Location: The Last Third of the Holy Trinity of Data

Originally posted on Aaron’s work blog at WCGWorld.com on 9/2.

Location on Facebook is Dead. Long Live Location on Facebook!

Facebook’s recent announcement that it is “killing off” Places — the location-based service that was supposed to put LBS darling, foursquare, out of business — has many agencies and marketers asking, “what does this mean for the future of location-based servies?” For me, the biggest takeaway is that Facebook (like Twitter) realized that for most of its members, location is more of a feature than a service. And by encouraging more people to geo-tag updates, pictures and videos, they will actually start to accelerate the collection of data around the 3rd pillar of the “Holy Trinity” of data for marketers i.e. location.

As someone that spent the last 9 plus months writing a book on location-based marketing, I see this as a smart move by Facebook. Unlike LBS players foursquare, Gowalla and SCVNGR, Facebook made zero attempt to make Places fun. Facebook also mailed in its “Deals” service by doing a poor job mimicking group couponing sites like Groupon and Living Social. So rather than continuing to support a service that less than 3% of their member base used in spite of its prominent placement on the mobile site and application, they decided to “transmogrify” location into a feature.

As my co-author, Mike Schneider, noted in a recent post, ” Places, the Facebook feature may be dead, but LOCATION IS VERY MUCH ALIVE AT FACEBOOK.” This refocus should get the 750 million members of Facebook to more actively add location to their updates — with their photos in particular. Adding this additional layer of data explicitly (Facebook already collects a lot of geo-data implicitly based on IP addresses and GPS info but keeps this private) now allows Facebook to offer this richer stream to marketers as they target their marketing and Facebook ads to potential customers.

Where Does Location Fit in the Holy Trinity of Data?

For a long time now, marketers have had access to a plethora of demographic data (age, sex, race) about their current and prospective customers. Over the last 50 years, day-part data (knowing what day/time someone is viewing something) has made targeting even more efficient. This has been particularly effective in the online world because it allows marketers to swap in messages when they know their customers are most likely to act on them (e.g. ads for new movies on Friday afternoons). Now comes location data that now allows marketers to know who, when and where with an ability to act on all three via mobile devices.

This last third of the “Holy Trinity of Data” is important for a few different reasons:

  1. It helps businesses target only those customers that they want with the right offer at the right time in the right place.
  2. Companies can steal business away from competitors “in the moment” as they are deciding where to go for coffee, dinner, a new pair of shoes, etc.
  3. By mining data, marketers can look at “valleys” in traffic and create campaigns and offers that help drive the right foot traffic during less busy times of the day.

For Facebook, this is critical because unlike the 11 million foursquare users that are dedicated and hyper active, Facebook has hundreds of millions of members, many of which are starting to look like the general non-early-adopter population, will have larger bases of customers from which to collect data. While quantity isn’t always better than quality, in this case, it gives Facebook a definitive advantage because most marketers are interested in scale.

How Will This Impact Dedicated Location-Based Services?

While I don’t think that Facebook’s decision to refocus its location activities will have a dramatic impact on services like foursquare and Gowalla, it will start to simplify which services customers choose for certain activities. Those that are interested in the gamification and richer experiences that foursquare and Gowalla offer will now have one less competing service to check into. And like Facebook’s creation of the de facto social graph for the Web, foursquare has done a great job at developing a robust geo-database that it offers (free) via its open API.

However, because Facebook will now be collecting more location data than ever before, they will continue to undermine foursquare’s leadership position as a geo-data provider. It’s also worth keeping an eye on Google now that they are gaining some traction with Google +. This new direction will make foursquare’s tips, pictures and now “lists” a major differentiator. Foursquare also has a leg up in the fact that they are solely focused on location versus Facebook which has its hands in a few different pies at the moment.

In the end, its the user that wins here because having the ability to geo-tag photos or indicate geo-intent with status updates is a much more natural activity than having to take out one’s phone, open yet another application, find a venue and ultimately check into that location. That doesn’t mean the active check-in isn’t valuable or worthwhile, but rather that companies will need to think longer and harder about what offers, tips or recognition they provide to customers for actively acknowledging their presence in a store (or intent to go to a store).

What do you think? Will you use Facebook’s location feature more now that it’s no longer a service?

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