• by Donnovan Andrews , November 7, 2014

Beacons are fast becoming the topic du jour.

What’s a beacon? These small bits of hardware that essentially enable retailers / venue owners to broadcast messages to nearby mobile devices via Bluetooth low-energy (BTLE). This is remarkable: Beacons have the potential to turn shopping into a personalized experience, based on your location in the store or your proximity to other items within a retail environment.

In the simplest of terms, it works something like this: you walk into the department store and when, for example, you pick up a pair of hiking boots, your mobile device can alert you about a sale on that specific boot (and provide you with a discount coupon). A beacon may also present you with a cross-sell for something in that category, like a hiking jacket that’s on sale or even a bundled discount for both items -- all provided by the retailer or the brand and sent directly to your pocket.

The beacon has the ability to be to the physical world what the cookie is for online content and commerce. With more practice and sophistication, beacons will be able to deliver targeted messaging filling the messaging gap where GPS leaves off.

For now, the user still has control of this relationship, meaning the user must opt-in/run the application (provided by the store or a shopping app) when in a beacon-enabled environment.

This may change as organizations wanting to build relationships with customers experiment with more aggressive techniques, such as beacon communications running in the background -- either via an app or devices’ operating systems.

As we move further into this, I expect to see significant activity and participation from the ad-tech community through bidding platforms and private marketplaces (PMP), where inventory is bought and sold.

There are still questions yet to be answered. Will consumers be willing to share their data with retailers, event venues, museums, etc. to enable personalized experiences via beacons? Do people trust retailers won’t be hacked, exposing users’ information? One thing is certain, beacons are getting a lot of attention for the ability to provide a direct, uninterrupted connection to consumers while they’re in the spending mind-set.

Here are my predictions about the beacon effect:

• Beacons transform the real world into a digital channel
• It’s relatively safe, since there are multiple steps required for end-users to activate beacon communications
• Consumers expect feature-rich digital experiences in the physical world
• A decrease in semiconductor costs, new mandates in marketing and consumer adoption will fuel the adoption of beacons usage
• By 2016, beacons will be free to retailers, museums, arenas
• The profit center for beacon companies will be software, analytics, insights and consulting services
• Consumers are “warming” to the idea of trading data for enhanced experiences
• Beacons are low cost and low maintenance, as a result there will be more than 4M devices in use by end of 2018
• Beacon-delivered advertising will generate significant activity in the next 18 months
• Beacon-generated ad space will be widely available via RTB and generate $500M-plus by 2018
• Mobile phone plans will be subsidized by advertising and supported by beacon data