve as a  lesson to the various elements involved that melding established consumer behavior and technology in a simple, easy way that also leverages consumer acceptance of social media  is a key factor for success.

The real power of this model lies in the fact that incremental, tracked purchases are made at the beginning of the consumer interaction, generating pay-for-perfomance, frontside ROI metrics that blow other “wait and see” methods of marketing out of the water. When you add in a “social media award” component (share the deal and get the deal for free), this model becomes even more powerful, as the campaigns quickly become viral and market themselves.

While Groupon, Living Social and the rest have been written about extensively, I am not sure the full potential impact of this model is understood. These companies solve an existing problem for local businesses by converting the traditional coupons, sales, and special offers they have used for decades into tracked offers that can measure in both financial upside and foot traffic. They also tap exisiting marketing budgets by stealing pre-allocated dollars away from traditional media via no-risk performance-based value propositions (that work).

This is in contrast to much-touted hyperlocal mobile push advertising campaigns that require a problem to be explained, before a retail business or brand will considering paying to try to solve it (assuming they agree the opportunity for ROI is there). More importantly, most retail businesses still do not have a way for mobile banner click-throughs to land a consumer in a place where a purchase can be converted. This is where mobile commerce comes in.

Moving The Merch: “Redemption Is Mobile Commerce”

The quote above is from Dan Gilmartin of Where.com and I agree. While redemption of printed or digitally displayed group buying vouchers brought into a restaurant, hail salon, or spa (for example) works well-enough, retailers that sell lower-margin goods want converted sales that “move the merch”, as they say. Giving 50% of your margin away to Groupon and their kind, is a fine solution for high-margin, service-oriented businesses, but retailers need to link campaigns for specials to actual sales.

Converted sales transactions, rather than impressions rendered or click-throughs to a standard website, are what attracts small to medium-sized retailers that gain little from traditional brand marketing. Since non-standardized point of sale systems for redemption are still the Achilles Heel of the mobile coupon model, tracked, mobile commerce conversions will emerge as the new, essential “redemption metric” in 2011.

With $1.5 billion in mobile sales logged in 2010 (a 3X increase over 2009), Ebay’s mobile commerce success shows that consumers are willing to transact on a mobile device. In just the 30 days before Christmas 2010, eBay transactions were valued at over $100 million  in gross merchandise value, a 135% increase over last year (Mobile Commerce Daily).

“Today’s consumers are transforming the shopping experience with their mobile phones, and retailers who have not broken down their siloed channels will not be able to keep up,” says Jim Bengier, global retail industry executive for Sterling Commerce.

2011: The Year Of Mobile Commerce

In the rush to check off the branded app and social media platform “must-have yes boxes” , mobile commerce sites were passed over by retail brands, and consumers have been left to “pinch and zoom” and fumble with large format websites not optimized mobile devices.

How big is the mobile commerce opportunity? In July of 2010, a scant 12% of online retailers had a mobile commerce site and an even smaller 2% had an app with checkout capability (Acquity Group). Even with these dismal brand/retailer adoption numbers, US mobile-commerce (sans travel bookings) grew from $400 million in 2008 to $3.4 billion in 2010, and growth is predicted to be “explosive” in 2011 (Mobile Commerce Daily). Show me the money, indeed.

In 2011, linking a smooth-running mobile commerce engine to special offer and redemption platforms/efforts will emerge as essential, as this is the simplest way to track success in a way most retailers understand. Retailers who sell online should build robust mobile commerce sites linked to their etail “technology stack” in order to capture converted sales, driven by mobile (or social) marketing. Simply “scraping” an etail website and shrinking it to fit for mobile ignores key differences in mobile vs at-home consumer purchasing-related behavior.

Social Commerce: Sharing The Wealth

Of the 620 million consumers using Facebook, the most active 200 million access the social network through their mobile device.

Why do large retailers and brands spend money building up millions of Facebook Page fans and then drive them away from Facebook to convert a sale? It’s even worse if they send a mobile consumer to a standard website.

Increasingly in 2011,  retail brands will use Facebook to promote special deals for fans, and give them the option to buy what they are promoting by linking to a mobile commerce page where that product is cued up. Facebook might-well offer these tools for businesses as a part of Facebook Deals, as they look to emulate Groupon’s incredible success.

Social commerce will take a while to catch on, but is on the horizon. It is an extension of mobile commerce, because technical integration with the “etail technology stack” is needed to create Facebook Commerce tabs, so secure transactions can take place within Facebook pages.

The power of social commerce really shines when, for example, mobile (or Facebook commerce tab) purchases driven by special deals offered to Facebook fans can be shared within (and extended to) the buyer’s social graph, after the purchase is made.

Tap, Tappity, Tap: NFC  Taps Established Consumer Behavior

I’d be remiss if I did not mention NFC (Near Field Communication) in this post. While mobile and social commerce are next up for online purchases on a smartphone, mobile payments at point of sale for smaller transactions will also be a hot topic in 2011. The path to a “mobile wallet” will be rocky, but NFC will emerge as the best way to both validate mobile proof of presence, and conduct small “tap to buy” transactions using value deduction from a secure, preloaded digital account contained within the device. Consumers know NFC and it is easy to use. The fact that three big US carriers have buried the hatchet long enough to line up behind NFC via the formation of Isis, is a powerful signal.

