What are beacons? iBeacon technology in digital marketing

Proximity-based beacons have made big waves in the Digital marketing world this year as more and more industries are embracing the technology.

Known as proximity marketing, the revenue from location-based services is expected to reach $43.3 billion by 2019, according to a recent report published by Juniper Research. The report also highlights that around 71% of this revenue will be generated through ad-supported apps.

So, are beacons this year’s new digital marketing trend? Let’s take a look at their impact so far and what the future could hold for this Disruptive technology.

What are beacons exactly?

The terms ‘beacon’ and ‘ibeacon’ are used interchangeably to describe the technology that enables mobile apps to understand the geographic location of its user and then deliver relevant content to them based on their immediate environment.

They run on Bluetooth Low Energy technology and physically, they look like small computers, powered by coin batteries.

Who is using beacons?

Because the use of beacons in marketing is still new, there isn’t much data out there that can provide accurate measurements of their impact and their core user base.

At this stage in the beacon revolution, however, it does appear that they are being used by loyal brand customers, i.e. those who are already very engaged with a retailer’s products.

In order for a customer to receive offers and promotions from retailers via beacons, they first need to download the retailer’s app and then turn on their Bluetooth signal to start receiving information – a lot of steps for the casual shopper.

Take a look at this graphic, published on Business Insider, which shows shopper motivations for signing up to in-store notifications:

This graphic, published on Business Insider, shows shopper motivations for signing up to in-store notifications.

So, it would appear that most shoppers who haven’t used beacons before are likely to opt into in-store tracking to receive discounts and coupons above all else. Interestingly, however, almost one-third of those surveyed said they would never opt into in-store tracking – that’s quite a large proportion of shoppers that aren’t engaged.

So, how are businesses making money from those that are embracing the technology?

The business benefits of beacons

First and foremost, beacons are likely to benefit businesses by collecting customer data. The more information you have about your customers, the more effectively you can target the content that you send to them.

Because beacons work in combination with mobile apps, companies have access to a variety of metrics about their customers’ shopping habits. This enables retailers to adjust their marketing strategies, store layouts and promotional offers to better align with what their customers truly want, thus improving their overall experience.

Essentially, beacons have the potential to make retailers more money by offering instant promotions and encouraging shoppers to buy on the spot, rather than shopping around online for a better deal.

The industries using beacons as part of their marketing strategies

Beacons are currently being used most effectively by retail outlets. Stores such as Macy’s, Urban Outfitters and Target are beginning to use beacon technology to improve customer engagement by gathering their data and offering interactive promotions while customers shop.

Relatively speaking, however, because beacons are a new technology, those retailers that are making use of them are still, for the most part, experimenting with them in their marketing.

Several of the world’s largest airports, including San Diego, LAX, Miami, Frankfurt and Hong Kong have started using beacons to give passengers directions to find their way round their huge complexes. They’re also being used to provide passengers with real-time flight information as well as promotional offers.

What could the near future hold for beacons?

Bluetooth technology is already being used widely to enhance the customer experience. We can now unlock our cars without keys, paint digitally using a single pen and improve our sports performance with sensors in our shoes.

Coupled with beacons, Bluetooth technology could eventually replace the need for key fobs and security codes and help streamline business processes. The technology could enable instant access to everything from electronic records to physical spaces, saving companies huge amounts of money.

Always misplacing your belongings? No problem, with beacons you’ll potentially never have to search again given that they could be used to track and locate your personal items.

And on a business level, the exact location of equipment could be monitored to ensure employees spend less time tracking down the tools required to do their jobs. Not to mention the ability to track employees themselves…

In short, beacons are already being used by big industries to gather customer data to improve their products and services and make more money through promotions. However, because the technology is still in its infancy, we don’t yet have any tangible data to demonstrate its current impact.

Certainly, it appears that only the most loyal customers are taking advantage of beacon promotions due to the fact that the content is reliant on the customer having the store’s mobile app downloaded and their Bluetooth access switched on.

It’s easy to see the potential business benefits of beacons in the near-future and it’ll be interesting to see what developments arise in future.

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