Kmart Geolocation Trial: How Close Is Close Enough?

Written by Evan Schuman
March 3rd, 2011
On Monday (Feb. 28), AT&T formally joined the geolocation marketing game, bringing Kmart along for its location-aware ride. As these efforts move from the whiteboard to the sidewalk, a critical question is: To be effective, how close should consumers be to a store before a promo pops up on their screen? Whatever you answer, it's likely to conflict with the distance today's technology can deliver. Conflict in the way that an Amtrak Acela conflicts with a deer on the tracks.

So how closely can a consumer's location be determined? In the AT&T effort, the telco is not using GPS and is limiting itself to cell tower triangulation. Depending on the area, that can range from 200 meters to as much as a three-mile radius. The nature of the alerts are such that they really shouldn't be used when someone is driving or in any other form of transportation (although it would be fun to try in the subway, watching as hundreds of ads appear and disappear).

It's designed to be used when someone is walking. If that person is walking in an urban area (walking in the suburbs is discouraged), an alert that a business has a sale and it's only three miles away is of somewhat limited value. To be effective, the alert should be restricted to businesses that are truly a quick, brief walk away. "Interested in 70 percent off new bedroom furniture? We're just three blocks away from you right now."

The AT&T effort is jumping onto an existing series of mobile geolocation trials called ShopAlerts, which launched 18 months ago. ShopAlerts encourages retailers to pitch coupons that are good for at least a week, with the idea being that the customer will come back a few days from now when she/he is back in the neighborhood.

Placecast, the company behind the ShopAlerts, has found that consumers are very quick to open these alerts, but they often don't take action right away, said Placecast spokesperson Rachael Himsel.

Is it possible that shorter duration alerts, using GPS to also offer a much tighter geography, would help boost the action numbers? Some Placecast trials have indeed been using GPS, but the distances have still been on the longer side.

One reason is the chicken-and-egg reality of all such early stage trials: With a relatively small number of participants, it's critical that the consumer see a decent number of alerts. Too many would be bad, but too few also gives a bad impression. To make it work now, the distance settings have to be rather generous to get the numbers right.

This raises an interesting scenario. Could this approach be hurt by strong success? In other words, if a huge number of retailers started using the service, would consumers start getting pinged so often that they either unsubscribe or—even worse—start ignoring the alerts?

Himsel said the vendor would have limits to prevent that from happening. But if those limits are in place, how much growth would their business plan permit? Ahhh, the joys of being tech pioneers.