Location-based-marketing

Your Small Business Should Avoid Location-Based Social Media Marketing

Location-oriented services such as Yelp and Foursquare are scuffling to stay relevant, while titans like Facebook and Google  are challenging the location game.  Thus, a  renewed clamor for small businesses to marshal location-based social media in their marketing campaigns.

But none of this hype will be good for your bottom line.

Recent research shows that a mere 12% of smartphone owners tap geosocial services like Foursquare to “check in” to locales.  This is down from 18% from 2012, which shows that this phenomenon is a kite that never really took wind.

Location-Based Search Optimization, Online Reputation Management, and Location-Based Social Media Marketing

Before I go further, I’ll clarify terms.  I’m considering location-based social media marketing to refer to offering users of location-based social networks, coupons and other incentives to “check in” to your business at a specified time of day, penning a review, or uploading a picture.  It can also include tendering a coupon or discount when a customer is in proximity to your business.

These things are what I feel are over-hyped–I’m not referring to optimizing your website for local searches or monitoring your online profiles.

Doing these latter activities is key for brick and mortar and for web-based businesses alike

Why You Should Not Invest Heavily in Location-Based Social Marketing

Carrying on, then, here are some reasons why marketing your business on location-based social networks isn’t the best move.

Cost-benefit Analysis

The main venues for location-based marketing are costly in terms of time and effort.  They’re free in terms of the money it takes to sign up for them, but only that. There is also the cost of running the promotions themselves.  There’s designing the promotion, advertising it, and doling out the rewards accordingly.  Too much of this can involve people “checking in” at your business, which may or may not bring tangible results.  Studies have shown it takes about a thousand Foursquare check-ins to create a 1% increase in sales.

What does generate sales, though, are the discounts.  These can be beneficial as promotional items, but you might find a very small net increase in the bottom line.  Selling your products may work only if doing so generated enough future sales at standard prices.  We all recall the black eye Groupon received when many businesses felt overwhelmed from the discounts they were offering.

In short, while there’s nothing wrong with coupons, time-based discounts, etc., there are many kinds of marketing, and these geosocial tools are the ones weighted most heavily toward cutting your markup.

Learning Curve

Some of the geosocial sites have usability that is less than counter-intuitive.  In particular, Foursquare, with its Mayorships and other odd lingo, presents a learning curve.  One reason why this is a serious problem is that users–tech savvy and young–are often turned off by clunky use of social networking, whether this means not seeming to understand it, using it too sparingly, or coming on too strong.

Stigma and Reputation

One of the ways in which these geosocial sites fail to achieve peak efficiency is that they depend on their own reputations.  If you offer a discount to someone who publishes a review, that review needs to get results.  As seriously as business owners take reviews, they don’t necessarily help the bottom line.  Several reviews, provided they are intelligent and convincing, can be beneficial.  But one or two isolated reviews look like just lat, a scant, unconvincing blip of information against the galaxy of info in which we are all floating. Further, it’s only too likely that a review might be brief, incomplete, or too vague.

All of this runs up against a machinery in place to distrust yelp and similar reviews or to write off the whole idea of reading them.

In short, if you’re going to go the route of using social networking, just use social networking: twitter, Facebook, etc.  Monkeying around with the geosocial components of these just introduces complications and a cost-benefit analysis that doesn’t come out on your side.

Comments

  1. Lucas E. Wall says

    Adam,
    Very interesting article. You certainly pointed at a very important aspect of any kind of social media and how it relates to advertising. It can really be a fool’s gold. And your observation about the cost of using location based social networks to advertise and bring in paying customers is spot on- the conversion rates are very, very, very tricky.

  2. says

    Totally agree with what you are saying Adam. One thing about social marketing that local businesses do not realize is the only way to have success is to approach it in a detailed and clever way.There is no point in diving into the social marketing world with no real plan. Of course that is not to say there is no point in trying but if you are looking for success then have a plan.

    The easiest approach to local marketing is by having your business listings on Yelp, Google, and many other local sites. Usually these are one time set up’s and by having these can help rank your company in searches.

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