Location: Are we there yet?

Friends, family and loved ones will soon gather to share that most cherished of annual American traditions: Getting drunk, pigging out and watching giant men try to kill each other on TV.

Super Bowl Sunday is also that special day when we see brand-new, big-budget commercials. But if you're a real sports fan, you'll notice that lineup of products advertised will be generally different from those hawked during regular-season games. Super Bowl ads involve mainstream products, including movies, financial services and Web hosting services. But during the regular season, the ads are all selling beer, motor oil and tires. Why is that?

Advertisers know that the demographic of the Super Bowl is much broader than that of the fans who watch football all season long. They assume, correctly, that real football fans are very likely to be American men who drink a lot of beer and who care very much about branding when it comes to motor oil and tires. Of all that "demographic information," location is absolutely vital. For example, the motor oil and tire commercials would make sense to an audience of football watchers in Saudi Arabia -- if Saudis watched football in significant numbers, which they don't -- but the beer companies would be wasting their money.

Advertising professionals have always obsessed over "location data." That's why everybody wants your ZIP code. Every time you sign up for anything anywhere, they want that ZIP code because, combined with gender and age, the ZIP code tells advertisers quite a lot about you. For starters, people within specific ZIP codes tend to have roughly similar income levels. Once they know that, they can guess what kinds of things you do, and what sorts of things you buy. They know the local weather, for example (no need to advertise ski equipment to people in Texas). They know what stores are available to you. They can even guess your political and religious affiliations with surprising accuracy. The amount of valuable information about people that can be gleaned from a simple ZIP code is enormous.

The future of advertising is the application of ever more accurate, more specific targeting of prospective customers. Advertisers want to know everything about you, including what your brand preferences are, your habits, your income and more. But most of all, they want your location. Not just your ZIP code. Not just the neighborhood you're living in. They want to know exactly, precisely where you are at all times. That way, they can make you offers that are perfectly relevant to you, right here, right now.

Advertisers are collecting information about you already, especially your buying patterns, from Amazon.com, Facebook, Gmail and other online services. Amazon.com was a pioneer in this area. Even 10 years ago, it was sending me e-mails suggesting books that were exactly the kinds of books I was interested in.

And advertisers will eventually get your location from your cell phone's built-in GPS. But when?

Why we aren't there yet

If you look closely enough, you can see companies and users alike dancing around the periphery of total location sharing. Everyone is dipping their toes in the water, but nobody's jumping in yet.

Apple notified iPhone app developers this week, for example, that the use of the iPhone OS's "Core Location" framework was allowed only to provide information "beneficial" to the use. Specifically, the company said, "if your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user's location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store."

Apple was also granted a patent this week for location sharing technology. The system would enable one caller to request another's location, and for permission to be granted, with one button push each. But so far that technology has not even been announced for any real product.

Google rolled out "click to call" functionality for ads in its mobile version of Google Maps. The service seamlessly uses location information from your phone's GPS to dial a local, rather than centralized, phone number of a company whose ad you see on your phone. It lets you call the local store, but it doesn't yet let the store call you.

The "click to call" service comes fast on the heels of Google's "Near me now" and "Explore right here" services, which use location data to tell you what's going on in your area. But, again, it's a timid testing of the location waters.

Location-based social services, such as Foursquare, Gowalla, BrightKite, TriOut, Yelp, Loopt, Plazes, Flook and others, use location information to facilitate social interaction, and social interaction to facilitate the discovery of new things.

Most of these services are hobbled by what I perceive as concern about location privacy. Some of them are based on location-based status updates, where users can broadcast their locations if they choose to do so. Others involve discovery, where people post something they've seen for others to find in the same location later.

All these are dancing around the edges of what we really want, which is to be able to know where all our friends and family are at any time. We want to be able to "look up" people's locations as easily as we look up their phone number in our address book. And we want to be able to set up notifications, so we're alerted when people we care about are nearby.

We want that real-time information about others. The problem is, do we want others to know where we are?

Resistance is futile

The squeamishness people feel about the privacy incursions by location-based applications is nothing more than future shock. In fact, it has always been pretty easy for strangers to figure out your location. Telephone books, for example, enable anyone who knows your name to find out where you sleep at night. Anyone who encounters you at work knows where you'll be most days. But we don't give these "privacy violations" much thought because they're old. We worry only about the new ones.

Most of us will be willing to hand over our privacy to advertisers on a silver platter for the right incentives. Money, for example. Cheapskate bargain hunters, coupon clippers and deal-seekers would happily opt into a system that alerted them to exclusive discounts from stores they happened to be walking past.

And free is a powerful incentive. One could imagine a service totally devoted to free stuff. Whenever someone is offering something free (free car wash, free cup of coffee, free movie tickets) at your location, the phone rings. For example, just as you're within 200 yards of a Starbucks offering a free latte, the phone rings to tell you about it. Would you sign up for that?

Such location-based services could spread airline-like flex pricing across a huge number of industries. For example, as movie theaters see that seats aren't being filled, they could keep dropping ticket prices as the show start gets closer, and alert people who have opted in and are also close enough to the theater to make the curtain.

Please don't think all this is pure speculation. It's going to happen. And soon.

Google, Apple and Twitter are making moves that will likely back their push for location-based advertising. Google acquired a mobile ad company called AdMob. Apple purchased Quattro Wireless. Twitter acquired Mixer Labs.

And it's when these major companies jump in that the rest of us will follow. If it plays its cards right, I think Facebook could own this space, mainly because people have already established closed social networks involving people they've decided to open up to. We already tell our Facebook friends everything we're doing, often supplemented with personal pictures and juicy details. Location services simply automate it.

But let's hear your opinion. Where are you on the coming world location services and location-based advertising?

Mike Elgan writes about technology and global tech culture. Contact Mike at mike.elgan@elgan.com, follow him on Twitter or his blog, The Raw Feed.

Copyright © 2010 IDG Communications, Inc.

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