These inherently mobile “real life hot links” need to go somewhere, so NFC will support the rapid growth of mobile commerce as well. Watch for NFC tags to start appearing in pilots/tests on out of home advertising, packaging, and even wine bottle labels.

Conclusions

Mobile commerce drives revenue and location-specific redemption of special offers that can be promoted via social media marketing. Redemption takes the form of real mobile commerce transactions linked to promotions that mimic the powerful Groupon model, without giving up the margins. Mobile commerce will grow rapidly in 2011, as branded apps fade in importance, in direct proportion to increased data speeds,  accelerated location-enabled smart phone adoption/usage by consumers, and the creation of mobile commerce sites by retailers.

Facebook will increasingly play a role in every brand or retailer’s marketing plan. With 200 million accessing it via their mobile device, Facebook will become a place where discounts, sales, and special offers are  not only shared and compared, but increasingly parlayed into converted mobile commerce sales. Facebook commerce transactions that leverage this same technical backside integration and occur within Facebook will not be far behind.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of mobile . He is also running sales for for mobile commerce solution provider Unbound Commerce. Contact him today to learn more.

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Not so long ago, in a Harvard dorm room not so far away, Facebook was born. In record time, Facebook has graduated to the big time.

Today’s announcement of Facebook Deals is very significant, as it shows Facebook is looking beyond contextual advertising and toward the power of mobile “social experiences” to drive purchases and tracked point of sale interaction. Fueled by special deals offered by the legions of businesses who already use Facebook as their primary social media engagement platform, Facebook Deals tips their m-Commerce strategy hand and, as such, is a big deal.

Beyond Advertising

While college students certainly still use Facebook, it seems a broader audience that includes 500 million active users also see the appeal. Facebook has capitalized on this user traffic to the tune of an estimated $600M in contextual advertising last year. This is small beans compared to the close to $30 Billion in annual revenue Google is generating, 97% of which comes from advertising.

While this gap between Facebook and Google is one indicator the size of the advertising opportunity in front of Facebook, they also have the unique ability to capitalize on something perhaps even bigger, by driving tracked proven m-Commerce revenue linked to a specific location-based marketing campaign for small businesses and large brands alike. Google has been trying to back itself into this powerful social interaction value proposition but, to-date, has failed.

200 Million people now access their Facebook accounts via mobile. If Facebook can provide a secure, customizable revenue engine, reporting dashboard, and accounting system that users and businesses both trust, they could be in a unique position to capitalize as m-Commerce finally emerges from uncertainty and takes center stage.

Facebook Well-Positioned With SMBs

The rapid adoption of Facebook by consumers and businesses alike has changed the very nature of marketing. The new two-way street norm of required engagement with consumers has evened the playing field between small and large brands – and has fueled Facebook’s growth and popularity via an ever-increasing stream of relevant content at the same time.

As location-enabled smartphone user ranks swell, connectivity issues improve, and data costs fall, Facebook hopes the day is not far off when all businesses will need a live dashboard that controls a branded mobile Facebook page. This could become more important than having a “standard” website. For many, it already is.

The Check-In Craze: Watching And Learning

As the Foursquare and Gowalla-lead “Check-In” LBS craze swept in last year, Facebook watched and waited. User numbers climbed even without an LBS play and advertisers lined up. Facebook watched and waited, and learned.

When Facebook finally launched check-ins via Facebook Places “way back” in August of 2010 and embraced the unique location-awareness capability of mobile, it was a sparse affair that simply answered the Foursquare and Gowalla challenge. Even if basic, checking in directly on Facebook sped up the process by cutting out the middle man, since Foursquare and Gowalla piggybacked on the users Facebook graph.

Lately and perhaps not coincidentally, the initial novelty of “checking in” via a function-specific platform/app like Foursquare and Gowalla has waned. Even though each company is adding functionality as fast as possible, they simply do not have the local reach to add real consumer rewards fast enough to please most of the people most of the time. Facebook, if nothing else, has this reach, and this add to the power of the timing of the launch of Facebook Deals (yesterday).

Tapping The Power Of The Private Sale

Another location-based force that has rapidly re-shaped consumer interaction with products and services is the “private sale” phenomenon. While it’s long been accepted that consumers will act based on opinions from a trusted network of peers, there are finally ways these actions to translate into real, tracked mobile sales that have the tangible and impactful side benefit of driving live bodies into a retail point of sale.

In the last 6 months, “private sale personalized shopping” companies like Groupon, Living Social, and RueLaLa have been printing money by tapping into the desire for small and mid-sized businesses to drive new customers into their storefronts by offering special loss-leader deals via mobile.

It is interesting to note that CEO Mark Zuckerberg focused in on the “if you get three friends to check-in with you, you get something free” element yesterday. If you use Living Social, you know that this exact model provides the viral, turbo-charged boost they use to spread their deals among the interlocking social graphs of their subscribers.

I heard recently that Groupon is only able to process 1 in 7 deals proposed to them by small  businesses and is generating an estimated $50 Million a month in revenue. Worth an estimated $1.3 Billion while taking in only 135 Million in funding, Groupon is proof that small businesses will share a generous portion of the incremental gross sales, in order to have a shot at winning over new potential long-term customers that they know came in and redeemed the loss-leader offer. If this $50M a month figure is accurate, by the way, it means that the Chicago start-up is roughly matching behemoth Facebook in annual revenue.

