How to Make Your Location-Based App a Success: Reward People for Their Activities

Location-based mobile applications, also now being called “check-in services” to differentiate themselves from other geo-aware apps like Google Maps, are the hottest new social applications on the mobile scene today. The lineup includes game-based applications like Foursquare and MyTown, which each provide points, credits and/or badges for “checking in” (registering your physical presence) with a particular venue. There are also dedicated shopping-related check-in services like Shopkick, which rewards retail customers with discounts and deals for patronizing select establishments.

But almost all of the check-in apps integrate some form of mobile advertising. After months of experimentation with various formats, marketers are starting to discover what strategies actually work.

Despite the media craze for apps like these, some analysts are rationally advising caution to marketers who are tempted to jump on this latest bandwagon – after all, only 4% of U.S. adults have ever used location-based check-in services and only 1% out of those that use them do so more than once per week. But businesses, hopeful of reaching their most engaged customers, see check-in apps as a big opportunity for marketing initiatives, not to mention a rich resource of consumer data ripe for mining.

Case in point: analyst firm ABI Research has just released a new study that finds businesses are primed to spend $1.8 billion on location-based ads in 2015, a somewhat surprising number given the small crowd of early adopters currently using check-in apps.

According to ABI Research’s Neil Strother, check-in apps may raise privacy concerns among some users today, but those issues can be overcome by offering consumers deals, discounts and rewards. The “value-exchange” of receiving these rewards will be high enough that consumers won’t mind giving up privacy in order to take advantage of the benefits. “If you care about getting discounts or being rewarded for shopping,” he explains, “you’ll accept having your whereabouts known.”