Beacon Ad Networks: The Best Way to Destroy a Developing Industry | Guest Post

Happy times ahead for beacon ad networks?

While some beacon companies turn to Ad Networks as a savior, doing so would destroy the industry. That’s the premise of our guest author Alex Ball, CEO and Founder of Signal360. He takes a hard look at whether beacon companies should turn to ad revenue to drive growth.

Why Beacon Companies Are Turning to Ad Networks

A year and a half ago Apple released “iBeacon,” a marketing name for a software callback added to the iOS Operating System SDK. To marketing teams at Entertainment, Hospitality and Retail Companies, it was as if Apple had sent an edict as to the future of marketing. It seemed, and continues to seem based on news reports, as if beacons are now at the core of every marketing campaign. However, all those months later, the number of real world implementations are miniscule.

One of the first stated implementers of the technology was Major League Baseball at stadiums across the US. Two seasons later, the technology is deployed at a small subset of stadiums and is delivering only a single welcome message through an application that has downloads of only eighty thousand compared to the tens of millions who visit a ballpark each year.

With the Apple iBeacon announcement have come thousands of “beacon” companies. Every company premises itself on the amazing vision of content being delivered in aisle. However, many of these companies are currently closing shop or pivoting as hardware prices dropped, initial enthusiasm has waned, and companies come to term with the fact that large enterprises buy complete turnkey marketing solutions, not hardware.

So far the story follows a typical arc for a technology; initial outpouring with many competitors, natural pivots and closings as the market is winnowed down to the few companies providing an adequate solution. The problem is that as beacon providers have struggled to effectively signup and integrate with enterprises, many in the industry have turned to an Ad Network as the saving grace.

The Premise of Ad Networks

The premise and promise is that instead of convincing retailers of the value proposition, proximity companies instead try to integrate their SDKs into a variety of 3rd party applications and hope to deliver across networks of physical devices installed in malls, retailers etc.

The recent Lord and Taylor press release stated that the company had embraced Proximity Marketing in its stores. What was not stated explicitly was that the app being used is a 3rd party coupon app and the Lord and Taylor app does not include any proximity functionality.

Unnamed sources at Lord and Taylor informed us that the quoted cost for integration was in the ten of thousand of dollars but that was deemed too expensive. To a company with approximately one million in revenue per store last year, this shows a disappointing precedent of being unable to produce even a small amount of value from proximity marketing. This is not the utopian or even dystopian vision of beacons everywhere, this is a big tease.

..And The Peril of Ad Networks

What’s the danger of Proximity Marketing taking the easy road of integrating with and creating Ad Networks instead of direct with retailers?

  • The danger is that the public’s first interaction with Proximity Marketing will be for a game app to suddenly send twenty notifications as a shopper travels through their grocery store.
  • The danger is that the Retailer will lose the ability to personalize, to learn from its customers, to improve and strengthen its brand and sales.
  • The danger is that the entire Proximity Marketing industry will be permanently damaged. Instantly the power of proximity will be branded by consumers as a spam mechanism for coupons.

The problem with the ad network approach is one of ownership. Because Proximity Marketing is a complex process that requires a retailer, a physical beacon, a smartphone application, interesting creative, feedback mechanisms to control rate of delivery, notice and choice and more; this is not something that fits into the standard agency model of a quarterly ad buy.

When the retailer is not the owner of the experience, then the policing of the content and the relevance is left to the Ad Network which is interested in impressions not in long term value add to the consumer. Proximity technology has the promise of being a powerful weapon in the physical retailers fight against ecommerce; it lets the retailer own the physical and digital experience, giving customized experiences and value to the customer.

So what’s to be done?

There are retailers who are staying the course. At Signal360 we have the pleasure of working with many NRF100 retailers who chose us because of our turnkey and complete solution. Today we have won the RFP’s, integrated into the apps and are deploying at major retailers across the country without sacrificing consumer experience for a seemingly easier path.

What does the future of Proximity Marketing look like?

