Mobile Beacons to Explode, but They Aren't a Silver Bullet for Tracking

Macy's, McDonalds and Target Have Lately Signed New Beacon Contracts

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A shopper at Carrefour.
A shopper at Carrefour. Credit: Philips/Carrefour

In the next five years, hundreds of millions of mobile beacon tracking devices will pepper retail shops, restaurants and malls, observers are predicting. Global brands including Carrefour, Ikea, Macy's, McDonalds, Pizza Hut and Target signed contracts with beacon providers in the last quarter, according to ABI Research, and Facebook this summer began distributing the trackers for free to small businesses. But analysts suggest beacons are still not the be-all end-all of real-world tracking.

"Research data shows that, from a beacon shipment perspective, most vendors are shipping multiple contracts in the tens of thousands," ABI Research said in its recent report. "This is a major upgrade from 2014, indicating that a lot of retailers are ramping up to deploy in 2016."

The company predicted in July that makers of Bluetooth Low Energy beacons will ship more than 400 million of the devices globally by 2020, a huge increase from today's 3 million.

Here in the US, companies like beacon provider and operator Mobiquity are at the forefront of the trend, signing deals with mall property companies including Simon Property Group and Macerich that place their tracking devices in hundreds of shopping centers.

However, despite the accelerated growth of beacons in real-world settings there are hurdles to cross before the technology reaches its full potential in marketing, namely connecting digital ads to in-store visits and purchases.

In addition to convincing smaller businesses to become guinea pigs for a still-emerging technology, companies must convince consumers to download the mobile apps that communicate with beacon devices, and have Bluetooth enabled on their phones.

"What's at stake is finally bringing offline attribution to reality, with big implications for tracking ROI and efficacy in local advertising," stated BIA/Kelsey Chief Analyst and VP, Content Mike Boland in a series of 2016 predictions from the research firm. "Beacons meanwhile will stumble for consumer adoption due to opt-in friction at the app and settings level. Adoption will grow if beacon engagement is integrated more seamlessly for invisible or 'background' functionality at the OS level."

"We're big believers that the BLE beacons aren't a silver bullet," said Patrick Connolly, principal analyst at ABI Research, in an interview with Ad Age. Though he suggested the app download obstacle could disappear as people adopt blanket services such as Apple Passbook, Mr. Connolly expects companies to take a hybrid approach to indoor location tracking in the future.

Companies will experiment more and more with other types of indoor location tracking technologies that rely on Wi-Fi, magnetic field tracking and even location trackers in LED lighting, he said. For instance, in May, French retailer Carrefour partnered with Philips to use its LED supermarket lighting to target location-based offers to customers via their phones.

"Next year it's hybridization," said Mr. Connolly.

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