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Mobile Apps Lead the Way Over Location Based Services

With all the excitement about making loyalty “social”, it’s easy to blend concepts like Mobile Applications and Location Based Services (LBS) together.  For the record, the two are closely linked and both depend on a GPS enabled Smartphone to do their job.

One key contrast to note is that mobile apps can provide multiple functionalities including a location based feature, while LBS usually refers to capabilities (typically more limited in focus and less capable than a mobile application) that are delivered through use of Foursquare, Gowalla or similar third party services.

Trying to keep tabs on the gap between market buzz and the reality of what’s available, we looked into some statistics on mobile and location based apps in the market today. Scanning an infographic about location based apps, we walked away with a few surprising factoids.

Most of the data in the infographic is derived from a Pew Research Study with topline message that “more than a quarter of American adults use mobile or location based services.” Looking deeper into the data and making some derivative calculations, we estimate the percent of US population using location based services to be somewhere between 2.6 – 3.2%. There is an interesting correlation of these numbers to the number of active users on Foursquare, about 10 Million at present or about 3.15% of US population.

According to the study, the penetration of location based users is heavily influenced by age as 62% of Millenials use a location based service. Not far behind is Generation X, those people between 30-49, 50% of which use a location based service. The trouble with these numbers is they don’t match up with the topline figures. For example, assuming a Millennial population of 80 Million, 62% equates to about 15% of US population. We are inclined to think 3% penetration of overall US population is closer to reality.

It is possible that corporations weighing the merits of mobile apps and location based services have noticed the same discrepancies.  Statistics provided by Terrapinn indicate that 67% of companies polled say they are allocating higher budgets over the next 12 months to build mobile apps, while only 14% are committing funding for location based services.

24% of brands polled in the same survey indicated the top reason to develop their own mobile app is to improve customer experience. Improving customer loyalty (16%) and gaining new customers (13%) were among the top 4 on the list, indicating that mobile apps are thought to be able to acquire, engage, and create retention across customer groups.

Dedicated Location Based Services have loads of potential and, if anything, have been underutilized for marketing purposes. The danger for them is the longer the gap exists, the greater the probability that Mobile apps will cannibalize their space as they deliver a more comprehensive solution for most brands.

Author: Kobie Marketing

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