O2 Turns on Geo-fencing for Starbucks, L’Oreal in UK

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Geo-fencing is getting a major showcase with a roll-out today by UK mobile operator O2, which is launching a program that will target a million subscribers with Starbucks and L’Oreal coupons. The discounts will work through O2 More, an opt-in offer program that currently allows companies to offer O2 subscribers discounts based on preferences and demographic information they’ve submitted. The program will now support a new geo-fencing trial service from Placecast creating 1,500 geographically restricted areas in which Starbucks and L’Oreal are able to offer deals to nearby customers.

When customers come within about a half mile of a Starbucks store, they’ll get a text message with a discount on Starbucks VIA Ready Brew. L’Oreal customers who travel near local drug store chain Superdrug will receive an SMS offering buy-one, get-one free deals on L’Oréal Elvive hair care products. Placecast CEO Alistair Goodman said this is the largest launch of a carrier-led geo-fencing program to date.

Geo-fencing refers to the creation of boundaries that trigger an action or notification when a person enters or exits the area. The idea fits into the larger trend of providing location-based services and advertising to users that are prompted by their movements around town. While some businesses offer specials through check-in services like Foursquare, others are turning to Shopkick to offer deals when customers walk into their stores. Groupon also lets you search local offers via an iOS or Android app.

Many current solutions, however, require a smartphone. Goodman said the O2 rollout shows the power of geo-fencing when deployed by a carrier. Instead of relying on GPS, Placecast’s geo-fencing establishes a subscriber’s location through a carrier’s network. That makes it possible to target users who don’t have a smartphone or a GPS-enabled phone. It also doesn’t drain the battery the way GPS often does. Altogether, it gives marketers an easy way to target all customers of a certain operator, provided they opt-in.

That’s going to be the key in this new era of location-based advertising and offers — users want to feel like they’re taking advantage of a deal, but they don’t like being spammed or stalked.

Goodman said the O2 service caps offers at one a day, although subscribers can turn that feature off, and he said that when done right, users respond well to the offers. Earlier roll-outs with the North Face and the Sonic fastfood chain found that 65 percent of users took up the offer to buy something. Also, 79 percent of users said the offers made them more likely to revisit the store, and six out of ten users read the offer immediately when it arrived. Goodman said business owners can use geo-fences to whip up deals on the fly that allow them to respond to weather changes or move excess product.

It’s unclear when a U.S. carrier will deploy a Placecast geo-fencing solution. Goodman said he’s in talks with a number of carriers worldwide. But he said the time is ripe to see geo-fencing go big. “We’ve seen consistently that if done right, consumers see this as a value, they don’t see it as advertising,” he said. “It’s very relevant offers they can take action on.”

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