• by David Berkowitz , September 28, 2010

I've got a riddle for you: What's the hardest part about location-based marketing? Here's a hint: It's not the marketing.

The challenge tends to lie in dealing with locations. This comes up all the time. Can locations accept mobile coupons? Does a brand have the right to run marketing around locations they don't own? For locations that are part of a chain, is the marketing the responsibility of the store owner or the corporate marketing group? While locations now offer compelling digital marketing opportunities thanks to advances in mobile media and devices, locations also cause a few wrinkles in some otherwise solid marketing plans.

Consider ShopKick, for example. In a recent Q&A on MediaPost, I was willing to peg Shopkick as the most overhyped mobile technology. As Shopkick has been the subject of stories in major media outlets from here to Botswana, it's easy to call it overhyped. The gist of the app is that you earn points by walking into select stores, which the app confirms by using the microphone to pick up an inaudible audio tone played by a speaker placed near a retailer's entrance. More points, dubbed "kickbucks," kick in when users take specific actions within the store such as scanning select products. Location is central to the app. The kickbucks only matter so much here, as I've made it to level six with over 400 kickbucks (in other words, I've used this app a lot) and still haven't earned a $2 Best Buy gift card. The app is still very new and can play a role in having consumers engage with locations and products, but it's not fully baked yet.

Yesterday, a new location-centric application called CheckPoints was announced that's designed to shift the framework of the experience. Instead of focusing on locations, CheckPoints works with brands, including launch partners Belkin, Energizer, Seventh Generation, and Tyson Foods. While users can check in at various shopping locations, the focus is on the apps' featured products. Scanning those products unlocks custom content and rewards. Here, the rewards are designed to be more tangible so it doesn't take too long to understand the benefits. Rewards can include airline miles and other offers not necessarily related to the items scanned.

Brands will be rooting for this app to work. I work with a number of consumer packaged goods brands, and I'm sure this will come up in conversation with several of them. If this app starts influencing users' purchase decisions, especially in ways brands can readily track, then brands will promote the app themselves. In essence, it will mark a transition of slotting fees to scanning fees. It's also worth noting that despite the differences between CheckPoints and Shopkick today, Shopkick can just as easily be used to promote products across a wide range of locations.

The limitations of product-scanning apps are numerous, and they're worth keeping in mind. The technological hurdles will be overcome within several years, but consumer behavior may not change as fast.

1)   Barcode scanners remain relatively niche. You need to keep narrowing the population from mobile phone owners to smartphone owners to application users to people who know how to work a barcode scanning application. The number of those folks is growing -- ScanLife just reported that scans with its app are up 700% this year -- but it's hardly everyone.

2)   It requires a shift in the consumer mentality. With print coupons, consumers sort through discounts that arrive at their door. Online, consumers find out about discounts by signing up for alerts such as email newsletters, discovering serendipitous deals through opt-in services such as Groupon, or hearing about deals via social channels. Barcode scanners require more active engagement on the consumer's part, so the value proposition will have to be clear, especially for low-consideration products.

3)   As Sophia from "Golden Girls" says, "Picture this." You're in your local Safeway trying to find your favorite brand of marinara sauce. As you're deciding between the brand with the extra basil and the rival brand with the extra oregano, someone's standing there scanning different jars' barcodes in search of a discount. Of course, she first has to find the application, make sure she has the right product, get the code properly in the camera viewfinder, and wait until the clouds scatter so she can get an extra bar of 3G wireless service. At that point, while she's trying to scan a barcode, her cart angled to take up three-quarters of the space in the aisle so you can barely pass by, you use your phone to Google "is it worth committing aggravated assault over a jar of pasta sauce?"

Consumer behavior is changing, and it will have to change to keep up with the increasing digital distribution of promotions and deals. Brands in general will benefit from this new genre of mobile applications, as the upside is significant compared to relatively modest costs to participate. The biggest hurdle is deciding which opportunities to focus on. Fortunately these marketers can make such decisions in the privacy of their own offices, not standing in the middle of grocery store aisles while waiting for the clouds to clear.