On the Subject of Beacons.

The age of context-based information is upon us. Users are now expecting the right information to be automatically given to them at just the moment they need it. Whether that means a boarding pass showing up on their phones at the airport or Spotify turning on when headphones are connected, your phone is now making assumptions about you want, all behind the scenes. Now, technologies are emerging which allow brands to tap into this contextual content as well. These wireless beacons enable users to get even more relevant and timely information delivered directly to their devices. The DC Lab set out to explore this technology.

In the past few years, three main contenders have come to market: Place Tip Beacons by Facebook, Beacon by Estimote, and ShopKick. All of these use a combination of software and hardware to connect consumers with brands, and provide meaningful, relevant information. The hardware beacons are small, plastic devices that emit a Bluetooth signal, run for months or years on small batteries, and are stuck to the walls of the business or place operating them. Beacons enable businesses and venues to communicate directly to people in their space, without the user having to actively search for information. The signal they emit contains information highly relevant to the location the beacon is in, so anyone receiving the information is guaranteed to get content that matters. This proactive, subtle communication is a new way to create a meaningful relationship with a consumer, but it must be done delicately.

THE DC LAB WENT ON A MISSION TO LEARN MORE

As millennials grow into older consumers (and their spending power hits nearly 1.5 trillion dollars in the next four years,) and these technologies become more ubiquitous, brands have the ability to foster the lasting relationships that are becoming more and more of a prerequisite for brand affinity. Millennials report caring more about brands than any other demographic, but that doesn’t mean they’re easy to reach. The personalization of information allows brands and consumers to connect together in ways that weren’t possible before. A retailer can show specific customers different ads based off of their likes and interests. In turn, the consumer actually cares about what they see, rather than just being barraged with things irrelevant to them.

That said, brands seen as invading a user’s phone to simply deliver a boring, irrelevant banner ad will quickly be chastised. With more tech-savvy consumers who have spent their whole lives online, the ability to deliver a relevant, pleasant experience is paramount. Each new technology has strengths, and it’s critical that we know how and when to use each of these services appropriately.

FACEBOOK PLACE TIPS

With 71% of US adults on Facebook, the company’s reach is powerful. When Facebook introduced Place Tips in January of 2015, their intention to further blur the line between the online and physical worlds became clear. If a Facebook user goes to a space in the range of a Facebook Beacon, then they’ll see a Place Tip in their Facebook feed, containing information such as business’s hours, reviews, or friends’ check-ins. For example, a traveler on a layover can see posts from his or friends who were also at the airport, such as photos and restaurant reviews. Facebook presumes that broadly similar types of posts occur based off the user’s location, and uses that to feed relevant information back at a later time.

The biggest advantage Facebook beacons have over competitors is that the Facebook application is already ubiquitous. The beacon simply alerts the Facebook app where you are, and Facebook displays the appropriate Place Tip. It’s a comfortable, familiar interaction for users: they post photos and reviews on Facebook just like they’re used to, and Place Tips handles the rest. In turn, they automatically see content relevant to them posted by friends when they enter new spaces, and anything they post publicly gets automatically fed to future people in the same place. That said, Facebook beacons are quite limited in the scope of information they can deliver. Place Tips stick to the basics such as friend’s comments about the place, photos from other users, or messages from the business. They’re also not extremely precise in their area; anyone within approximately 50 feet will be shown the same information. The beacon can’t detect where users walk around in a store, specifically what they’re looking at, or how long they’ve lingered.

Pros:

• Easy for businesses to set up and deploy.

• Consumers are already familiar with how Place Tips function in Facebook, and may not ever know the technology is new.

• Drives brand image and creates links between the brand and a user’s friends and family.

Cons:

• Only provides basic information: photos, friend’s comments, etc.

• Can’t be used to provide business analytics

• Walled within the Facebook application

ESTIMOTE

Although appearing physically similar, the Estimote beacons are quite different than those from Facebook. Like the Facebook offering, Estimote beacons send a wireless signal to the phones of nearby users and provide contextual information. However, Estimote beacons don’t connect to the Facebook application. This means that the user must install a 3rd party app in order to actually see any information.

While a higher initial entry barrier than Facebook, companies like Starbucks (whose mobile app represented 16% of the company’s total transactions) have proven consumers are willing to download an app if they can see how it benefits them. Whereas Facebook utilizes a single physical beacon to know the user is near, Estimote takes advantage of three or more physical beacons. This allows their service to know more about users: where they’re standing in a space, how long they’ve been there, and how many total users there are. This increased awareness means the possibility of more accurate, more relevant, and more useful information to be returned to the user.

The Estimote beacons are a more complicated, less ‘turn-key’ solution, but offer far more end-user power. Rather than having a pre-defined use, Estimote intends for the brand deploying their beacon to actually come up with the specific service it provides to the user. Estimote is essentially acting as a hardware supplier suggesting uses for its product. Consider a museum: users are expecting to spend hours highly engaged with the experience, and are more willing to install a one-time-use app if they see how it could benefit them. The museum could use signage to promote an app-install at the entrance with the promise of an enhanced experience. As users walk through the exhibit, the Estimote beacons would communicate their precise location, and the museum app could automatically display content relevant to the exhibit the user is looking at. It’s unlikely that consumers will install an app in a store they’ll only be in for a few minutes, but if they understand how an app could greatly enhance their experience for a few hours, it’s much more reasonable.

Lastly, they’re far more expensive to deploy: a set of three is only $100, but the cost of developing and maintaining an application (if the company doesn’t have one already), can reach much higher prices very quickly. Because Facebook and ShopKick don’t require custom application development or beacon integration, they’re far easier to deploy.

Pros:

• Can give highly contextual, specific information based off a user’s precise location.

