LBS fledging but ripe for Asian market

Location-based services (LBS) remain a fledging affair for online users but the landscape could change in Asia where the market for such services is ripe for harvest, according to market observers and players.

A report released earlier this month by Pew Research Center's Internet & American Life project revealed that only 4 percent of online adults used location-based services, down from 5 percent who said likewise in a May survey. The report, conducted between Aug. 9 and Sep. 13, also found that only 1 percent of Internet users used LBS on any given day.

A Forrester Research study in July also yielded similar statistics, revealing that only 4 percent of Americans had tried location-based services. In the report, Melissa Parrish, interactive marketing analyst at Forrester, said: "The question is whether [location-based services] has reached the mainstream and it looks like the answer is no."

Location-based applications such as Foursquare and Gowalla and Facebook Places, allow people to use their Web-connected mobile devices to "check in" at locations and publish the information online. Users can share their whereabouts with friends in real-time, locate others who are nearby or be alerted--and entitled--to special promotions at partnered retail stores within the vicinity.

Both studies defined location-based services to be software mobile applications used for check-in purposes rather than those that are simply location-aware, for instance, navigation and maps.

The nascent use of location-based services in the West is similarly reflected in China.

Ben Cavender, associate principal from China Market Research Group (CMR), told ZDNet Asia in an e-mail that Chinese location-based services similar to Foursquare or Facebook Places are still very much in the early stages of adoption.

The majority of Chinese mobile Internet users are still not familiar with the concept of LBS and checking in at locations, Cavender said.

However, the analyst noted that the current situation in China could likely change in the future as more users access the Internet via their smartphones.

Furthermore, the use of local social media and networking sites such as Renren and Kaixin is already commonplace among Chinese Netizens. Hence, said Cavender, the concept of sharing information and socializing online is already in place for location-based services to take flight.

He pointed out that there are already sites that incorporate concepts similar to LBS, such as Jiepang, which is "essentially Foursquare, but for Chinese people". Users of the service can share their location on social networking sites, check in, earn badges, become mayors or score special discounts with partnered merchants, according to Jiepang's Web site.

Cavender noted that the number of people checking into locations is currently still limited, but awareness of such location-based services is indubitably picking up, which would bring about higher adoption in the future.

Strong potential for LBS in Asia
In an e-mail interview, Ryan Lim, business director of Singapore marketing company Blugrapes, said the landscape is ripe for the adoption of location-based services in Asia, where the use of social media is growing at an exponential rate.

Lim reasoned that most countries in the region have a good combination of three key factors that drive LBS adoption: smartphone penetration, GPS-capable smartphones, and the mobile Web.

Countries, such as Singapore, that have a higher penetration rate of GPS-enabled smartphones and mobile Internet use will likely see higher adoption of LBS, he added.

Asked about barriers preventing this market from gaining traction, Lim pointed to "privacy and security concerns". "Not everyone is comfortable to broadcast their whereabouts and location to friends, [what more] complete strangers," he said.

In addition, he added that there have been reports of consumers becoming victims of burglary since criminals can now determine when a person is, and is not home.

Annette Zimmermann, principal research analyst at Gartner, stated in a forecast report (note: registration required to view report) that "realistically, the growth [of check-in location apps] will level off and will not go much beyond early adopters" unless the applications deliver real benefit to users when they check into a location, such as rewards, special discounts or freebies that they think are worthwhile. These are typically included in business strategies that LBS players such as Foursquare and Facebook Places are already executing.

Entertainment giant Disney also recently inked a geolocation partnership with Gowalla which observers said could finally push LBS to the mainstream.

However, Lim noted that in Singapore's case, marketers and retailers remain hesitant in deploying a LBS campaign because there has yet to be a critical mass among users. This, he said, points to the current lack of awareness of the LBS model among the general public and traditional advertisers.

Nonetheless, there is burgeoning interest, he said, adding that Blugrapes is working on various location-based social media pilots with marketers.

"While everyone is aware that this will not change the marketing mix anytime soon, it is a necessary investment into understanding the trend that will inevitably come in due time," Lim concluded.