Again Facebook has watched and waited, as (literally) hundreds of “daily deals for you” copycat (and well-funded) companies have sprung up and, as such, have proved the viability of the “opt-in daily deal” model on a massive scale.

Since almost 70% of US businesses have a Facebook page right now, Facebook could blow past these”check in for a personalized deal” companies that all must compete with each other and sell-in their solution to one small business at a time (or, more importantly, one giant brand’s “gatekeeper” agency at a time). The latter, in my opinion, is the harder row to hoe.

Into The Path Of The M-Commerce Parade

M-Commerce is a hot topic and, finally, there are real metrics to back up the years of wild expectations and predictions. With Deals, Facebook has stepped off the sidewalk and jumped out into the middle of the street, just as the location-based “special offer” m-commerce parade is poised to sweep over them.

These “daily offers” are nothing more than a new, location-based (mobile) way to promote the same tried and true “chalkboard” restaurant/bar specials or “sale bin” store items you see every day. The difference is that they are discoverable, BEFORE you enter the location/point of sale, when a consumer is in actual real-time physical proximity to that same location and have volunteered their location to the platform that is displaying the deal.

Think mobile is not ready to handle for the volume of potential commerce? eBay will more than double m-Commerce this year, from $600M last year to an-expected 1.5 Billion in 2010.

With the launch of Deals, Facebook is now playing in this hot space and can offer richer and richer solutions for businesses and consumers alike that can scale very quickly. They can capitalize on what has worked for other players with far-less reach that have conveniently prepped the landing zone before them, and avoid what has not.

A Single Solution?

By positioning the mobile Facebook app as the “login” solution that can also serve as an authentication engine, Facebook hints at their intent to solve the problem of “app option overload” for consumers and the “financial backside fragmentation” issue that has long-plagued the e-Commerce world. These elements will be especially interesting to watch.

While consumers do not all enjoy having to open a different app every time they walk into a business, the more important reason Facebook is poised to solidify the opportunity like no other is due to the fact that small town small businesses are generally already familiar with managing the backside page interface. Again, a whopping 70% have a Facebook page.

With so many social media options that may or may not include a customizable LBS m-Commerce element, big national brands (and their agencies) are also seeking a single solution. If Facebook simply can add the “check-in” and related special offers and m-commerce redemption tools they need to what they already provide, the barrier to entry becomes very small across all adoption fronts.

What’s The Big Deal

If mobile Facebook users can act upon a proprietor’s customizable call to action  by being directed to the location near them, debit an account on the same mobile platform that showed them the offer, and link it to trusted input from their social graph, Facebook will be linking the power of social marketing and m-commerce.

If Facebook can prove that consumers will not react adversely to special offers being “pushed” toward them when they are out and about, based on actual location and other algorithmically calculated variables like time, weather, and past behavior, well that would be something.

What if they could prove that consumers will volunteer “personal preference profiles” including what brands they like most, in exchange for real savings linked to location-based local or regional deals personalized for them? Not so far-fetched.

With m-commerce predicted to explode from $1.9 Billion in 2009 to almost $24 Billion by 2015 (see above), Facebook Deals might be just the beginning for the social network. Yes, Facebook Deals is a big deal.

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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of location-based social media marketing. Contact him today to learn more.

Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of location. Contact him today to learn more.

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Last Monday, I attended an event at MIT in Boston. It was a standard panel-style presentation/discussion, with a moderator, sponsored by Nokia (thanks for the turkey wraps and little red gourmet cupcakes). It “sold out” in advance and I’d guess at least 200 people were there. It was, literally, standing room only.

Are Today's Agencies Enbracing Mobile?

Billed by organizers (Mobile Monday Boston) as a way for attendees to “learn the realities of mobile advertising”, the panel was stacked with ad agency people. Many attendees I spoke with saw this as a rare opportunity to hear directly from ad agencies, regarding their mobile plans. A finger on the pulse of those paying for the upkeep of the mobile heartbeat.  After all, if these agencies have the ear of the brands, then knowing their mindset regarding tomorrow’s mobile spend is very important, as the collective “Mobile Industry” springing up around all this “potential” needs to get paid today.

The Year of Mobile, Every Year

With the general mobile advertising outlook over-ripe from 3 years of unrealized, predicted mobile spending ramp-up, this night had the potential to shed some real light on the future of mobile marketing, and, perhaps, the fate of many of the companies represented in the audience. With livelihoods literally depending on brands spending real money via the mobile marketing tools many in the audience had invested so much time and money in, it is little wonder the event sold out in advance.

The Auditorium Fills Up! It Was Standing Room Only.

The predictions about the mobile ad spend have been recently correcting downward, as most brands idle on the sidelines, in a wait and see mode regarding mobile. Many dabble in mobile banner ads, a few skin up and launch product-related iPhone apps, and most have plugged into the free social media machine. But the big money is still not flowing and there is a backlog of companies waiting for the faucet to be turned on.

Are Agencies Paving The Way Or Blocking Progress?

