[Should I care about] Location-based Services (LBS)

Even before the latest peak in downloads of scvngr  Location-based Services had a huge buzz in the internet community; Foursquare's and Gowalla's (both launched last year) growing user base put Facebook under heavy pressure. So heavy that about a month ago they launched their competitive service called Facebook Places.

Location-based services promise to "socially engage" users for your local business like cafés, bars, museums and similar public places. But how do these systems work? Why is there a hype about them? How do they try to keep this promise and what would I - as a business owner - have to do to participate? All boiling down to one major question: Should I care about Location-based Services?


What it is
In its classic sense a Location-based Service is simply a service taking into account the "where" attribute of an activity. In this sense the "yellow pages" have offered such a service for a long time: looking for a certain type of business in a certain area. But when we speak of Location-based Services in the Social Media Landscape, we mean services connected the "where" attribute to the social "who" as in "friend".

These services offer much more than what Google Maps or Qype offer for years: telling you where your friends are, what they do there and how they feel about. On top of this these new services do this on a much higher level than GPS-Coordinates as they make it possible to identify public places, restaurants, bars and basically all type of venues.

Depending on the venue the user is at these web services offers him various actions/activities. The best known is the so called "check in". By triggering this action the user is saying "I am at this location right now" and all his friends in his network receive a notification about. So you know where your friends are and are able to join them. The second best known is the commenting: A lot of services allow their users to leave a comment at a venue. As comments are public they allowing you and others to see what you thought about it.

Like your friends. Simply consider the following scenario: You are in some street in your city you are not very frequently. You are hungry and there are a couple of restaurant near by but you don't know which one is good. But your friends do! So you fire up Gowalla or Foursquare on your iPhone and look at the comments your friends have left about the places around. And you'll see that guy from PR who always suggests these awesome places often visits in the sushi bar near by and gives it good critics. So you go into that place and you love it. You are checking in and commenting yourself.

This is exactly what makes these system so powerful. They make a connection between the social graph online and real life. And more and more companies jump on this train giving people special gifts and promotions who check very frequently. And the presents in these services offers a wide range of possibilities. Up to location specific activities that only a certain company offers or special promotions you can only get after you've checked in using the web service. This way venues are able to reward loyal customers while creating buzz around themselves.

Services
With almost 3 million users Foursquare is the biggest pure location-based service. The basic idea behind their model is to engage the user to "unlock your city". There are various badges you can earn if you master certain exercises and activities. The best known is the "Mayor"; it shows that you are the person who checked into a certain location the most. Depending on which badges you own (and proudly show off) some companies give you special offers. By the time of writing there are already 15.000 venues experimenting with special offers through Foursquare; like giving free beer to their mayors.

Gowalla, by numbers the second biggest pure location-based service, has a slightly different approach. You can "check in" into location as well, collect badges and  receive and exchange items but overall the discovering of new places and location stands in foreground. Users can create trips and upload pictures for venues. And you can follow others around the trips they are doing (like a rockband on tour or their current example: John King). This does not prevent any business to give special offers to gowalla users, too, but the fun part of following what other are doing is clearly in the focus of this service and its users.

A very controversy discussed services was once again launched by Google: In its range of mobile apps Google Latitude is definitely the most discussed one. As many other Google mobile Apps you can launch it from a mobile device only. While in most services the user actively announces where he/she is Google Latitude works differently; they track where you are all the time using the GPS of your phone. And publish this location allowing your friends to see where you are and what you are doing in real time. This feature gave it the nickname "Google Stalker Tool". How Google wants to include local businesses or make money out of this services is still unknown. But if they do ever come up with a good idea they can fall back on a big community; by now already 8 Mio users signed up and about 3 Mio use Latitude actively.

The newcomer in this field just announced they had over 100.000 downloads of their app in the first 24 hours after launch: scvngr (pronounced "scavenger") launched their playful version of what a location-based service could look like just about two weeks ago. Instead of only a simple "check in" action the user has various actions including the so called "social check in" where a group of users is announcing that they are at the same place by holding their phones together [link to the video]. Their app is available for iPhone and android devices and allows companies and institutions to build "location-based mobile games" using their online builder. This feature allows venues to be much more creative and individual and attract users with a fun game instead of simply offering promotions and the way scvngr wants to make money: having more than game on at the same time costs a monthly fee.

Should I care?
Especially the last example shows that there is still room for new ideas and concept in this market. Though the basic idea is not the youngest the products in this market are still in their kids shoes. If you are interested in new things and have a static place or venue you want to promote investing in these concepts is clearly not a bad idea. How the users except it - specially if it becomes more complex - is another question though. And only time will show which of those concepts will last. But be aware of the possibility that the winning concepts might not even exist yet. There are going to come much more over the next few years. Even if you might not be interested in it yet you should have an eye on what is happening in this market because it will grow a lot and engage more and more users over the next couple of years.