TS&T — Telecom Strategies & Trends
Location-based mobile advertising (LBMA) services deliver localised and targeted ads to consumers by identifying their location information, preferences and basic demographic profile. Online companies such as Google as well as third-party app developers like foursquare, are the typical players in this market. Lately, though, telcos have been increasingly interested in this service as well. Most telco-initiated LBMA services are delivered via SMS or MMS and registration is usually provided for free to existing users. Current services already available include Telefonica’s O2 More and You Are Here services in the UK, as well as AT&T Alerts and Verizon Selects in the US.
The interest to offer such services derives to the possibility to tap additional revenues as well as improve customer retention. On the one side, LBMA services offer new advertising alternatives, for the telecom itself but also for other companies. On the other side, LBMA can be use as a tool to effectively improve customer loyalty through more engagement, thus minimising churn. Telefonica, for example, has identified O2 Priority Moments as a foundation stone for its customer retention strategy in the UK. According to the telco, its brand consideration among UK customers improved significantly due to the high degree of customer engagement that their LBMA programs created.
However, security and privacy issues could hinder the take-up of LBMA services, especially if consumers perceive them as intrusive. An example is Verizon Selects that raised concerns among American consumers because the service taps other users’ information such as their mobile web history and application usage data.
Though such issues are not spanning throughout all markets. For Telefonica’s LBMA offers in the UK, for instance, it seems that consumers consider that the perks of using LBMA services underplays the privacy and security issue.