Disclaimer: I have long-suspected large agencies of stunting the potential of mobile marketing because they fear that tracking and reporting real results regarding converted sales could shine unwanted light on all the untracked bread-and-butter mass broadcast marketing they run via traditional media. So, this night I came prepared to have my mind changed and I really expected to see and hear the excitement agencies were passing along to their clients. Why else would they have signed up for this panel? I was ready to be convinced that my conspiratorial theories were wrong (or at least have my mind set at ease).

To set the stage, here is the actual verbiage used to promote the event:

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Mobile advertising is getting a lot of hype, but what are brands really doing in mobile today?  What should we expect in 2011?  Our panel will discuss the realities and answer questions like:

• How big is mobile brand advertising?
• How does mobile fit into the big picture for most brands?
• What are the hot issues for brands? Targeting? Buying? Ad formats? Measurement?
• How has Apple’s promotion of iAd changed the market?
• What are the opportunities for publishers and app developers?

Speakers:

Adam Towvim, Jumptap (Moderator), Brett Leary: VP/Dir of Mobile Marketing at DIGITAS, William Nann: Director, National Advertising Sales at Crisp, Brenna Hanly: Mobile Catalyst at Mullen, Jon Phenix: VP Sales, Nexage, and Stephen Bagdasarian: Digital Strategist & Mobile Specialist, Hill Holliday Advertising

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This was a who’s who of Boston Ad Agencies and the purpose was to have them explain their individual or collective “realities” right there, live and in front of a room of mobile industry “insiders”. Kudos to Mobile Monday Boston for putting this together, by the way.

Sponsor Nokia Kicks Off

Sponsor Nokia opened the evening with a slideshow overview of their plans to re-take a share of the booming US smartphone marketshare they let slide by. They announced a $10 Million dollar developer contest designed to lure apple-addicted code writers their way.

The slideshow touted their global marketshare and reminded us all of the gazillion Nokia phones they sell. Despite impressions here in the US (caused largely by iPhone mania), they are a real powerhouse elsewhere. The new N8 just launched in the US and the Nokia team even had a fishbowl full of business cards collected, for the purpose of handing out two new phones at the end of the night to two lucky winners. Nothing turns heads like free phones as schwag. They even branded the nametags at the conference, making it look like 200 Nokia employees were in the audience. First time I have ever seen a logo on a nametag. Pretty smart, actually.

The guy next to me took notes about all this on his iPad, and even snapped a few pics on his iPhone, as did I. Nokia is well-positioned to make some moves and has a track record a mile long but, in the US, they have a long way to go.

Patterns Emerge

Top Boston Ad Agencies Address Mobile

Jumptap’s Adam Towvim was the moderator and did a good job all night. He kept the panel moving and asked the right questions. As the conversation flowed along, some clear patterns  emerged.

The first was that fragmentation was generally viewed as a big problem in the mobile landscape and that it negatively impacted the ability of agencies to convey a concise strategy to their clients.

The second was that ad serving consolidation was needed to increase efficiencies, reduce redundancy, and allow the agencies to better know WHO was actually seeing the mobile ads and better-measure engagement, across all platforms. A tall order.

The various kinds of phones (feature phones vs smart phones vs “candy bar” phones) were mentioned as an additional challenge.  Ad exchanges and buyside technology plays (to aggregate various ad servers) were also mentioned as welcome tools.

Sponsoring or branding iPhone applications was discussed as a way that brands could get involved, but it was noted (and generally agreed) that few agencies were adequately staffed up for  this.

Brenna, the representative from Mullen mentioned that she worked on a crowded creative floor and only-recently heard mobile advertising even mentioned. She offered that only because the team had been shown a presentation on the potential of iAd had the topic even come up.

iAd was generally seen as a positive platform for creative to be conveyed on both mobile and on tablets, but soon the conversation shifted to the fact that Apple was wielding too big a big control stick and some brands were bailing out (IE Adidas).

The discussion was fairly interesting (and fair) but not very exciting. The focus seemed to be more about “glass is half empty” what-can’t-we-do problems with mobile reach and fragmentation. Branding apps and creative rich media used in addition to mobile banner ads were lightly touched on as positive. There was little “let’s dive in” energy and only a smattering of carefully worded cautious optimism. All evening, I had the nagging feeling that something was missing…what was it?

What Was Not Said

The time was 8:15 and the panel had been on stage for over an hour when, finally, it happened! Brett Leary from Digitas was talking about the potential of the iAd platform, when he mentioned LOCATION. Yes, that little teeny detail about mobile marketing was not mentioned for the first hour+ of the discussion.

As if startled awake, Steve Bagdasarian from Hill Holiday picked up the ball and ran with it, nailing  several important factors one after another that only mobile advertising can offer brands. He spoke of “marketing to context” and how mobile allows even a small campaign to yield very large results and learnings. He spoke of “completing the user experience cycle” and how the “where factor” adds a powerful new element for brands.

Finally, just as it seemed things might heat up and the true power of mobile fleshed out, the moderated session ended, and the floor was opened to audience questions.

A Murmur Of Energy

Astounded that it had taken until nearly the end of the evening for the fact that most mobile devices know where they are and can deliver contextually-relevant messaging to come up, I raised my hand and was called on first. I asked about Mobile Proof Of Presence and “checkin” transactions linked to marketing messages. I asked for each panelist to comment further and expand on the potential they saw regarding Location as a mobile differentiator.  A murmur of energy swept through the crowd.

