Checking In From SXSW, Part II: On Safety and Business’ Use of Location-based Mobile Apps

(Editor’s Note: This is the second of a two-part post by guest blogger Emily Reeves on location-based apps like Foursquare and Gowalla, which have become the latest buzz in social media. Reeves attended the recent South-by-Southwest interactive conference in Austin, Texas, and is sharing what she learned about location-based apps here. You can read Part I of this series here.)

Are There Safety and Security Concerns if I Broadcast That I Am Not at Home?
The simple answer: no. And really that means that there are no additional security concerns by using location-based services.

Several panels at SXSW quickly dismissed sites like Please Rob Me as irrelevant to the discussion because, in truth, we have been announcing our locations for years using Twitter and Facebook: a person’s absence from home can be determined from simple status updates without revealing an exact location away from home.

There may, however, be safety and security concerns when it comes to privacy and how companies use the location data they are collecting.

For example, with enough data, a company could predict with 90 percent certainty where a user will be at a specific time in the future. (Although, according to a representative from Loopt, 95 percent of Americans are incredibly boring, going from home to work everyday.)

Additionally, companies could sell the data to hedge fund managers as a prediction for success of retail locations. Interestingly, it was noted that location data can not be anonymized: it is very easy to identify who a person is based on their location data.

What is This Game Aspect?
An additional twist to the location-based applications is that they reward participants for their check-ins.

With FourSquare, for each check-in, a user is given points. The user who checks in the most at a particular location is deemed the “mayor” of that location (a title that can be stolen by the next person who checks in more frequently than the other). Some businesses are even giving discounts to people who achieve the “mayor” designation. Users can also be granted “badges” for doing interesting things at interesting places.

With Gowalla, rather than badges, the user can accumulate items to add to his or her pack and even trade items at certain locations (so future users can pick up the items the previous user left).

Frequent updating of status becomes a game, with users attempting to out-score or out-accumulate people they have never met and reap the reward of badges, mayorship and free stuff from locations where they check-in.

More: After the jump, why businesses of all sizes might be interested in location-based apps.
Why Would a Business be Interested in These Services?
There will be much more talk in the coming months about location-based services, how consumers use them and how businesses will use them. These location-based services are all about mobility, so consumers are telling businesses exactly where they are all the time. This makes mobile devices, and the location-based applications on them, the new point-of-sale communications.

The future of location-based services includes location-aware advertising and location-aware marketing/couponing. The technology already exists today for location-based advertising, but it is not being implemented. But in the last couple of weeks, Starbucks announced a partnership with FourSquare to award a barista badge to frequent visitors:

“Foursquare has been encouraging businesses to take advantage of the information their customers provide when they play the game and [has] announced plans (see announcement here) to introduce free tools for businesses, like statistics about customer behavior and the ability for employees to interact with customers on social networks. Starbucks plans to use Foursquare data less for business intelligence and more for getting feedback about what customers like and do not like, Mr. Bruzzo said.

“Frequent customers will also get rewards. Both Foursquare and Twitter, which also plans to introduce a set of analysis tools for businesses, allow Starbucks to take ‘the pulse of the experience’ in physical stores in real time, he said.  Starbucks customers earn the barista badge after checking in to five separate shops. The coffee chain is still figuring out how to reward people for frequent visits.  Coffee shops have been the classic example for mobile coupons — when someone walks by a shop, they get a coupon for a free coffee, for instance. Starbucks may do that, but Mr. Bruzzo said he is hoping to use Foursquare to provide even more meaningful prizes, like invitations to special events, photo sharing or online reputation scores, he said.”

Based on the opportunities to drive traffic and increase sales on slow days, there is little doubt that businesses will jump on these technologies soon.

Will the Mass-market Population Adopt This Like They Adopted Twitter?
For most of the market, downloading an app for updating location status is going to be a barrier to entry. The benefit of using a location-based service will need to be pretty great to jump that hurdle with the mass-market user. But with the media coverage and big brands like Starbucks jumping on board, it is probably only a matter of time before brands like FourSquare (with more than 600,000 users — 100,000 signing on in the last 10 days) and Gowalla (with more than 100,000 users) see mass market interest.

More Specifically, Will Arkansans Adopt These Services?
While some tech-savvy Arkansans are starting to location-based services, most do not. And that’s typical for Arkansas, which is often behind the curve in emerging technology.

But there is a trend toward localized news and information. And with location-based services allowing delivery of hyperlocal information, there is promise that even Arkansans will take to this technology. Local Arkansas businesses, politicians and early adopter users are already experimenting with the services.

(Emily Reeves is director of account management and research at Stone Ward of Little Rock, an advertising, marketing and public relations firm. You can find her on Twitter @Reeves501 and e-mail her here. She blogs regularly at MsAdverthinker.com.)

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