NEW YORK (AdAge.com) -- This could -- finally -- be the year of mobile marketing. But not exactly in the ways first predicted.
The combination of location and social networking -- once confined to tiny players like Foursquare, Gowalla, MyTown, Whrrl, Loopt and others -- is about to get massive scale in the form of Facebook, which as of last month had 450 million users and is adding a million new users each day.
Facebook is expected to launch location-based functionality as soon as May, according to an exec with knowledge of Facebook's plans. Marketers will be allowed in soon after.
Last week Ad Age reported that McDonald's is building a location-based functionality with Facebook that will allow users to "check-in" at restaurants and share menu items with friends. That campaign is expected to be rolled out some time after the consumer launch, when Facebook integrates brands into the system.
The social impact of including a physical location in a virtual sharing app is immense; so is the marketing application as brands are then able to turn their physical locations into media channels connected to real people across Facebook's social graph.
"People talk about location-based advertising, but location removes the need for advertising," said Seth Goldstein, co-founder of SocialMedia.com. "If you know where the consumer is, and that she is physically touching your brand, then you do not need to rely upon traditional mass-media channels to reach her."
Mr. Goldstein sees marketers adding location as a key part of the value exchange with consumers. A store could, for example, offer free Wi-Fi to patrons who share their location to their friends.
McDonald's declined to comment on its Facebook plans, but one can imagine it could allow users who "check-in" the ability to share an offer or promo, as well as their location, with their social connections.
Jumping on bandwagon
Brands quickly recognized the power of location-aware social networks, and Pepsi, Dunkin' Donuts, Starbucks, Bravo, Warner Bros. and others jumped on the bandwagon and did deals with Foursquare.
But location-based marketing is very much in an experimental phase, mostly because the medium is tiny. Foursquare just signed up its millionth user, for example; MyTown has 2 million; Loopt has 3.5 million; and Gowalla still under a million. For a marketer that needs to reach hundreds of millions daily, geolocation social apps just can't provide the scale yet.
"Today no one can do location-based social marketing at scale other than potentially Facebook, should they release something," said Mike Lazerow, CEO of Buddy Media.
But with the proliferation of smartphones and location-aware networks -- including Facebook -- lots of marketers are betting that the sharing of physical location is about to become as natural and ubiquitous as a status update. Indeed, where you are could become the most valuable part of social networking. See a friend is having a coffee down the street? Why not join him?
Budgets devoted to this kind of marketing are tiny, just like social media budgets were a few years ago. But unlike some other recent social phenomenon -- take Twitter, or even Facebook itself -- it didn't take marketers long at all to figure out that the marketing potential is immense.
"We're always looking for the next big thing that isn't just a passing fad, but a viable wave in consumer behavior," said Chris Fuller, emerging media director at Pizza Hut. "Geolocation services appear to be just that." Pizza Hut built a Facebook ordering platform in 2008.
But the greatest opportunity for geolocation apps could be for local businesses, for which scale is less important than reaching the right people to generate foot traffic. "This will be the biggest thing to happen to local businesses since paid search," said Ian Schafer, CEO of DeepFocus, which just launched specialty practice GEOFocus. "It enables people to move in flocks or herds; you create waves of people."
Boon to local businesses
Some local businesses are catering to their Foursquare "mayors" with offers and special services. The Scholastic Store in New York is offering visitors 10% off any purchase, just for checking in while visiting.
Facebook, incidentally, has a self-serve ad platform created for small advertisers, the types most likely to benefit from location-based services.
Still, some wonder if this could be too much. Facebook is a platform that allows people to share their lives, and it makes sense that location would become part of that. But each feature Facebook adds -- such as its recent Open Graph function, which brings its social graph to third-party sites -- brings pushback from users, mostly in the form of privacy concerns.
"Being fully connected and available 24/7 to all your peeps and tweets may not be as healthy as it seems," said Scott Bedbury, CEO of BrandStream. "Not being available, being off the grid and being fully present in whatever moment you're in, and with whoever is with you, is my measure of 'engagement.'"