Again, Steve Bagdasarian from Hill Holiday lead the way. He was genuinely fired up and called mobile Location Based Services (LBS) “the future”. Steve described standard banner ad click-though measurement as “not suitable” for mobile and even tied in brick and mortar “here and now” campaigns as key. He even mentioned New England-beloved Dunkin Donuts as a willing participant in some tests his agency was running.

Will Nann from Crisp jumped in and added that he thought measurement was key and Brenna from Mullen asserted that “time and place marketing” and “learned purchase behaviors” would be very important. Yes!

Brett from Digitas (remember, he first used the “L” word), asserted that mobile could “use all the elements” and would emerge as powerful, as long as tracking could work across all platforms.

Another question was asked and the discussion spun off into tablets, Nokia hurriedly handed out two new N8 smartphones via the business card drawing, and the program ended.

Conclusions: Agencies Remain Cautious

It was an interesting event, don’t get me wrong, but I was left with the distinct impression that, even when confronted with a room full of mobile industry insiders clamoring for evidence of some optimism, agencies remain cautious and, unless prodded, will not push mobile on their clients, at least until reach is better understood and confusion caused by fragmentation reduced. This implied “all or nothing” trigger point felt, to me, more like a convenient excuse, than a real client-side-generated requirement.

Hill Holiday stood out as the most-willing to “go for it” and the resulting impression was not, at least to me, one of foolhardiness. It was, in fact, the opposite.

Test Small, Learn Big: What Can Be Done

To get ahead, in my opinion, agencies need to embrace the idea of “test small, learn big” and those out there with solutions for forward-thinking brands should describe them to the brand’s agency of record as a low-risk  trial. Or they should pull the “end around” and find a cheerleader at the brand to demand that the agency address the measurable mobile opportunity with, at least, a small foray.

Mobile solutions that offer low-risk pilots and can generate demonstrated revenue lift (without causing confusion) will open the doors to more and will win early. Dashboards that allow the agencies to view/understand metrics, own them, and pass these on to their clients/brands are essential, as the agencies need to made to feel they are in charge of the results and pass them on at their pace, in synergy with other non-mobile campaign results. Agencies that bring these platforms to their brands will be seen as innovators, but the platforms must first win over the agency and be prepared to let them be seen as the winners.

Even if on a small (initial) scale, trials of these mobile marketing tools can show the brand real numbers and label the agency as forward thinking and not afraid of mobile, even during this “fuzzy front end”. The time is now and those with numbers generated over time (even if small now, on a user percentage basis) will be well-positioned to win when the user numbers catch up. The brands whose agencies push this strategy now, will beat their competitors whose agencies fail to act boldly and try some of these new, exciting tools.

Just DO It (and log the metrics)

Doing versus talking about all the reasons not to do is essential, especially in the face of mounting evidence that mobile usage and search is taking off, while at-home desktop search is falling (+247% vs -15%). While the percentages of those who engage with branded businesses via the location-enablement of their phones are still small, this opportunity to learn is big. If a consumer is out and about and searching for something, brands need to be ready to show them WHERE to locate that item and buy it, right then, in that crucial mobile-only moment. And their agencies should be telling them the best way to do it.

Are the agencies hurting mobile? I think the answer is no, but they certainly can do more to encourage trials and not link mobile marketing to unrealistic requirements like 100% defragmentation and total, complete reach, with uniform tracking across every device or platform.

Agencies also need to take the time to educate their employees on the basics of mobile marketing and LBS. This is crucial. It was clear to me that some top people at the agencies represented at this event were not fully versed in how these tools really work and the potential value of the metrics that can be generated. They need to educate themselves.

The Shotgun AND The Rifle

Most of all, in my opinion, agencies must discard the notion that mobile campaigns that provide tracking dashboards and ways to demonstrate ROI will expose the inadequacies of the other more standard media buys that do not. There will always be a place for the shotgun approach in marketing. Mobile, using the power of location, is the highly accurate rifle shot.

Where Can I Buy These Cupcakes? They Were Awesome!

All in all, it was a good evening. I was relieved that the topic of location and the unique differentiating abilities of mobile platforms was discussed, even if it was tacked on at the end of the evening and initiated by an audience question. Clearly, we in the industry need to make it easier for agencies to focus on the full half of the glass, but agencies also need to put aside the convenient excuse that they will only let their brands dive in when every single element of mobile marketing is known and understood.

As the Mad Men TV show teaches us, the basic premise of advertising has been around for a long time. Mobile, on the other hand, offers us new and different and untested potential and there is a degree of “try it” needed if brands are to be exposed to the full potential of tracking incremental sales tied to specific mobile campaigns.

Thanks again Mobile Monday for the event and to Nokia for sponsoring it. By the way, where did you get those little red velvet gourmet cupcakes? I wish I could use my phone to find the brand that makes them and then navigate to the authorized retailer near me right now that sell them. I wish the agency that handles their media would call me and hire me to help. Wouldn’t that be sweet!

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Wilson Kerr (@WLLK) is a former Tele Atlas exec and started Location Based Strategy, LLC in 2007 to help clients harness the power of location. Contact him today to learn more.

