Target must make some people hungry, because a quarter of its shoppers head from the store to a restaurant. Another 25 percent or so eat out before their shopping trip. So maybe Target should capture some extra revenue by selling meals right on the premises. Or perhaps it could do a cross-promotion with neighboring food establishments.
The numbers aren’t guesses. Nor are they estimates based on customer surveys taken after the fact. They’re actual measurements of where and when a sample of people spent their time, garnered by pinging the GPS receivers on their mobile phones. New services are popping up that track people in real time to give businesses a more detailed picture of consumer habits than ever before. The new tracking services go beyond location-based apps such as Foursquare, which require users to actively check in. Rather, these startups connect the dots of where you go without your doing anything at all.
In the past, this kind of location data could be obtained only by asking or paying consumers to fill out surveys. Even then, people might not remember exactly where they went after shopping at Target, or they might give the answers that they thought the questioner wanted to hear. They might not even know the answers to some questions, such as how often they were in range of a certain supermarket or whether they’d passed by any ATMs.
“Survey-based research is really great for figuring out what people think, but it misses out on where they go and what they do,” says Thaddeus Fulford-Jones, CEO of Boston-based Locately, a startup in the new field of location analytics.
The information about Target shoppers comes from a pilot study Locately did with Mobext, the mobile-marketing arm of advertising agency Havas Digital. From Mobext’s usual panels of shoppers who’d volunteered to offer opinions, it recruited people from Boston, New York, and Chicago who had cell phones with Sprint Nextel. The shoppers, who granted the company permission to follow their GPS traces for two weeks, didn’t have to activate anything on their phones. Sprint’s equipment would take a reading of their location every few minutes during the day and less frequently at night. If they were driving or walking from store to store, for instance, that information was transmitted to Locately.
Cell-phone companies have always been able to figure out roughly where callers are by triangulating among the nearest cell towers. Since 2003, the government has required more accurate locations in case people use their cell phones to call 911, so GPS was added to all phones. Carriers must provide the data to law enforcement in response to a subpoena. Last year, phone companies got a million such queries.
But now smart phones are loaded with apps that rely on users’ willingness to have their phones reveal where they are. Which means this information is largely there for the taking. “It’s not very hard to get to a tangible benefit,” says Phuc Truong, managing director of Mobext. For instance, the measurements provide hard-to-get specifics on commuting times and routes. A company might use that information to increase its subway advertising or fine-tune the timing of a radio ad, then follow up to see what impact that move had on business. The company can see when a customer drove by its store to go to a competitor, and try to figure out why.
Mobext has already sold some of its retail clients on the idea and is performing its first studies with Locately, but it won’t have the earliest results until February. “It’s new, and not many people are thinking along these lines,” says Truong, “but we’re trying to guide our clients to think that way.”
The ramifications for business are far-reaching. “I think the fundamental business of demographics is going to change very dramatically,” says Sean Gorman, president of FortiusOne, a company in Arlington, Virginia, that recently launched a location analytics program. The software allows developers to build location analysis into their apps, giving them the ability to gather all kinds of data about consumer whereabouts.
This kind of tracking raises obvious issues of privacy. All these businesses profess sensitivity to such concerns. For research studies, companies spell out to the volunteers just what they’ll be watching them do. Locately sets a time limit—generally about three months—on how long it will collect information. All the companies say they strip the data of personal identifiers. The collected information is aggregated, so researchers see the movement patterns of groups rather than individuals. And once they’re done with it, they say, the personal data is discarded.
Whether these policies actually alleviate the concern is an open question. But with the right assurances and enticements, Truong says, people have actually been excited to sign up for the project. And Gorman says people are generally getting used to the idea of broadcasting where they are, through programs like Foursquare. “I think as more people realize the reward for identifying their location, it will become more popular,” he says. Rewards could range from special-event invitations to limited-time discounts on meals.
It’s too soon to put a dollar figure on the business value. Retailers haven’t been getting the information long enough to change marketing strategies and see the results. As a result, they’re not yet ready to discuss it.
But market research giants Nielsen and Harris Interactive have both started using Locately’s technology, indicating that the potential is large. In the past, when companies such as Nielsen have sorted people into demographic groups, they’ve based their estimates on information like which U.S. Census block a person’s zip code falls into. Now location analytics provides more accurate information more quickly, says Tony Jebara, chief scientist and cofounder of Sense Networks, a location data analytics company in New York.
By analyzing where people go as well as where they live, the company’s algorithms are able to sort consumers into “tribes” such as college students and young urban professionals. Jebara says his company has deals with two cell-phone carriers that he won’t name, which are using its software to develop aggregate profiles of customers. The carriers, in turn, will be able sell those profiles to marketing agencies or retailers.
Locately’s Fulford-Jones is optimistic about the potential of location analytics to extract business value from data that couldn’t be gathered before, assuming that consumers are willing to coöperate. “The cool thing about this data,” he says, “is because it’s new, even small slivers of it are really helpful and useful to business.”
A Roomba recorded a woman on the toilet. How did screenshots end up on Facebook?
Robot vacuum companies say your images are safe, but a sprawling global supply chain for data from our devices creates risk.
A startup says it’s begun releasing particles into the atmosphere, in an effort to tweak the climate
Make Sunsets is already attempting to earn revenue for geoengineering, a move likely to provoke widespread criticism.
10 Breakthrough Technologies 2023
These exclusive satellite images show that Saudi Arabia’s sci-fi megacity is well underway
Weirdly, any recent work on The Line doesn’t show up on Google Maps. But we got the images anyway.
Get the latest updates from
MIT Technology Review
Discover special offers, top stories, upcoming events, and more.