• by Steve Smith , Staff Writer @popeyesm, January 28, 2011

The consumer behavior most valuable to most marketers has less to do with what the buyer is doing than where they are at a given moment. For a decade, search services and ad targeting coveted simply knowing where someone lived. Now, mobile technology has the potential to let the marketer know which city or town block the person is on right now. That is, if the consumer lets the marketer in. Location-based services (LBS) has become the new third rail of privacy concerns. It is the kind of technology that reminds consumers how intimate digital tracking can become.

But LBS is also the kind of technology that just as easily reminds users how much value bleeding-edge digital platforms can add to their lives. When my iPhone locates me, it can tell me in seconds what movies are playing in the next half hour within five minutes of my dinner location. It can tell me what some of the previous diners at this restaurant thought of the evening specials, and, most important, it can get me back to a familiar path after my fiancée gets winsome in the passenger seat and has me drive down an attractive road, "just to see what is down there."  

The promise of LBS for marketers comes not only in the potential for targeting consumers often at the very tip of the purchase funnel. This is also one of those digital breakthroughs that can deliver demonstrable, undeniable value to the consumer. Trying to convince online browsers that the mountains of Web beacons, cookies and tags they encounter on the Web gives them "more relevant advertising" continues to be a hard sell. Telling that same consumer that knowing where you are allows us to deliver coupons, product information or better pricing for the doohickey you are in front of on aisle 3 of Best Buy -- that is an easier sell.  

In fact, according to a new Microsoft study of consumers worldwide, 50% of U.S. consumers say they have used a service that determines their location. Among those LBS users, 65% have used basic GPS. Curiously, the study found that 52% had used Google Latitude or Google Places, which seems a bit high to me unless they are including anyone clicking on the little red hotspot flags Google puts on its local map searches. Facebook Places has also been used by half of those who have tries LBS.

When it comes to mobile search, 42% have used it. But as we move into the trendier LBS check-in and app-based solutions, the usage drops off radically. The well-hyped Foursquare check-in and local social networking product, for instance, has only been used by 15% of respondents, followed by Loopt and mobile coupon provider Yowza. Locating other people is not a high priority for now among consumers. Among the people who use LBS, 94% consider these services very or somewhat valuable, and much of that value is seen in GPS, traffic and weather.  

The privacy concerns surrounding LBS are not surprising in kind, but they are notable in intensity.  87% say they are uncomfortable sharing their location with people they have not specified can receive that information, and 84% are concerned about sharing personally identifiable information. Privacy concerns seem heightened around the services that people actually find less useful. Concerns about location sharing with others is highest, with 73% checking the top two boxes regarding misgivings about not controlling who has access to their location. And about 57% tend to feel that the risks involved in location sharing outweigh the benefit. Only about a third of respondents said they would be likely to provide their location to other people.

When it comes to getting location-based information about the nearby area, restaurants, traffic, weather and services and such, the perceived value of LBS increases, and people seem willing to reveal location in return for safeguards. For instance, in the U.S. 55% say they would feel more comfortable using LBS if they could easily and clearly manage who sees their location.

What is most interesting about LBS is that familiarity breeds comfort -- to a degree. The study finds that concerns about theft and being harassed because of LBS decline sharply as the consumer actually uses location services. Interestingly, the major worries about privacy (location sharing without consent, identity theft) remain fairly high even among those who have used these services.  

LBS offers marketers an interesting dynamic where the consumer is hyper-aware of both the potential risks of digital tracking at the same time he or she is very appreciative of the services it can provide. This seems like an interesting opportunity for marketers, publishers and consumers to have a real conversation about exchanges of tangible value.