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Summary:

Visa has been working with the Gap on a campaign that provides discounts and promotions via text message when users make certain transactions on their Visa card. The program shows how mobile offers and discounts are incorporating more intelligence, which will be key for success.

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Visa is tapping its global processing network to push real-time offers to consumers who opt-in for discounts delivered to their phone. The company has been working with the Gap on a campaign that provides discounts and promotions via text message when users make certain transactions on their Visa card.

The news pushes Visa into the growing market for mobile discounts, which is getting crowded with everyone from Groupon and Foursquare to eBay and Yelp working on driving local transactions via mobile phone. But the news highlights where the competition in this space is going.

We’ve already seen discounts offered to people who check-in to certain locations. But we’re now moving to more targeted offers by taking into account more information than just location. That’s going to be the key for local discounts to matter to consumers. Just offering up a generic discount based on location isn’t going to be enough. Offers will have to be tailored to a user’s tastes, the time of day, even sometimes factoring in the weather and other data. This is what will make mobile offers resonate.

That’s why the Visa announcement is interesting. For Gap shoppers who sign up, they can get offers pushed out to them when they make a purchase on their Visa card. Gap, or other merchants who participate when the program goes national soon, can decide to push out an offer based on not only a zip code, but they can single out recipients by time of day, spending habits, what kind of merchant they just shopped at or anything else Visa can offer the partner based on its records of the customer’s spending habits.

This could open the opportunity for a merchant, who has already signed a customer to the Visa program, to offer real-time discounts that speak to what the user is doing at the moment. If someone just bought gas in the morning, there’s no need to offer a similar coupon for gas. But how about an offer for coffee or breakfast? That’s what Visa can bring to the table: this history of purchases, along with the ability now for other merchants to leverage that in real-time.

This is where the market is going to go thanks in part to the growing ability to crunch huge amounts of data in real time as well as an emerging willingness to share more information from consumers. As mobile discounts for local businesses start to fly, it will be offers that have some sense, some intelligence on the user, which will have a better shot at getting noticed and used.

Thinknear, a startup that’s part of TechStars’ first New York class, is one example of how more intelligence can go into offers. The company is working on a system for merchants that allows them to push out discounts based on a number of factors, not only on location, but also time of day, weather, even local events. Though the system is more focused on helping merchants bring in business during slow periods, it shows how intelligence and data can help refine offers to make them more effective.

Groupon’s purchase of Whrrl also shows others are moving in this direction, trying to add more intelligence into local offers. Groupon is launching a mobile deals app called Groupon Now, which delivers time-based discounts based on a user’s location. Whrrl’s technology will likely go into helping match up discounts to a user’s tastes.

Dennis Crowley, founder of Foursquare, alluded to this need for better targeting at the Where 2.0 conference when he said he’s looking ahead to when Foursquare can use the time of day and a person’s immediate travel history to determine if that person hasn’t stopped for lunch and is ripe for a lunch coupon.

This may all sound a little invasive, but people are increasingly getting used to sharing their location, especially when it means getting something valuable in return. Retailers, location-based services and discount providers will need to tread carefully but I think the more relevant the offer and the more they make sense to a user in the moment and place they’re in, the more likely they’re going to find success.

  1. My company’s product, Sapling (StartupBus 2011), is a location-based messaging service that’s targeted towards merchants as well. When we presented at SXSWi, the biggest fear we heard was over spam and companies abusing the location based model. For instance, Wal-mart buying up locations near K-marts.

    Our response was that this idea is going to happen, whether or not we do it. It’s up to companies to be ethical about the use of this kind of data, which is what we vowed to do as a bootstrapped organization. VC backed companies are under enormous pressure to grow quickly, and often take ethical shortcuts to get there.

    Users might not mind giving up information such as location, but they certainly don’t like being annoyed. If it reaches a point where these apps are nagging a user, they’re going to turn them off.

    http://saplingapp.com/
    http://treehousemobile.net/

    Share
  2. My company’s product, Sapling (StartupBus 2011), is a location-based messaging service that’s targeted towards merchants as well. When we presented at SXSWi, the biggest fear we heard was over spam and companies abusing the location based model. For instance, Wal-mart buying up locations near K-marts.

    Our response was that this idea is going to happen, whether or not we do it. It’s up to companies to be ethical about the use of this kind of data, which is what we vowed to do as a bootstrapped organization. VC backed companies are under enormous pressure to grow quickly, and often take ethical shortcuts to get there.

    Users might not mind giving up information such as location, but they certainly don’t like being annoyed. If it reaches a point where these apps are nagging a user, they’re going to turn them off.

    http://saplingapp.com/

    Share

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