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Mid-Year Report on Location Market: Privacy, Google, and AT&T

June 25, 2014  - By

Half the year is over. It’s gone. Now it’s time to figure out where the location industry is going for the remainder of the year. One analyst (actually, several) believe that the industry, fueled by indoor location and place-based advertising, is around $14 billion right now — with no place to go but up — given some bump in consumer awareness. In other news in a busy month, Google bought Skybox Imaging for $500 million in cash.

As the mid-point of 2014 arrives, with a few big location industry deals already consummated, there is a chance for industry executives to study what is going to be a strong niche market in the months ahead.

One analyst believes a big location niche is indoor analytics and proximity marketing, which is defined as nearby a store or within a business. “The latter would include ads and coupons. We’ve estimated that roughly $3.5 billion of potentially $14 billion, or so, in 2014 U.S. mobile ad revenue, will be location-based [broadly defined],” said Greg Sterling, founder of Sterling Market Research. “Of that, about $1.4 billion will be ‘geofenced’ or nearby.”

Sterling believes that the in-store component is still in an embryonic stage. “There are billions of dollars of coupons distributed every year, but most of that is still print. Some of that is in-store distribution and redemption,” he said. “A portion of that over time will migrate to mobile in or near stores.”

Sterling said there are billions of dollars available from proximity marketing, but it will take time. He cites “Mapping the Indoor Marketing Opportunity,” a report he authored for Opus Research, that says the market for indoor location and place-based marketing/advertising will surpass $10 billion by 2018. (See a preview of the report here.)

In a published report, Sterling admitted that he was nervous about the $10 billion number, but it may turn out that the figure could be conservative because of the software licensing from indoor markets.

Sterling says that while indoor positioning has been important to the older location business, it is still in its early stages. The big deal is mobile, which has brought new attention and interest to location, he said. “Indoor location will feed mobile and online marketing with data and analytics as well as targeting opportunities,” he said.

Many executives and analysts in the location industry have marginalized privacy issues; some even say it is dead with opt-in approval by consumers. However, privacy issues will continue to hamper the location industry, Sterling said.

“Privacy is far from dead. Indeed, it’s on the rise, and a major issue that everyone in the location and mobile segments needs to tackle head on,” Sterling said. “Denial, delay and obfuscation will result in regulatory intervention and/or consumer fear/rejection.”

In a blog, Sterling said that the San Francisco-based Philz Coffee chain no longer will be tracking customers after a local ABC affiliate revealed they were using Euclid retail analytics. Sterling said the ABC report acted as if it had uncovered a big government or corporate conspiracy.

Sterling will be giving the keynote address at the Place Conference in New York on July 22 at the W Hotel. Topics include proximity marketing, indoor positioning markets, privacy and other location topics.

Google Continues Location Industry Dominance with Acquisition

Skybox-Google-logoGoogle enhanced its online mapping service by acquiring Mountain View, California-based Skybox Imaging for $500 million in cash. Sources say both Google and Facebook are purchasing satellite and drone companies in an attempt to expand into other market areas.

One of the ways Google will be leveraging Skybox is in disaster relief and to improve Internet access in remote areas, something the company has been strongly pursuing.

On its website, the five-year-old Skybox said that it plans also to share in the development of the burgeoning autonomous vehicle market and continue to design its own satellites.

A Skybox satellite image of Tampa, Florida.

A Skybox satellite image of Tampa, Florida.

AT&T Expands Location Information Services

AT&T’s new Location Information Services, which includes a security function and LBS, is expanding into more than 150 countries this summer in a pilot project. The Location Information Services are enabled through an API that can notify companies when their customers, who opt-in for the service, arrive in a new country.

Some application examples, provided by AT&T, include credit card companies confirming customers have traveled to a new country as soon as a device is turned on; allowing the credit card company to either decline or approve purchases overseas; companies using the service to track the movement of equipment to prevent stolen property; and the ability for hospitality entities to offer restaurant and other suggestions to consumers based on their location.

In other LBS news:

  • The new Amazon Fire Phone has GPS and location functions plus a new feature, Dynamic Perspective, which can be used for such built-in apps as maps and games. The phone is available on July 25, but Amazon is taking pre-orders. In the meantime, competitor Apple has a new iOS 8 feature that allows shoppers to enter their payment details on an m-commerce site by scanning their credit card with the camera on their mobile device, according to published reports. The operating system will use sensors to provide apps with indoor positioning data.
  • HERE acquired the mobile predictive analytics firm, Seattle-based Medio, earlier this month. The company plans to integrate Medio’s predictive analytics, in conjunction with its map platform, to customize LBS “prediction experiences” for consumers, according to published reports. These experiences (full disclosure, I hate it when companies use the word, “experience”) may include delivering restaurant or other information at a relevant time, such as around lunch. While no financial details were released, the deal is expected to close at the end of July.
  • Hundreds of businesses in Brixton, near London, will be integrating Apple’s iBeacon as part of the first networks for mobile payments, according to published reports. Businesses in Brixton are switching from currency payments to mobile payments by text. Previously, iBeacons have been used for proximity offers, advertisements and product information when a user is in a retail area. The mobile payment application allows users to quickly check out, reports say.

About the Author:

Kevin Dennehy is GPS World’s editor for location-based services, writing a monthly column for the LBS Insider newsletter. Dennehy has been writing about the location industry for more than 20 years. He covered GPS and location technology for Global Positioning & Navigation News for seven years. His articles on the wireless industry have been published in both consumer and trade magazines and newspapers.

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