A few proximity marketing providers will offer complete and turnkey systems to assist retailers deliver in house proximity marketing.

These well crafted and contextual messages will meet with mostly intrigue and interest by consumers as we have seen with our implementations. As consumers become more familiar with the technology and the use cases, and on a case by case affiliate basis, brands will be allowed to deliver into the retailers apps and select 3rd party applications. This will open the door in a controlled way and most importantly keep the ownership with the retailer. Ever since the dawn of the Internet, retailers have seen many of their advantages chipped away. Not so with proximity, retailers will finally own their physical as well as digital space.

Count us in to that vision. That’s something we want to be a part of. Because in the end its what will be good for the consumer and thats what matters.

Guest Author

Alex Ball, CEO and Founder of Signal360. Signal360 a leader in proximity marketing solutions with over four years of experience creating a differentiated, turnkey, best in class proximity platform.

Share Your Thoughts

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What do you think? Will brands be able to resist the call of ad networks? And what will it mean for consumer acceptance and the success (or failure) of beacon-focused companies?

13 Responses to “Beacon Ad Networks: The Best Way to Destroy a Developing Industry | Guest Post”

  1. Ad networks sound tempting, but a quick look at the CPM bidding exchanges for existing web and mobile advertising models just shows how quickly that revenue turns to nano-pennies on the transaction.

    Our premise for a long-term sustainable business in this market is being the provider of the technologies, services and and engineering expertise to roll out proximity-enabled solutions at massive scale for our brand customers and solution partners. It’s about facing difficult engineering challenges and providing customers with the confidence that they can commit to proximity and beacon technologies for the long haul with an acceptable capital and operational expense that they will recoup through enhanced relationships with their customers.

    David
    Chief Product Officer
    Radius Networks

    Reply
  2. David,

    Could not agree more. Content and a good approach is king! There are a lot of s*itty apps coming to the stores that do nothing else than hurting the industry. But there are also very good ones that don’t. And actually make a really good profit :)

    Cristi
    hacking apps with labs at applabs

    Reply
  3. Jeff Hest

    Agree completely that lousy consumer experiences will kill the industry. However, the way Lord & Taylor (and Marriott, Urban Outfitters, and dozens of others) have implemented the Swirl platform gives the retailer (Lord & Taylor in this case) COMPLETE control over the experience. They’re in charge of the look and feel of the content, the frequency with which it is delivered, which apps can access their beacons and trigger deliver, and a ton of powerful ways to personalize the experience on an individual basis. My company is looking at rolling out Swirl as well – it’s a killer system with support for BOTH the retailer’s branded app AND a growing (soon to be HUGE) network of enabled third-party apps that provide retailers like us with enormous reach that we could simply not get from our app downloads.

    Feeling a little jealous, Alex?

    Reply
    • Jeff, Agree completely that the lousy experience can kill the industry. Nothing is really changed, content, albeit a relevant content is till king.
      However Swirl is not end all, mobiquity and footmarks are beacon networks too.
      And of course we are building them out too – somewhat uniquely thou. The complete control is important the SDK integrations is the key. More importantly continuing education of the client base is a must.

      Reply
  4. Building a beacon enabled ad network is an entirely separate matter to terrible consumer experience. Right now it is primarily tier one retailers with big budgets/intelligence investing in beacons. The result is a good stab at consumer experience.

    As the technology flows down the tiers the experience, if retailers are left to design the experience themselves, may well degrade.

    By claiming beacon ad networks will destroy the industry, you are actually creating an elitist situation where only the top tier retailers with the biggest budgets should play. Allowing organisations with deep consumer experience and beacon knowledge to deploy technology lower in the tiers (and therefore fronting the capital and knowledge) should mean there is a good, consistent experience across all retail – not just the high end.

    Again beacon ad networks and quality of experience are very separate. I already see some tier one retailers doing it themselves with terrible experiences, and some lower tier retailers with a great experience as part of a bigger network. You shouldn’t confuse the two.

