Location based marketing services (LBS), or Bluecasting, is growing fast.
Subscribers and revenue doubled in 2009, according to Gartner, Inc. Despite an expected 4 per cent decrease in mobile device sales, LBS subscribers are forecast to grow from 41.0 million in 2008 to 95.7 million in 2009 while revenue is anticipated to increase from $998.3 million in 2008 to $2.2 billion in 2009.
Bluecasting is gradually gaining ground as a common term for the provision of any small digital media to suitable media-playing enabled devices over Bluetooth® via the OBEX protocol. Where by "small digital media" does not exclusively mean advertisements but could include photos, podcast style audio content, video, mobile ticketing, games (especially those written in J2ME) or even other applications.
Gartner expects more compelling and useful applications and services to come to market in the next 12 to 18 months such as digital coupons to be redeemed in a nearby shop and points-of-interest search services. This is a well-trodden path, with retail outlets pushing vouchers to bluetooth-enabled handsets to encourage consumers to enter, return or buy more. For example, an application employed by MGM casinos in the US, uses text messaging to encourage punters to return to the gambling tables as they leave the building's perimeter.
However, the scope for this channel to quickly proliferate message volumes and turn off consumers; to focus legislators on levels of permission required before messages can be pushed to users; suggests that utmost care is needed by marketers if this particular golden goose is not to be quickly killed offf. Unfortunately history does not augur well.
Rather than focus on mobile push and pull marketing as a new geographically contextual channel utilising mobile devices' bluetooth and in-built scanning capability, the time has come to focus on how Bluecasting will create genuine innovation and fresh business models.
One such example in the general insurance marketing could transform how consumers buy car insurance, a future raised at the Financial Service Forum's (FSF) General Insurance Summit.
Telematics, mandatory in new cars soon, is already touted as a technology that will allow for more individualised insurance premiums. The basic idea is that a driver's behavior is monitored directly while the person drives and this information is transmitted to an insurance company. The insurance company then assesses the risk of that driver having an accident and charges insurance premiums accordingly. A driver who drives long distance at high speed, for example, will be charged a higher rate than a driver who drives short distances at slower speeds.
Yet mobile devices bring the opportunity for yet more profound innovation. How about pay-as-you-go insurance pricing, comprised of micro-payments? You would pay when you are driving a car, not when you you aren't.
Not only would this potentially bring financial benefit to the consumer, but also it could provide a strong offset to the current race to zero in insurance pricing and margins. After all, the experience of other sectors such as telecommunications and utilities suggests that PAYG allows for higher unit usage costs.
Ironically, adopting pay on use schemes might actually shift consumer perception of insurers away from being a utility provider, as policies become increasingly individualised.