BREAKING NEWS:

Want to check out the potential impact of location-based Personalized Shopping in real-time? Well, for a while today, you had to wait at least a little while longer to review the role group-buying site Groupon will play.

Their site went down and temporary chaos ruled, due to unprecedented consumer demand for today’s unique deal from national retailer GAP. The (ongoing) deal is a limited time offer for a $50 gift card from GAP, for $25. Free money.

This looks to be the first time a national deal of this sort has been offered and the response shows the true power of offering pre-qualified opt-in consumers a tracked campaign that can be tied to incremental (frontside) retail sales lift.

I have written about this trend previously and the space is red-hot.

Groupon Site Crashes Due To National Gap Deal Interest

By signing up for Groupon, consumers ask to be told about deals near them. Since the GAP is a national retailer, they have locations in every city that Groupon has local coverage in.

My local Groupon Boston discussion board was packed with confused customers, dealing with a site trying to process too much revenue too fast. The good, validating news for Groupon and other Personalized Shopping players like Living Social and RueLaLa is that these confused customers were/are all frantically trying to buy the deal.

This is the online/mobile Personalized Shopping equivalent of a frenzied 6 AM rush through the doors on Black Friday.

Here was the official response from Groupon:

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From Moderator “Josh At Groupon” (14 minutes ago):

Everyone experiencing site issues:

Thanks for your patience and sorry for any inconvenience. We’re experiencing an unprecedented level of site traffic today and are monitoring the site all day. If you’re experiencing some technical troubles with the site, I suggest trying to reload the page a few times. If you continue to experience trouble and need to leave the site for a while, just check back before the end of the day and buy your Groupon then! This deal will be available until midnight. Again, very sorry for the trouble.

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In Boston alone (I refreshed a few times and the page loaded without a “Something Broke” error message), at the time of this writing this, 5898 people (and counting, fast) bought the deal (and there is still over 9 hours to go). That’s almost $150,000… at mid-way through the deal, and in one city.

Groupon is in about 75 US markets, so, even if we stopped the deal now, that’s in excess of $11 Million in revenue, sold to about 450,000 people, in a single day.

And, assuming Groupon customers do not melt-down their servers entirely, there is still 9 hours to go. Phew. No wonder they are valued at  over $1 Billion.

Some lessons here are to 1) carefully consider the impact of the fine print on hundreds of thousands of shoppers 2) do not under estimate the enthusiasm of a populace seeking a great deal near them and 3) location-based Personalized Shopping is here to stay and is about to get a whole lot bigger.

Read more about my take on Personalized Shopping here and let me know how I can help your brand take advantage.

-WK

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Wilson Kerr (@WLLK) is a former Tele Atlas exec who started Boston-based Location Based Strategy, LLC in 2007 and is helping his clients harness the power of Personalized Shopping. Contact him today to learn more.

Wilson Kerr (@WLLK) is a former Tele Atlas exec who started Boston-based Location Based Strategy, LLC in 2007 and is helping his clients harness the power of Mobile Proof Of Presence. Contact him today to learn more.

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The promise of location-based mobile advertising has been painfully slow to materialize. It seems the last five years have all been declared “the year”, with the usual cliché examples flogged. Most brands and their agencies still pace the sidelines, waiting and watching. If they do add mobile to their spend, they tend to replicate the click-though web advertising approach, and miss the full potential.

In this post I will explore the rush of start-ups seeking to perform an end-around on the mobile advertising blockage, by betting that personalized, actionable, tracked, direct to consumer sales promotions that are location-based will finally unlock the true potential of mobile. In past posts I have discussed incremental, tracked sales revenue “lift” and the importance of remembering that brands make money by selling more products through authorized retailers, not by exposing their brand or driving people to a corporate informational website.

Driving Boots In The Door Is Key

The difference between an ad and a personalized location-based special offer is subtle, but important to understand, as we consider why “personalized shopping” start-ups are springing up so fast (and attracting so much VC attention). Mobile marketing, when linked to a call to action based on real-time proximity to a retail location (and honed by a personal preference profile) can finally show ROI by linking itself to proven in-the-door foot traffic (and converted sales). Thankfully, the platforms are now there to allow this to happen.

Discounts and special “limited time offers” are not new and have been around since the first baker made a double batch of bread by mistake and needed to sell the excess before it went moldy. By dropping the price, he increased sales volume and attracted new customers to his bakery. By selling more, he discovered he got a better wholesale volume price on the flour. So, even though he grossed less per loaf, his net profit per loaf held up, and he sold more bread and made more money. Simple math.

I have an admission. I check-in on Gowalla,  tweet on Twitter, post Facebook updates based on where I am, scan QR codes, use apps to find business addresses, and see a lot of contextual mobile ads, yet, after almost 3 years as a full-time mobile LBS consultant, I have never actually bought anything as a result of a location-based offer. That streak ended last Tuesday.

$25 For $50 Gift Certificate Prompted My First Location-Based Purchase!

I spent $25 on a location-based offer from Living Social, for a $50 gift certificate at a nearby restaurant called The Fireplace. (My wife is a “foodie” and enjoys dining out the same way I enjoy a day on a trout stream). How could I not? What is really amazing is that, in the 2 days the deal was offered, 925 other people also bought it, generating $23,150 in tracked, incremental revenue, all tied to a single, specific marketing message. Obviously Living Social takes a %, so The Fireplace does not take all this in, but the real value to them is the opportunity to win over repeat customers when they come in the door and sit down for a meal. What traditional ad or coupon or campaign could they possibly run that offers this sort of (tracked) response?

