The way the story goes, you are walking by a Starbucks on a cold day -- or a hot day, depending on who is telling it -- and your mobile phone rings with a coupon for 50 cents off a latte or a Frappuccino.
Of course, this story is a decade old, and while it illustrates the fact that geo-targeting has been touted as a major mobile-marketing boon for a while now, there have been few real examples (and Starbucks, for the record, has not offered this promotion).
But there are signs the technology is finally catching up to the promise. Last month, mobile social network Loopt announced one of the first major location-based marketing experiments, with CBS. The plan aims to use the mobile phone's inherent ability to locate a prospective customer without invading a consumer's privacy by requiring several steps before any geo-targeted ads are served.
First, a Loopt subscriber must turn on the phone's locator button, which broadcasts its location. (Even without a GPS, the location can be approximated based the phone's relationship to the cellphone tower receiving its signal.) Then when the subscriber checks the mobile-web version of CBS News, MarketWatch or Sportsline, the page will display a banner ad targeted based on the subscriber's location.
Loopt has a limited subscriber base among Boost Mobile and Sprint customers. However, Mr. Altman said partnerships with additional mobile-phone services are expected to be announced soon. Other fledgling geo-targeted services include Buddy Beacon, available on phones from Helio, and applications such as BuzzD, which provides real-time search information from patrons at nearby bars and clubs.
Cyriac Roeding, exec VP-CBS Mobile and CBS Interactive, said the Loopt arrangement solves myriad problems related to location-based advertising: It's opt in by the consumer, can be turned off at any point and doesn't clutter inboxes, spam anyone with text messages or interrupt with unwanted rings.
"It's simply getting a better banner ad," he said, playing down Big Brother concerns. He said a large number of marketers contacted the network following the announcement, but so far none have signed up for the service.
Perhaps the bigger opportunity in location-based marketing is the unique utilities marketers can provide consumers based on knowing where they are. Think about location-based mobile marketing's ability to improve local directory assistance or localize the contents of an age-old ad format such as the Sunday circular. Michael Baker, VP of Nokia's mobile-advertising group, said the chief marketing officer of a major retail store told him that 96% of customers come to the store with a mobile phone in hand. In the future that phone could automatically flash the day's offers.
Already Target is looking to morph its Sunday circular into a mobile version, said Jerry Courtney, the retailer's group manager of corporate multimedia, at the Ad Age Digital Marketing Conference. "It's just a matter of what format does it come to you in and how easy is it to use at the point of purchase?"
Michael Bayle, senior director of mobile advertising at Yahoo, said mobile-phone subscribers might be enthusiastic about navigation services, but marketers aren't sure how excited they would be with location-based marketing services. Over time, privacy and spam concerns are likely to diminish, he said, creating challenges on the creative front where ad copy will require location-relevant, individually targeted messages.
But another telecom expert, Roger Entner, senior VP-communications sector at IAG Research, put it more bluntly, calling some of the possibilities of location-based mobile marketing "creepy."