The pros and cons of beacon-based marketing

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Are you considering adding beacons to your mobile marketing mix? Here are some of the technology’s biggest pros and cons.

Remember how before Snapchat went mainstream, you were pretty sure it was a platform you needed to be on, even if you weren’t 100 percent sure why? That’s sort of where we are with beacons right now.

The location-based technology has come up a lot lately; Forbes even called 2015 “the year of the mobile beacon.” But are they right for you? Here are two of their main pros, as well as two of their main cons.

Pros

They’re data goldmines

Beacons’ greatest value comes in the form of the data they can provide. If you’re a regular Bloomingdale’s shopper, the retailer knows a lot about you: where you live, your tastes, how often you buy clothes, how much you’re generally willing to spend on clothes. What data set could be more valuable for Bloomingdale’s than the knowledge that you’re there right this minute?

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Marketers always talk about the importance of relevant experiences. If there’s ever a time when a consumer would want to receive offers and information from a brand, it’s when they’re in one of its stores. For brands using beacons, your location can also provide insight into their spaces.

“It’s good to know for product placements, where to put ads and how to charge for the ads,” says Michelle Skupin, director of corporate communications at RetailMeNot, which has geo-fenced entire malls.

They’re easy to try…

Beacons are small – they generally look like hockey pucks or those colorful fake rocks on climbing walls – and cheap. One costs about $20, with a battery that can live for a year.

Just before the 2014 holiday season, Macy’s outfitted its stores with more than 4,000 beacons. Other retailers that have since followed suit include Target, Tesco and the Hudson Bay Company, the iconic Canadian department store that also owns Saks Fifth Avenue and Lord & Taylor. Starwood Hotels started experimenting with beacons two years ago, using the technology to implement its mobile keyless check-ins. American Airlines has also deployed beacons to help travelers navigate the overwhelmingly large Dallas-Fort Worth Airport.

All of those examples were experimental. Similarly, a movie theater like Regal or Loews could, for next to no money, install beacons in select theaters, sending nearby consumers information about new movies or upcoming showtimes. It’d cost not very much and with stakes that low, what does a brand have to lose by trying?

Cons

…but they’re difficult to master

While many brands have used beacons, none have done anything truly groundbreaking with them, mostly because nobody really knows how to. Simply put, there are a lot of variables. For that movie theater example to work, consumers would have to have a movie theater app or several on their phones. People are more likely to have Fandango downloaded, but Fandango doesn’t have any physical space.

Adam Broitman, a digital marketing consultant working with start-ups Goodshop and Kiip, says there’s also confusion steeped in beacons because they aren’t entirely necessary.

“A lot of start-ups want to leverage the notion of the sharing economy and being the ‘Uber of X’ and they’re not seeming to start with a problem. I think the search for beacon excellence is a bunch of people taking a cool, promising technology, and trying to create problems where there aren’t any,” he says. “I can think of a few instances where it might be nice to get a push notification in aisle 5, but I can’t think of a lot of instances where I really need that.”

They’re not self-reliant

The movie theater example also highlighted what is arguably the biggest challenge where beacons are concerned: their dependency on other technology, such as apps. In the iOS App Store’s most-downloaded chart, the only apps associated with physical locations are Walmart, Walgreens, Chase, Bank of America and Starbucks, which ranks the highest of the five.

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“The difference between Starbucks and other players in mobile payments is that it’s actually solving a pain point,” she says, referring to the long lines. “I don’t think the Starbucks app has mass adoption yet, but I think that will change very quickly because customers in line can download the app and buy their coffee before they get to the cashier.”

Beacons also rely on battery-draining Bluetooth, which most people generally don’t keep turned on; and push notifications, which most people don’t like. Forrester Research from last year found that 60 percent of consumers accept push notifications from a select few apps, while 17 percent don’t accept any ever.

Summary

Beacons provide marketers with a lot of data and while they’re easy to set-up, they’re difficult to deploy successfully because of all their needs: apps, Bluetooth, opting in. Broiter thinks beacons have a lot of potential for mainstream success, as long as there’s something clearly in it for the consumer.

“A Target or a Walmart would have to have a special loyalty program or some other benefit that would make the average person stop, turn on their Bluetooth, and accept a prompt from Target or Walmart asking to connect their device. That’s two steps out of the way and the value for that would have to be at least double,” he says.

Despite their value as data providers, beacon marketing is difficult to pull off for all but the biggest brands. That is, until someone comes along and creates the all-encompassing beacon network tying them all together, at least.

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