Location, location, location is usually offered as a key piece of advice to prospective homebuyers. But might the message soon extend to merchants and brands as well, due to the increasingly interconnected world of smartphones, social networks and GPS tracking technology?
Location-based services like Foursquare allow their users to show others that they have “checked in” (to a bar or restaurant, for example), as well as to see where friends signed up to the same service are located.
Foursquare now claims over 7.5 million users worldwide. Unlike Twitter or Facebook it is available in China, through Apple’s App Store.
In fact, Chinese consumers got their first look at location-based social networks before most Americans. China Mobile, the world’s largest telecom operator by subscribers, first introduced a similar service in 2002, and China Unicom followed suit the next year. But there were problems: the country’s GPS signal was weak and penetration of broadband was low, says Southern Weekly. The service failed to keep its customers interested.
Now, it seems to be back, with Foursquare’s rapid growth in the US inspiring plenty of Chinese imitators.
One of the first companies to enter the market was Jiepang, founded in May last year and now boasting 400,000 active users. Jiepang, like its competitors, is synced to all the major social networking platforms like Renren, as well as to microblogging service Sina Weibo. That means when a user “checks in” on Jiepang the news will instantly be shared with friends online.
Jiepang competes with more than 40 location-based service companies for business, says research firm Analysys, including smaller upstarts like Sifang and Digu, as well as industry leaders like internet portal Sina and search giant Baidu. Having started out as a pioneer, China Mobile is also developing its own application once again, which will be available through its app store Mobile Market.
“It will be relatively easier for big companies to get started due to their large user base and brand names,” says Ren Yanghui, an analyst with Analysys. “But they have no overwhelming superiority. After all, it’s a new field, and everybody starts fresh.”
That’s good news for advertisers, who see location-based products as a way to encourage purchases and reward loyal customers. Marketers believe that users are more likely to go to a shop or restaurant once they see that friends have already “checked in” (although dentists won’t be holding their breath, presumably).
Also powerful is when users ‘share their experience’, by taking photos of their location or writing a short message about it.
Several advertisers have run promotional trials around location-based networks. Starbucks kicked off with Jiepang in December, giving out coupons each time a customer checked in on Jiepang at a Starbucks outlet.
Another location-based firm, Qieke (owned by Shanda, the country’s largest online game operator) has been cooperating with over 100 brands, including Starbucks. During promotional periods, customers who check in at specific store locations receive a L’Oreal gift bag. Those checking in at 7 Days, an economy hotel chain, will get a free lavatory kit worth Rmb10 (the joy of it!) and are then entered into a lucky draw for a free room night, says the Wall Street Journal.
Promoters say location-based social networks (now known in the cool jargon as LBS) will grow rapidly this year, fuelled by the increase in smartphone ownership.
But others call for perspective. Although there are now more than 3.5 million subscribers with LBS accounts in China, far fewer of them are actually active. Commercial critics say that only a few thousand hardcore fans are utilising the service on a daily basis.
One major obstacle is that many mobile phone owners still lack the smartphone technology that enables the service.
That may change, of course. But until then, building a wider user base will be a challenge. “People checking in at a location and sharing their experience about it has not caught on in China yet,” one Foursquare user told Technode, a local tech blog.
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