U.K.'s 02 Works With With Marks & Spencer, Starbucks, L'Oreal on Location-Based Marketing

Mobile Phone Operators Text Marketers' Deals to Customers; Orange Will Be Next to Add Service

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LONDON (AdAge.com) -- Cellphone operators are muscling in on location-based marketing -- usually the preserve of specialists such as Foursquare -- and the two biggest U.K. mobile companies, Orange and 02, are competing to be leaders in the field. O2 has a big head start, with deals with Marks & Spencer, Starbucks and L'Oreal, but Orange won't even discuss its plans except to say the company is entering the new area this year.

02's first deal with leading retailer Marks & Spencer offers customers a free smoothie if they buy a particular sandwich or salad at the store. To redeem the offer, customers quote a unique product code from the text message.

The 02 service sends targeted SMS or MMS messages to customers when they enter areas that have been "geo-fenced" by brands, retailers or services. To receive a message, customers must be older than 16 and have signed up for the 02 More program, which invites them to state products and services of interest, age and gender, and promises to send out no more than one text a day. More than 1 million people have opted in so far, out of 02's customer base of 22 million subscribers.

02 went live with location-based SMS toward the end of last year, when it launched programs with Starbucks and L'Oreal. Starbucks has built 800 geo-fenced areas in the U.K., and used location-based marketing to promote the launch of its Via instant coffee range in October 2010. The L'Oreal deal was put together with pharmacy chain Superdrug, and included messaging buy-one-get-one-free vouchers for the Elvive hair care range.

Neither Starbucks nor L'Oreal would comment on their first experiments with location-based marketing. At the time of the launch, L'Oreal's head of CRM, Hal Kimber, said, "In future mobile will undoubtedly become one of, if not the key channels for developing consumer relationships."

Shaun Gregory
Shaun Gregory
Marks & Spencer signed up for a six-month program. Nick Fouhy, online marketing manager at M&S, said in a statement, "Mobile is already an incredibly important channel for us with over two million people shopping at M&S on their mobile phones last year."

Shaun Gregory, managing director of 02 Media, said, "This is another nail in the coffin of the old model of reaching mass audiences. We are thrilled to be working with such a progressive and iconic brand. Location adds a whole dimension to the mobile marketing opportunity... It's taking the richness of the medium and delivering something unique that customers really want."

Orange has also announced plans to introduce location-based marketing this year, but would not release any details.

Both 02 and Orange plan to launch mobile payment services later this year using Near Field Communication technology, which will allow customers to use their phones as cashless wallets, replacing cash, payment cards and travel cards.

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