My First Purchase Based On A Location-Based Special Offer!

I checked Living Social competitor Groupon as I was writing this up, and they were offering a nearly identical deal from The Fireplace as well! (Groupon is a volume-”triggered”, limited time, personalized, local discount offer platform). I thought I was misreading the numbers…but over 4,500 people paid $20 for a $50 gift certificate, so far. Wow…that’s over $90,000 generated from a single deal, and counting. When is Groupon going public?! Are they hiring!? Check out the numbers on these deals. Remarkable.

Volume "Triggered" Discounts

Living Social and Groupon are but two such companies harnessing the power of delivering opt-in deals based on location and, I believe, they are on the leading edge of a “personalized shopping” craze that is about to sweep the mobile industry. Groupon, by the way, is not even 2 years old and is valued at least 1.2 Billion (yes, Billion). If they can sell 4,500+ visits to a single restaurant in a few days, what else can they do?

Another standout to watch, besides Living Social and Groupon, is RueLaLa. They serve up invite-only fashion brand discounts (via daily “boutiques”) to 2.4 Million members! There are hundreds more personalized shopping wannabe’s starting up now, to vie for a slice of the personalized shopping pie. Here is a quick sampling; Eversave.com, Woot.com, DailyDeals.com, DailyDeals.net, SaleCamel.com, FuseDeals.com, DailySteals.com, and DailyCheckout.com.

The ones that will win will use algorithms to learn from real purchases and deliver increasingly personalized and location-based offers that drive (tracked) foot traffic into physical locations.

Platforms/apps that track in-store metrics showing both foot traffic (MPOP) and sales conversion (redemptions) that are fueled by personalized location-based special offers (delivered by smartphone), will bridge the gap between the virtual world and the physical world. These platforms (with Mobile Proof Of Presence as a foundation) are about to become the hottest thing going.

Gowalla, Foursquare and their kind and doing some great things, but should consider that advertisers will want accurate metrics regarding brand interaction, within a retail environment where hundreds of brands might be present. For coffee shops and restaurants, their model works pretty well, but inaccurate and “fake” checkins are going to prove an achilles heel as/when the brands with the real money to spend get a taste of “tighter” MPOP accuracy via other options.

In April of this year, I wrote a post about the significance of validated MPOP (Mobile Proof Of Presence) and maintain that hyper-accurate MPOP validation linked to special offers, not mobile ads for brands, will be the key to finally unlocking the full potential of mobile. And it’s happening.

The LBS world was recently rocked by news that a pre-launch application called Shopkick had attracted $20 Million in VC funding. That’s right, the application has not even launched in beta, and the company has attracted what Mashable calls “an obscene amount of investor attention”.

Why, you ask? Because Shopkick intends to validate MPOP in a whole new way (they call it the Shopkick Signal), via installed in-store equipment that eliminates fake checkins and delivers marketing messages based on very tight proximity, within a store and without GPS. This means brand-specific checkins are possible, and they are accurate. According to a recent Techcrunch article, Shopkick co-founder Cyriac Roeding is quoted as saying, “This is all about foot-traffic. So far, no one has nailed a way to entice people to actually come to the store that makes sense to the retailer“, Roeding says. He goes on to say,“This is the physical world equivalent of an online click,”. Hmm.

Attracting "Obscene Investor Attention"

I assume the platform also will learn actual shopping and buying behavior and personalize the offers it serves up based on a powerful cocktail of mobile delivery+retail locations+brands carried+loyalty rewards+MPOP+special offers+redemption/ conversion tracking.

The platforms (like Shopkick) that capture accurate metrics generated by opt-in consumer interaction with retail locations (and sales conversion of branded products carried within those locations) are going to become very attractive to retailers, brands, and agencies sick of being screaming at by their clients to provide just such a solution. Remember, this is information that consumers ask for, and they are rewarded with savings on products they buy, in stores they visit.

Brands and retailers alike might finally step off the sidelines and onto the field, if they can track ROI and link incremental sales to campaigns, while providing a positive consumer interaction with both the brand and the retail stores authorized to carry it. The era of personalized shopping is upon us and mobile, at long last, might finally starting living up to its potential.

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Wilson Kerr is a LBS Consultant focused on helping companies understand and harness the power of  Mobile Proof Of Presence. He is also wondering  how he will slip the waitress his 50% off Living Social coupon at The Fireplace without his wife noticing.

Wilson Kerr (@WLLK) is the Founder of Boston-based LBS consulting firm Location Based Strategy, LLC and helps brands understand location-based forces that drive changes in human interaction and communication. He can be reached at Wilson@LBStrategy.com.

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As a LBS consultant seeking to fortify my position as a thought leader in the area of checkins and Mobile Proof Of Presence (MPOP), I scan daily blog posts, articles, tweets, newsletters, and emails for real, live examples of companies harnessing the potential of MPOP to drive sales lift.

Many experts (myself included) have opinions about how impactful the phenomenon of “brands delivering personalized marketing messages to opt-in consumers at the exact time and place they are most-able to act upon these messages” will be. My use of the word “phenomenon” here tips my hand, but specific examples that can be seen as validating use cases are generally still hard to find.

