Tracking devices that let you opt in to receive location-relevant information on your smartphone are becoming more widespread
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Or you’re at the airport and the airline’s mobile app prompts you to upgrade your seat.
Such futuristic-sounding scenarios may not be widespread, but are indeed happening via wireless beacon technology, which has been gaining a foothold in retail stores, airports, sports arenas, hospitals and other settings around the world. Major internet players are introducing beacon strategies as well.
Beacons are small gadgets installed in public spaces that use electronic sensors and short-range transmitters to communicate with smartphones and other devices. They allow businesses to send messages to nearby consumers. Shoppers generally give permission to receive the messages by downloading apps and enabling their phones’ Bluetooth feature.
Bluetooth low-energy beacons, in conjunction with apps, can ping mobile phones with special offers and targeted messages when shoppers enter stores – a phenomenon called proximity marketing – and help travelers navigate airports or patients find their way around hospital hallways. They also help businesses collect consumer information and monitor shoppers’ movements in stores – a feature that appeals to retailers and brands, but raises concerns for privacy advocates.
We believe that beacons are going to become a common part of life, not just retail.
|\u2014 Patrick Connolly|
While the technology underlying proximity marketing is evolving, the general concept appears to be gaining support among retailers and other organizations. “We believe that beacons are going to become a common part of life, not just retail. We will see them in corporate offices, airports, hotels, hospitals, smart homes, smart cities, etc.,” ABI Research Senior Analyst Patrick Connolly told CreditCards.com via email.
“The in-store experience is going to change dramatically over the next five to 10 years, and will shift away from the bottom line to creating excitement and ease for consumers; analytics are essential in enabling this, and customers will have the right to not take part if they want,” he said.
In 2020, ABI Research predicts manufacturers will ship more than 400 million Bluetooth low energy (BLE) beacons, currently the dominant retail indoor location technology. An estimated 4 million beacons shipped in 2015, Connolly said.
Growing in retail
Retailers are ramping up beacon installations, according to ABI. Macy’s introduced more than 4,000 beacons in its 800 department stores in 2014 using Shopkick’s shopBeacons, which are based on Apple’s iBeacon technology standard and work with the popular Shopkick shopping app.
Shopkick now has more than 20,000 beacon installations, with retailers American Eagle Outfitters and The TJX Companies (T.J. Maxx, HomeGoods, Marshalls) also among its clients, according to Margot Langsdorf, vice president of client services at Shopkick.
“This allows users to be rewarded for the simple act of visiting a store,” she explained via a representative. The devices emit an encrypted signal, using a combination of BLE and ultrasound technology, which Shopkick users and retailers’ own apps can pick up, she said.
From digital welcomes and store directories to special offers on merchandise based on their location in the store, customers are able to leverage beacon technology.
|\u2014 Orlando Veras|
Shopick also is working with select retailers to allow users “to be guided through large stores to find what they are most interested in, while receiving rewards for visiting certain parts of the store,” said Langsdorf.
American Eagle Outfitters used its beacons in the past to reward customers for trying on clothes in its stores.
Macy’s in 2015 followed up its shopBeacons rollout by installing another set of BLE beacons that work in concert with the Macy’s app in stores nationwide. Customers opt in to receive the notifications, according to the retailer, which didn’t provide statistics on its beacon program.
“From digital welcomes and store directories to special offers on merchandise based on their location in the store, customers are able to leverage beacon technology to their benefit while on the go, directly to their mobile device,” Macy’s spokesman Orlando Veras told CreditCards.com via email.
The largest deployment to date, however, is a rollout by Rite Aid of beacons the size of a quarter in its roughly 4,500 stores. The drugstore chain had no comment beyond confirming the beacons’ presence, but it is said to be working with inMarket’s “mobile to mortar” platform.
InMarket, which works with retailers to loop in third-party apps, has more than 46 million active users, company spokesman Dave Heinzinger says. That’s about 25 percent of all U.S. smartphone users, he says.
Online-style analytics about in-store shoppers
InMarket’s beacon data platform works with apps to pinpoint a customer’s location in a store and help build a profile over time based on his or her shopping patterns, according to Heinzinger. This information allows stores and brands to, for instance, predict when shoppers may be thinking of returning to the supermarket and to touch base with them before and during their shopping trips.
For years and years offline has watched \u2026 unable to do the things that e-commerce does.
|\u2014 Dave Heinzinger|
The idea is to make offline businesses more like e-commerce, in which online stores offer layers of personalization based on customer data, Heinzinger says. “The in-store messaging piece of this is really just the very tip of the iceberg,” he said, explaining that consumer openness to brands starts to increase before a shopping trip and peaks in the store, then drops sharply after the visit.
