During a preholiday shopping trip to New York, Lisa Libretto received an enticing alert on her iPhone: an offer for a $25 discount on a Vince Camuto handbag that she had seen on the retailer’s website.
“If my phone is alerting me to the discount or some information about items I might like, that will totally pull me in,” said Libretto, who lives in Ridgefield, Conn.
The alert arrived at an opportune time, pinging as she neared the entrance of the Vince Camuto store. And it cemented her decision: She would buy the purse after all.
But the timing was no coincidence. The app that she had downloaded from ShopAdvisor used beacon technology, a new addition to location-based marketing, to pinpoint her whereabouts before sending the discount.
“I hope it’s a technology more companies will use,” she said.
Libretto, 44, an artist and stay-at-home mother with two young sons, has embraced online shopping. “My time is so short that when I do get to shop, the alerts are fantastic,” she said.
Because retailers are acutely aware that despite the popularity of online shopping, nearly 92 percent of retail sales are made at brick-and-mortar locations, a technology that will help drive shoppers into stores is certain to attract a lot of attention.
And with the ubiquity of smartphones, now owned by two-thirds of Americans, retailers and technology companies have spent the last few years trying, with modest success, to find ways to combine a shopper’s desires with innovative mobile apps to get legions of consumers into stores.
Now, ShopAdvisor, a 4-year-old company based in Concord, Mass., has added a wrinkle to location-based mobile marketing that it hopes will be the breakthrough retailers are seeking. GPS-based mobile apps are not new, and geo-fencing, the ability to create a virtual perimeter around a designated location such as a shopping mall, has given retailers the ability to send push alerts to prospective customers nearby.
But beacon technology can pinpoint a customer’s location so precisely that a retailer knows when that shopper is lingering in the shoe department or browsing in lingerie.
ShopAdvisor, which offers its own mobile shopping app and specializes in creating multichannel mobile shopping platforms for media companies as well as retail brands, has incorporated beacon technology in a novel way.
With the aim of driving shoppers into stores, ShopAdvisor incorporates data analytics that filter a shopper’s preferences and provide a way for retailers to send personalized alerts to consumers who have downloaded a brand’s app, offering discounts, highlighting sales, and providing content such as product reviews that might instantly sway a buying decision.
“We’ve had at least three years of heavy-duty location-based marketing under retailers’ belts,” said JiYoung Kim, senior vice president for Ansible, the mobile division of Interpublic Group, a global marketing company. “Everybody has the same tool, and targeting alone can only take you so far.”
What makes the ShopAdvisor approach enticing, Kim said, is that it not only precisely locates a shopper in a store, it provides personalized creative content from that retailer to that shopper on the spot. Offer that shopper a 20 percent discount on some new black pumps she has been eyeing, along with a positive review from a popular fashion magazine, and a purchase is far more likely.
Shoppers who have downloaded apps from various retailers in the last three years have been flooded with repetitious push alerts that have become like robocalls and tend to be annoying. For proximity mobile marketing to be effective, it requires something more.
“When you give people a marketing message about something that they actually want, in a location where they can act on it, that doesn’t feel like an ad or an annoyance,” said Scott Cooper, ShopAdvisor’s founder and president. “It feels like a service to them. They tend to respond to it.”
The company’s revenues come from monthly fees paid by clients, like media companies and retailers, based on the scale, scope, and frequency of the campaigns they run. It also draws revenue from retailers that subscribe to its proximity marketing service.
ShopAdvisor spent its first two years searching for a promising value proposition. It raised $11 million in venture financing but was still in search of what Cooper called “the breakout business model.” The advent of beacon technology this year solidified the mission. “That last leg on the stool has really exploded the business,” he said.
Despite the early success indicators, however, analysts remain wary.
“Beacons are very new, and these are very small examples,” Kim said. “This is a crowded and very competitive space, and everybody wants a piece of what ShopAdvisor is doing. Because of privacy issues as well as not wanting to freak people out, nobody wants to be the first to do something dumb with a technology that powerful. The results so far are good but they are still in the very early stages.”