    What is important is:
    a) a great consumer experience
    b) ensuring the consumer gets real value from that engagement

    What matters is the skill of the organisations implementing.

    Reply
    • Yes I agree. While we can affect the customer end result with client education, It is a separate issue from networks. Networks are a mere vehicle to ensure a prompt delivery.

      Reply
  5. Hello,

    Instead of fighting here, let’s get together and create cool stuff. Innovate people!

    It looks like all of us are “the best” in the business, but no one really matters at the end.

    What it matters is the user experience, advertising or not.
    And when I’m talking advertising, there’s a twist…

    Owen, I agree of a) b) but you also need to calibrate… and your last sentence really point out.
    You know what I’m talking about isn’t it? Txs and Blues… sometimes don’t work ok on yours…
    So sometimes hardware don’t work as it should.

    Users will decide at the end…

    Mario

    Reply
  6. Mobile apps that use beacons technology to connect patrons with merchants should stay as far away from ad networks as possible. Beacons give merchants insight into their customers without compromising privacy. It is win win for all sides. Customers don’t have to be tracked via ad networks and merchants can still understand their visitors and provide them with the a customized experience. This is possible because of the way beacons work and contextual and proximity level. This something we take seriously at OfferDrop. All users of our consumer OfferDrop apps are completely anonymous. However, merchants still gain insights and can incentivize their shoppers without compromising on privacy.

    Reply
  7. Interesting conversation.

    If all the IBeacon Vendors can do is to deliver proximity messages based on their own HW, then better everyone to switch lights off and close down because the industry will not prosper on this basis.

    Proximity Messages is how the IBeacon industry was conceived from the Beginning and people have seemed to get stuck and tried to develop the industry based on this which is locking the real value of the IBeacon industry development; proximity data capture and analytic tools, not necessarily pushing messages.

    For big retailers, conferences, malls, museums etc proximity messaging provides little or no value compared with proximity data capture, analysis and understanding.

    Sure pushing messages has some short-term benefits but it can really spam the sh*** out of people if delivered without adding real value.

    We always suggest our customers to phase in the following way; first 6-9 months is just to gather and capture proximity data, and only after that are you in a position where you can make the most of this data integrated to your CRM to really start delivery real value in the form of personalized content per customer segment or cluster, not just in the form of 1 message fits all.

    Julio Alvaro
    Blue Sense Networks
    http://www.bluesensenetworks.com

    Reply
  8. Ad networks are not what the proximity device market needs right now. The market needs merchants with a vision for engaging with their in-store customers and not just fixated on pushing coupons or ads. It is about timely and meaningful engagement and moving past email marketing. What is lost in a lot of the proximity movement, is that proximity devices enhance mobile marketing where both the consumer and merchant can benefit. For example, within the OfferDrop platform, mobile customers are always anonymous and this is critical for us that customers are in control. But at the same time merchants are aware of how their store’s footprint is being used by visitors and if the merchant puts forth effort to engage with meaningful notifications and offers, they will gain more loyal and happy customers.

    Democratizing beacon and mobile technology is the critical step for proximity and contextual communication for local merchants. The technology barrier needs to come down so that merchants are not forced to either adopt a third party coupon mobile app or investment big bucks into building their own contextual enabled apps.

    Reply
  9. Seem to me that some of the comments are very myopic. No to networks, all hail the merchants.
    Networks have their place, its about engagement, not just marketing, not another coupon app whether it is proximity based or not. Open your minds a little and just offer a second imagine what else you could do with a network – engage people, guide them, communicate with them in the larger context, not just with in constrains on occasional merchant.

    What this movement needs is a balance. Ultimately it is about delighting the end user. for without them there is nothing.

    Reply
  10. Great debate, but I have to tell you I agree with balance and making the service accessible to smaller merchants. There are intelligent places where a network concept will work beautifully, as well as providing the merchant with a way to control their own messaging to their consumer. Stay tuned! We have this covered.

    Reply
  11. If ad networks are used for pushing ads and no value then it will destroy this developing industry.

    Reply

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