Checkin Platforms Have Paved The Way

While the potential has been in-place for some time, it has only been in the last 6 months that the stage has finally been set for cases of  lift to be demonstrated. By “lift”, I mean proven, incremental sales tied to opt-in location-based marketing campaigns delivered via mobile platforms that leverage the fact that a consumer willingly notified the offer-serving platform they were in physical proximity to the point of sale. We have Fourquare, Gowalla and other “checkin” platforms to thank for this shift, as their success has accelerated consumer and brand awareness (and calmed the hand-wringing “privacy alarm” naysayers).

The Meat Of The Matter

While checkins are hip and fun, the real meat of the matter here is in mobile payment systems, offer redemption tracking, and algorithmic “learnings” by the platforms that deliver real, actionable value to consumers.

This is what will get us over the hump, as the offers are not only unintrusive, they are personalized, actionable, and tied to a system that gets smarter over time, based on real consumer redemption/purchase behavior. Pie in the sky? Amazon nailed this years ago and new “customized daily deal” companies like RueLaLa, Living Social and Groupon are out of the gate and growing fast.

On July 14, Mobile Commerce Daily Associate Editor Dan Butcher posted an article that stopped me cold. Titled,“McDonald’s Goes With Near Field Communications For Sales Lift”, it succinctly describes a program that utilizes nearly every ingredient of (what I believe to be) the recipe for a new form of location-based marketing. Dan’s post was covering a July 5 post by Senior Analyst Red Gillen of financial consultancy Celent titled, “A Merchant’s Argument For Mobile Contactless Technology“. Note that the (bold) emphasis is mine, throughout.

Red Gillen Of Celent

Mr. Gillen researches payment initiatives and visited with McDonald’s in Japan, to discuss mobile technology. He starts off by saying, “..The focus of our discussion was McDonald’s use of mobile technology for sales lift purposes — i.e., as a channel to distribute coupons and special offers, to entice customers into McDonald’s restaurants.”

He is already speaking my language. “Sales lift” is another way of saying incremental purchases and his immediate shift to the importance of using mobile to drive more customers through the retail door struck me. Too many view the “mobile web” as a smaller version of the web and miss the obvious real world implications of being able to walk around, while online, with a device that knows where you are. Coupons are old news but linking Near Field Communication (NFC) as the “mobile technology” behind redemption by a specific customer and, thus, proving that customer was in a specific store at a specific time is not.

He goes on to describe the program in detail by saying, “Customers (now about 18 million of them) register as members of McDonald’s “Toku” promotional program.  On a weekly basis (in time for the weekend), McDonald’s sends program members a mobile e-mail, with a list of coupons and promotions available that week.  Customers then have two choices.  One is to use their mobile browser to open mobile coupons, which are shown to McDonald’s cashiers (a promotional code is clearly visible).  The other, if customers have already downloaded the McDonald’s app (which 8 million have already done), is to download the coupons to their contactless mobile wallet.”

Wow. An opt-in program. Time sensitive offers delivered to a mobile device. Two ways to redeem the coupons. One of them involves mobile NFC payment tied to a downloadable opt-in branded app that serves as a “contactless mobile wallet”. Hmmm.

McDonald's Mobile Coupons

Red is just getting warmed up. Remember this is not a pilot or a concept, this is  happening. He goes on to say, “Either way, the customer gains the benefit of the coupon.  However, with the contactless version, there is a special advantage.  Namely, McDonald’s is able to close the loop between coupon distribution and redemption.  By associating redemption patterns with a customer’s “Toku” membership ID number, McDonald’s begins to develop intelligence about that customer’s preferences.  Based on this, McDonald’s is able to configure and send out highly personalized promotions (by menu item, specific restaurant, time of day/week, etc.) to the customer’s mobile phone, which the customer is more likely to redeem. This increasingly tightening marketing loop cannot be achieved with plastic membership cards, nor with mobile browser-based coupons.”

So, the NFC redemption system learns as it goes and is able to generate increasingly personalized time/place/item offers based on real behavior within the application. This is the “walk-by-and-get-an-offer Starbucks Cliche” so often flogged in LBS circles, but it’s real and it’s live now and, apparently, used by 8 million opt-in consumers in Japan, in conjunction with a distinctly American brand that is hardly a fringe player in the quickserve landscape.

The finale is contained in the last paragraph, “Once customers tap their contactless coupons, the data is leveraged to immediately send orders back to the kitchen..This just goes to show that contactless is not just about payments.  In fact, it often isn’t about payments at all..”

NFC Contactless Payment and Redemption

Red’s point is that, even though NFC is most-often associated with cash-free payment (for example in mass transit ticketing), the real power of this model is that the system is using the personalized, tracked coupon redemption patterns to learn from the consumer’s behavior in order to both prove increased store visits and sales (lift) and increase efficiency via the speed of the resulting transaction.

I have covered why this is so important for brands to understand in previous posts, but suffice it to say I am excited to finally see the first real examples of companies leveraging the power of tracked, cutting edge mobile LBS technology, while also respecting and harnessing the power of consumer preference.

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Wilson Kerr (@WLLK) is the Founder of Boston-based LBS consulting firm Location Based Strategy, LLC.