The Pain and The Promise of Beacons in Retail

This article originally appeared on AdExchanger, April 10th 2017.

Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Brian Handly, CEO at Reveal Mobile.

Beacons entered the marketing landscape a few years ago with splashy headlines touting large national retail deployments and the ability to engage with customers in real time.

While recent headlines have been fewer, the pace of beacon deployments has evolved but hasn’t slowed. Nowhere is this more evident than in retail, where beacons bring both pain and promise for retailers’ marketing and customer service teams.

The initial hype focused on using beacons for real-time, proximity-based push alerts. The pain here was quickly evident: Users must have the retailer’s app installed and Bluetooth enabled on their phones, and must have opted in to push alerts.

Additional friction points surfaced as time went on. First was the issue of scale. Most nationwide retailers have a strong physical presence, but lack significant adoption of their mobile apps. If a retailer’s app only has a few hundred thousand users, it won’t see enough devices bumping into their beacon network to make it worthwhile.

Implementation of beacon hardware and software also caused stress.

Most beacon companies wanted their SDK installed in the retailer’s apps and their proprietary beacons in the retailer’s locations. If a retailer decides to partner with more than one beacon company or replace its previous vendor, it can’t reuse its existing beacon infrastructure or technology. Instead, it is faced with multiple SDK integrations, and beacons from different vendors in a single location. It gets unwieldy very quickly.

Finally, most marketers overestimated the consumer appetite for beacon-triggered push notifications. Just because you can send someone a push alert every time they walk through your door doesn’t mean your customer is clamoring to see it.

These hurdles slowed adoption and made it difficult to generate a meaningful return on early beacon investments. This is the crux of the pain: Can retailers use beacons to generate revenue? The answer, without a doubt, is yes, but they must adapt with new strategies.

At the top level, retailers benefited from their own learning and industry tailwinds. They’re putting more emphasis on mobile apps that provide meaningful value back to customers, giving them a reason to download the app in the first place. Also, more devices, cars and homes use Bluetooth to connect, while Bluetooth low-energy advancements and savvy developers have almost entirely eliminated battery-drain concerns.

Retailers are evolving their beacon strategies by increasing the amount of devices bumping into their existing beacon networks. InMarket, RetailMeNot, Shopkick, Digital2GO and Swirl are allowing retailers to tap into their networks via partnerships that increase the scale of devices detecting beacons.

Retailers are also rethinking who deploys and manages the beacon infrastructure. Many of the major beacon deployments today occur behind the scenes, out of the eyes of the media, and involve companies you may never have heard of.

They’re deploying beacons in hardware like digital signage, jukeboxes and sound systems. Beacons are also appearing inside the kiosks and end caps at retailers on behalf of the brands that appear inside the store. This provides one path to simplifying the challenge of managing a beacon infrastructure: Let someone else do it.

A third approach occurring more frequently is the adoption of open beacon signals, such as iBeacon and Eddystone. This allows a retailer to place one vendor’s beacons inside its stores and let others use this signal, rather than deploying multiple proprietary beacons from several providers.

If marketers overestimated the short-term value of beacons and sending real-time, location-based push alerts, they underestimated the long-term value – and promise – of beacons.

While a real-time beacon-triggered alert can be an effective marketing technique for the right campaign, a beacon network can also be leveraged for audience understanding and foot traffic measurement. Beacons can double and triple the amount of devices seen at a location, as beacon detection occurs quietly and passively in the background, rather than requiring an app to be opened at the location.

More importantly, even though today’s dominant location-based technology is GPS (latitude/longitude), the location data from beacons, as well as from Wi-Fi and RFID signals, offers much more specific information that can add value.

Since a smartphone must be within a few meters to detect a beacon versus GPS and Wi-Fi, which are only accurate to within a few hundred meters, this accuracy creates a better indicator of true consumer intent and a more definitive path to purchase.

ABI Research estimates that 500 million beacons will be deployed by 2021. This means millions of retailers, restaurants and businesses around the world will have the physical equivalent of a digital tracking pixel at their location, with the smartphone serving as the “cookie” to collect these interactions. Smart marketers will likely use this data to bring more relevant products and advertising to their customers.