“For years and years offline has watched \u2026 unable to do the things that e-commerce does,” such as showing shoppers Nike ads if they searched for sneakers, Heinzinger says. “That sort of thing is now available to offline brands and retailers because of mobile and because of the accuracy the beacons provide.”
One inMarket client, The Clorox Company, targeted busy millennial moms in grocery stores with a back-to school campaign that sent recipe ideas from its Hidden Valley salad dressing brand. Another client, Energizer, sent a message about its EcoAdvanced recycled-battery product.
Neither of those mobile ad campaigns involved shopper discounts, Heinzinger notes. “Our most successful campaigns haven’t been about discounting. It’s the timing of the message that really drives the interest and the sale,” he says.
Beacons are showing up elsewhere as well.
- Major League Baseball, through ballpark beacons, provides offers, rewards, directions, parking information, concession menus, seat upgrade ability, and video highlights to fans with the MLB.com Ballpark app.
- In September, Proxama PLC, a U.K. mobile proximity marketing business, said it was partnering with taxi advertising firm Ubiquitous to deliver messages to taxi customers and would install up to 4,000 beacons in taxis across U.K. cities.
- In 2014, Miami International Airport deployed beacons across the facility, enabling airlines, retailers and others to message passengers and employees. And Lufthansa has installed beacons at Munich Airport to invite passengers with the German airline’s app to purchase entry into the business lounge, for 25 euros, or buy a business class upgrade through their smartphones.
- In Florida, the Sarasota Memorial Health Care System introduced a smartphone “wayfinding app” that uses beacons to help patients navigate the main campus.
Internet players using beacons, too
Still to come, major internet players also are looking to use beacons.
Facebook offers free beacons to retailers so merchants can send alerts and promotional messages to smartphone-carrying customers who open Facebook and turn on Bluetooth during store visits.
Google has developed open source beacon technology called Eddystone that would allow you to use any internet-connected device to interact with objects in the physical world around you. It’s part of a project called the “Physical Web.” So, for example, you could tap your phone on a movie poster to get more information about the film. Or you could tap a parking meter that would connect you to a website where you could punch in how long you’ll be parked, and then pay with your phone.
The best part: Users who have Google’s Physical Web widget installed on their smartphone browser “can discover any beacon broadcasting the Eddystone signal, so it will basically remove the need for a dedicated app,” ABI’s Connolly said. “Google is hoping that this will be more user friendly” than downloading and opening apps.
While most BLE beacons now are based on iBeacon, Eddystone or both, about 15 other indoor-location technologies are currently available and likely to break into mainstream use in the three years, Connolly said.
The growing adoption of BLE beacons won’t remove all barriers to wider use. Privacy advocates have voiced concern over the potential for businesses to overstep and gather too much identifying data about consumers through beacons and other proximity marketing technologies.
This is a touchy area and I really don’t see retailers wanting to talk about it very much.
|\u2014 Pam Dixon|
World Privacy Forum
Pam Dixon of the World Privacy Forum says retailers can link a phone’s unique identifying number with a consumer’s credit cards and shopping patterns, building it into the personal profile – an ability that she considers “very uncomfortable.”
While the beacon industry says consumers give permission by downloading apps, Dixon says that, technically, apps aren’t necessary for proximity marketing technology to capture data. Some in-store digital signs are collecting information from people passing by, with no app necessary, she says. “This is a touchy area, and I really don’t see retailers wanting to talk about it very much,” she says.
InMarket’s Heinzinger, however, says his company’s beacon platform is “100 percent opt-in,” and likened the privacy level to that of GPS systems. ABI’s Connolly compared proximity marketing privacy to loyalty cards, which also help collect data and offer benefits.
While some technologies don’t require apps, they often require user permission anyway, Connolly said. The data collected by proximity marketing technology is typically anonymous, as “the value/risk trade-off isn’t there for big brand retailers to attempt customer identification,” he said. “Brick-and-mortar retailers have too much to lose from a privacy scandal.”
Beyond privacy issues, retailers using beacons also need to present good enough consumer benefits to make it worthwhile for you to download an app and turn on your phone’s battery-depleting Bluetooth.
Heinzinger cites InMarket client Heineken’s 2.4-percent sales lift from an in-store campaign with messages based on the beer’s tie-in to the James Bond movie “Spectre.” “We know it’s working. That says to me that consumers like it,” he says.
If retailers want customers to opt in and engage with beacons, they need to do more than push ads through a generic app, according to Connolly. Retailers that figure this out will succeed, because early trials suggest the effectiveness of this form of engagement, he said.
“This is not going to be an overnight success,” Connolly said, “and beacons are not a silver bullet for indoor location. But there is still a huge opportunity here, with pretty much every major start-up receiving funding in the last 12 months.”