• Can provide much more detailed traffic analytics to the business or venue.

• Can be configured for almost any purpose as dictated by the app it’s connected to.

Cons:

• Requires integrating into a new or existing standalone app.

• Requires the deployment team to define use case and promote the app-install at point-of-visit.

SHOPKICK

ShopKick fills in the gap left by Estimote and Facebook solutions. A combination of hardware beacon and custom app, ShopKick serves as a way to drive store traffic by showing the user relevant promotions in nearby stores, and then rewarding them for browsing the store. A 2014 study (pdf) by the deal website RetailMeNot showed that digital coupons are a rising and powerful way to connect with consumers, but that retailers must “. . . must master the digital to in-store redemption process.” In the same study, nearly 60% of respondents said that digital coupons were likely to influence their purchase. ShopKick attempts to address all of these factors in a single, fun, useful application.

The basis of the app’s reward system is the Kick. For instance, if a department store wishes to promote new beauty products, it can offer Kicks to consumers who’ve historically shown interest, such as a reward of 250 Kicks for entering the store, and then 100 more for each qualifying beauty product barcode scanned. This directly drives consumer engagement of the product, while also allowing users to earn rewards without ever having to purchase anything. The app simply serves as a way to reward users for visiting stores and learning about the products. Afterward, the Kicks are redeemable for gift cards and other promotions. ShopKick reports helping drive over one million store visits from its 15 million users on Black Friday. Since inception, it reports over 20 billion products browsed, 100 million store trips, and 17 million gift cards received. Serving such clients as Macy’s, Best Buy, Sony, and Disney, ShopKick is a proven competitor in the mobile engagement space.

The ShopKick beacon is a tool for businesses looking to directly drive foot traffic through promotions and rewards. It adds value by making consumers aware of deals and then providing an incentive for them to visit the store, browse, and scan products. In return, users are rewarded with gift cards and exclusive discounts. ShopKick beacons have the power to track users as they browse the large retail space, providing analytics of their shopping habits. These tools provide retailers insights such as what displays customers were attracted to or ignored, what paths they take through the physical store, or any other multitude of subtle analytics about what’s happening within their stores. It also gives consumers a fun, exclusive way to earn rewards and discounts simply for shopping as they normally would. Retailers have reported that this ‘gamification’ has consumers actively seeking out ever Kick point offered, and people have shown they’ll work for a reward if they value it. This is a set of powerful tools that Facebook Beacons and Estimote don’t currently provide.

Pros

• Directly drives foot traffic into retail stores while connecting consumers to products and services they might care about.

• Rewards consumers for learning about products, which drives loyalty

• Provides highly detailed store analytics

• Established install base with over 14,000 participating locations and > 15m users.

Cons

• Less applicable to smaller mom-and-pop type stores.

FACEBOOK VS. ESTIMOTE VS. SHOPKICK: OUR FINAL TAKE

In our analysis, the biggest differentiator between these beacon technologies is that the Facebook beacon seamlessly integrates into the Facebook application. This is a major benefit over the Estimote beacon, which require users to download another application before they can engage. ShopKick has the current advantage of being an established, proven way to drive direct retail traffic.

Another major difference is frequency and content depth.  Facebook beacons aren’t intended to provide highly localized content, but they enrich the quick interactions that occur between users and businesses each day. Estimote user experiences are less frequent, but far richer and engaging with a higher-level of content delivery. While less frequent, when Estimote interactions occur, they are able to offer deeper and more relevant user information to the user. Lastly, Shopkick strikes a balance somewhere in the middle. By offering relevant discounts and rewards at nearby stores, ShopKick rewards users for their participation.

When comparing the three technologies discussed, and deciding which to implement, brands must be realistic of their goals, and have an understanding of the type of person who shops in their stores. It’s less likely that a small arts & crafts store would need the power of Estimote or ShopKick compared to a national department store. At the same time, while a Facebook beacon might have an excellent reception at a small coffee shop, it would probably be less impactful in a national electronics chain. Understanding how customers interact with your brand is the first step to deciding which beacon technology to employ. They each offer extremely powerful tools when implemented correctly.

SO, WHAT DOES THIS ALL MEAN FOR BRANDS?

Regardless of the medium, it is essential for brands to deliver on the customer expectation of compelling, relevant content at just the right moment. It’s important to note that this personalized content delivery walks a fine privacy-line, too. Customers want personalized info, but they don’t want to feel spied upon, which means that brands need to be cautious in what information they push to users.

The best brands, like Macy’s, have been able to walk this fine privacy line, and interact on a personal level with customers to deliver information that anticipates their needs. Macy’s gives customers exclusive, real-time deal alerts when they use the Macy’s app in-store. Trusted, positive brand experiences like these solidify connections between customers and brands.

In this new communication medium, great brands like Macy’s avoid presenting customers with traditional banners ads (which customers are often blind to) and instead work their magic with contextual information that improves the user experience and solidifies their brand value in the customer’s mind. It’s crucial for brands and advertisers to remember that beacons aren’t just a new way to deliver the same old message. It’s critical that the technology is used appropriately, and adds value for both the retailer and consumer.

WHAT’S NEXT?

Clearly, we’ve been doing a lot of research and having quite a few debates about beacons lately. It’s time for us to leave behind the research phase and get in there and get our hands dirty as we try testing contextual messaging with customers, and we can’t wait to get started.

We’d love to hear your stories about how you’ve interacted with a brand through beacons and what you loved or hated about the experience, or if you’ve utilized beacons in your own marketing. Give us a shout on Facebook, Twitter, or LinkedIn, and let’s keep this discussion rolling.

Have a brand you think could benefit from beacon interaction with customers? Reach out and let’s plan some amazing strategies that make waves.