LbM Technologies: Which has Potential?

Location based Marketing (LbM) is one of the marketing keywords of the future. The potential of location-based technologies is increasing, as is interest in them. There are now various technical options for localization. However, these also differ in their possibilities: some LbM technologies clearly stand out from the standards of others.

Anna-Lina Köhler, who is dealing with LBM as part of a study assignment at the PFH Private University of Göttingen, met a specialist in the field: Stefan Brinkhoff, founder of locandis, the startup for Location based Marketing Solutions. In the interview, he presents some of the essential LbM technologies and assesses their potential.

Anna-Lina Köhler: How can the word “Location” be defined in terms of Location based Marketing?

Stefan Brinkhoff: The basis of Location based Marketing are, as the name suggests, location-based services. There are very different options for determining the location. Basically, however, a distinction is made between outdoor and indoor technologies.

Anna-Lina Köhler: Which methods can be assigned to the outdoor technologies on this basis?

Stefan Brinkhoff: “The so-called Cell Tower are among the outdoor technologies. The localization via these Cell Tower is mainly used by providers such as Telekom or O2. The mobile phone provider can recognize the position of the smartphone through the customer’s permanent registration in his network within a certain framework and thus send him a corresponding SMS. No app is required to deliver this notification, but the mobile phone provider is also only able to transmit simple text messages. Although work is currently being done in the USA to support Rich Text formats, this is very unlikely to be used by providers like Apple.

Anna-Lina Köhler: How well do these Cell Towers work?

Stefan Brinkhoff: A very clear disadvantage of the Cell Tower based location is that due to technical requirements the localization accuracy is sometimes very limited – there can be deviations of several hundred meters. In rural environments, there are even inaccuracies of several kilometers. In the best case, in urban areas, it is a localization accuracy that “only” deviates by 500 meters. I’m not quite sure if you should still call that Location based Marketing.

Anna-Lina Köhler: Are there technical possibilities to increase the accuracy of the localization?

Stefan Brinkhoff: The precision can basically be significantly increased by using an app, as a GPS localization function is used here. The standard APIs of the smartphone manufacturers manage to determine the current position of the user with an accuracy of 50 to 100 meters with an app running in the background. Unfortunately, however, it must be noted again and again that the localization function is usually not sufficient even in urban areas.

Anna-Lina Köhler: Why is that?

Stefan Brinkhoff: If there were a nationwide WiFi infrastructure in Germany, it would also be possible to locate the customer without an app via a WiFi-localized function that also uses trilateration methods. But until that happens, it will probably take a few more years, so that today WiFi localization is mainly used in the interior of buildings such as in shopping malls. Here, anonymized heat maps of the running behavior of individual customers can be recorded. However, this method is not suitable for individual customer contact – this is very important.

Partially questionable methods in LbM technology

Anna-Lina Köhler: So we are in the area of indoor technologies. What other methods are also in use here?

Stefan Brinkhoff: Furthermore, there is the magnetic field measurement indoors. Here, an attempt is made to exploit the specific characteristics of a building in relation to its earth’s magnetic field in order to locate a customer. With this method, the building is measured using “fingerprinting”, and then a localization can be carried out via the magnetometer of the smartphone. The disadvantage here, however, is that the accuracy of the localization is often insufficient, as the conditions of the earth’s magnetic field often change due to various interference factors. Another localization method, which is highly questionable in Germany from a data protection point of view, is localization via inaudible audio frequencies, which are broadcast via the retailer’s sound system and processed by the smartphone’s microphone. Small Bluetooth transmitters, the so-called Beacons, have also been essential for Location based Marketing for some time. They work with Bluetooth signals and are supported by both Apple and Google across all operating systems.

Anna-Lina Köhler: Which of these technologies do you think is the most promising in the future?

Stefan Brinkhoff: In my view, the Beacons are currently the most promising technology in this area. A decisive advantage lies in the fact that the procedure is “permission-based”. The customer therefore actively gives his consent to the localization. In addition, the localization function with a precision of about 1.5 meters is significantly above the standards of the other LbM technologies. Since the procedure works most reliably via an app on the customer’s smartphone, a customer approach is made possible that can take place individually, situationally, at the right time, at the right place and above all personalized.

Anna-Lina Köhler: Where is the maximum beacon density? Can the radii overlap, or should this be avoided as much as possible?

Stefan Brinkhoff: Basically, there is an overlap of radio signals, especially in small rooms. This often happens simply due to reflections. Overlays cannot be ruled out. But they are also not to be seen as dramatic.

Effects on the smartphone’s battery consumption

Anna-Lina Köhler: For many LbM technologies such as Beacon technology, users are often required to have the Bluetooth function of their smartphone switched on in connection with an app. This often affects the battery consumption of the smartphone. How is it with the locandis technology?

Stefan Brinkhoff: Yes, we have also heard from some customers that certain LBM solutions drive up battery consumption a lot. At locandis, we use, among other things, a so-called “silent tracking”. Our solutions are implemented in such a way that even with necessary Bluetooth use, the battery performance is not impaired. This is also due to the fact that the app does not have to be open to fulfill its purpose.

Anna-Lina Köhler: In the area of indoor localization, Philips offers a light-based solution for the localization function. Why do you think Beacons are still the better solution?

Stefan Brinkhoff: The infrastructure costs are completely different with Philips’ light-based solution. While Beacons can simply be attached to the ceiling, the entire lighting system must be replaced for Philips’ indoor localization. In addition to the high cost difference, there is also the significant disadvantage that indoor navigation with the light-based solution only works if the app on the customer’s smartphone is also open. This is not required with Beacon technology, and the app can also be closed. We assume that this has a significant influence on customer acceptance.

Anna-Lina Köhler: Finally, the question, what importance do you attach to Location based Marketing and its technologies for the future?

Stefan Brinkhoff: Location based Marketing is becoming increasingly important. Because advertising, especially for the younger generation, is relevant when it is broadcast in the right context. And this is made possible by Location based Marketing technologies such as Beacons.

 

Stefan Brinkhoff, locandis founder, in conversation with Anna-Lina Köhler