Location-Based Ads and the Rise of the Check-In

A long time ago, I visited Google. I talked with a few people on the product development team and I mentioned that they were in a unique position with AdWords, because they only got paid when someone clicked on an ad. The actual serving of the ad itself they did for free.

To be successful, they had to maximize the number of times they could serve an ad. The problem was that they couldn’t invent any more searches. Only a certain number of people, per day, would search Google for “mini van” or “cell phone” or “tropical vacation.”

They got a bit of a cagey look in their eye and glanced at one another. That was true, they said. They were limited by the number of people performing a search for a particular keyword. “But,” they said, “we have a very broad concept of what a search is.”

I didn’t know it at the time, but they were telegraphing their intention to launch AdSense, the contextual advertising program that scans a Web page, determines what it’s about, and places relevant ads. Suddenly, they opened up the whole Web to their ads. They figured that reading an article about tropical vacations was close to searching on that keyword; close enough that they could put up an ad and get some clicks (and some cash). Of course, they were right and AdSense and contextual advertising has been hugely successful for many advertisers.

We’re on the verge of seeing this happen again. The opportunity to serve ads is about ready to burst wide open again, and this time it’s going to happen, because we have the technology as well as the scale to start seeing location-based, contextual advertising happen on a grand scale. Location is the new context.

Playing Foursquare

A growing number of people have begun using an application called Foursquare. You can download it onto your smartphone, and there’s a way to play using SMS codes.

Foursquare is part game and part guidebook. It’s a unique experience. The idea is that you carry your phone around with you and “check in” from various locations (such as parks, stores, restaurants, or bars). Every time you check in, you get points. You also send notifications out to your network of friends, and get a chance to write a tip about the place. When you check in, you get those tips.

Here’s the clever twist on all of this: whoever logs in the most from a particular location is deemed “the mayor” of that place. A few locations have clued into the power of this and are offering special deals. A bar may post up that the mayor gets to drink for free.

Do you see how deviously awesome this is? People begin to check in constantly from these places (thereby broadcasting the place out to their friends), hoping to achieve mayor status.

This competition may just be the boost that consumers need to get them engaging in the new behavior of broadcasting — where they are and what they think. I say this is new because this isn’t a question of technology. We’ve actually had much of the technology to do this on smartphones for a while.

The problem has been the underlying behavior. There wasn’t a clear and compelling reason for people to actually “check in.”

The chance to become the mayor of a place in Foursquare may seem to be a bit of a novelty and a gimmick, but it may be enough to spread out this new behavior. And then, just like contextual advertising opened up the entire Web to search ads, maybe checking in will open up a new flood of inventory of relevant placements for mobile ads.

The Check-In as Opt-In

We’ve been thinking about the location-targeting of mobile ads only at the extremely high-levels, if at all. We need to begin putting some new vectors into the way we consider media moments and opportunities. Physical location is naturally one, but we need a few other things if we’re going to jump on this opportunity.

We should be able to target mobile ads not only on where people are, but also what time of day it is. We should be able to perform look-ups on public calendaring systems to see if concerts or parties are going on at that location, at that moment. We need to know what’s on the menu or in the inventory of the location. We might even want to know how close the person’s friends are, so that we can offer some group discounts.

The first brainstorms around location-based advertising tended to consider the consumer to be passive in the situation (i.e., systems that would blurt out offers and coupons to people as they walked by stores and restaurants). What a terrible idea. Have we learned nothing? Have we not been listening to our own advice? How could we come up with a disruptive ad format like that?

The concept of the check-in is much better. We should think about the check-in as the first step toward an opt-in. Imagine a call-to-action on menus and posters, asking people to check in on Foursquare (or some version) to get offers or information. It’s much easier and more elegant than texting short codes.

One way or another, we’re going to get ourselves into mobile ads in a big way. The challenge with this, though, is the same that we’ve always had: how do we deliver ads in ways that are seen as valuable and relevant by the consumer? We don’t know the full answer, but the first thing we need to do is what we always try to do: let the consumer be in control.