I’ve been very critical of Bluespamming – the indiscriminate blasting of a marketing message to all mobiles in the vicinity who happen to have their Bluetooth switched on, as if that was consenting to the spam. I’ve also been pretty sceptical that it would make it as a stand-alone marketing channel. And while there may be ways of legitimate opt-in Bluetooth marketing, I’m not sure that they ever provide the scale that makes things work.

Of course, many disagreed and set out to prove me wrong on all counts. I’m not aware that anyone has succeeded yet, but I’m always interested to have an update from anyone who has had an outstanding success with the channel or who has a thriving business model somewhere.

One entrepreneur who had a lot of early success was South Africa’s Petros Kondos. Sadly for him, the star which shone brightly at first eventually waned and he closed the business. However, Petros knows that there’s certainly no shame in failure – in the words of the legendary entrepreneur and investor, Vinod Khosla, “I’ve failed more times than I’ve succeeded”. And my own success in mobile marketing was built on the failure of my first foray into the industry with ZagMe.

Petros has written a warts-and-all account of his years as a Bluetooth Marketer. This includes some great case studies of success, but also specifies all the lessons he learned over the years, including what Bluespam is (and isn’t) and why his venture didn’t make it. If you have any interest in this area at all as a marketer or potential entrepreneur, this is a must-read book.

Great entrepreneurs learn from their own experiences for sure. But I think it’s especially admirable when they make those lessons public and share them with the world in the belief that it will save others repeating the same mistakes.

You can get your free PDF of Petros’s book by mailing him pk AT telkomsa DOT net or tweeting him @petros99.

Petros is moving to Toronto shortly, so look him up if you’re in the area. Or better yet, recruit him for your company or startup.

So here’s my attempt at a wooden stake through the heart. I know my stake won’t work. I know entrepreneurs will keep trying it. But this is at least a reference point I can point them to, rather than re-stating the same arguments again and again and again.

By the way, the reason I know this is because I’ve also been sucked in to this kind of thinking. So it’s the voice of experience, rather than my little pet theory.

Just to set the context here, I’m specifically talking about Permission Based Marketing (PBM), though the points may well apply to other models too.

1. You don’t need to

If you think citizens need paying to see advertising, you’re on the wrong track. It’s the wrong way of thinking about the messages you’ll be sending out.

Instead, you need to think about the content in the same way as an editor of an old skool newspaper thinks about her editorial. Will this be of interest to the reader? Will it add value to their lives? Will it be welcomed as part of the ongoing communication? If you can honestly answer “yes” to this, you can send it. if it doesn’t pass this test, don’t. Simple as that.

5 years ago, I wrote a post about what constitutes value and it’s probably worth a look if you’re interested in this area. But the basic point was that adding value was about providing the user with an IDEA – or Information, Deals, Engagement or Advertainment. More detail in the original post or in my White Paper on LBS, which I’ll send you if you email me russell AT mobhappy DOT com.

2. The Consumer Won’t Earn Enough

Once you start crunching through the numbers, no matter how you slice and dice it, it’s hard to find a scenario that earns a person a (very) maximum of $10 a month. Why? Because advertising is about scale. You have to deliver ads in very large volumes to make money or earn money.

Let’s do some basic maths. If you charge the advertiser $50 CPM (by the way – approximately 5 times the going rate) and give say 10% of that to the consumer, that would seem reasonable, right? So, every 1000 ads the consumer sees, earns them $5, which equates to 2000 in a month to earn $10.

Don’t forget we’re talking PBM here, so that’s 2000 messages (think SMS or email) over a month or 66 a day. It’s just not going to work.

Now, people will say. Yes, but this is a new form of marketing. It’s post-advertising advertising. Maybe it is, but with inflated cost you get minimal advertisements to sell, which means the consumer earns less than ever.

Of course, I can’t cover every scenario here. It maybe that providing the value in some other form of currency with a high perceived cost, but low actual cost is possible. But if you heed my first point above, you don’t need to worry about this element at all.

3. Contingent Liability

When you issue your user the right to claim money from you, from an accounting perspective (this may depend on where you’re based), you have to make provision on your balance sheet that you will pay them. Even when it’s perfectly clear (like 5 years later) that you won’t be paying them.

This can create a huge liability for a small business, hogging increasingly large amounts of precious cash.

Of course, there are ways to get round this, like having an expiry date, but this makes it less attractive for the consumer. Back to Point 1 again.

4. The Wrong Users

If you do pay people and they are really doing it to get their grubby little hands on $10 a month, how attractive do you think this audience is going to be to an advertiser? If they really need money that badly, are they going to be able to afford anything that the advertiser wants to sell?

Even if they really are a great audience, you’re going to find it hard to overcome this widely held belief among agencies, especially. It’s just another reason not to try your groovy channel out.

5. The Nick Syndrome

Apologies if you’ve read this little story before.

I had a friend I shall call Nick, because that’s his name. When he gets very drunk and happens to be in a restaurant, he calls the waiter over and asks for 15 eggs and 15 wine glasses. The bemused waiter normally brings them and Nick spends about 20 minutes building a complicated pyramid of eggs and glasses. By this time, most of the restaurant are watching in suspense.

Nick then announces that he’s going to pull the table cloth out and all the eggs will break and fall neatly into their corresponding glasses. The suspense is palpable as it would be truly amazing if he managed to pull this trick off. With much theatre, Nicks grasps the table cloth, (even the kitchen staff are watching now) and with a flourish, he yanks it hard.

Glasses and egg fly everywhere, coating the immediate vicinity in broken glass and yolk. It’s also noticeable that not one egg has broken cleanly into one glass. The restaurant is hushed in shock and Nick stares at the wreckage. He then shakes his head and says, after a 4 second pause:

“It never works….”

Paying consumers doesn’t either.

Happy for a startup out there to prove me wrong and maybe it is possible. But I doubt it.

This export of technology innovation into developed markets is probably going to be the first time that this phenomenon has ever happened at scale and on a consistent basis, so it’s going to be fascinating to observe it at first hand.

I was delighted to hear that this is a theme also promoted by Iqbal Quadir, the visionary and influential founder of Grameenphone, when we spoke at the same event in London recently, so there must be something in the idea!

This week I was at Mobile Web Africa, which proved to be a well attended event in Johannesburg, with a great line up of speakers. Africa is certainly a market to watch in the future and I expect to see huge growth in innovation, mobile usage and revenues from the mobile ecosystem. So it was a privilege to be asked to speak and to learn what’s happening in person.

M-Pesa, the Kenyan branchless banking system undoubtedly stole the headlines, judging by the Tweets and ReTweets and is a very African success story. Not only is it now the biggest bank in the world with 8 million customers, but annual money transfers are now equivalent to 20 – 25% of Kenya’s total GDP, depending on who you believe has the most up-to-date facts. Many banks will clearly try to replicate this and probably most will fail, but it does paint a great picture of what mobile banking success looks like.

By the way, M-Pesa launched in March 2007.

There were many other examples of the new, new, but one of my favourite pieces of out-of-the-box thinking came from Mocality, which aspires to be Africa’s largest (only?) business directory. The challenge is how they build such a thing from scratch, especially in the content of small businesses’ lack of tech savvy and indeed, tech access.

Their solution was to crowd-source – employ a whole bunch of agents to input the data via their wap-enabled phones, along with photos uploaded from camera phones. The problem comes with ensuring the accuracy of that data – and avoiding completely fraudulent entries, created purely to make commission.

So, when Agent A completes an entry for a business, the data is sent randomly to another agent in the area. Agent B then visits the business and verifies the entry. Both get paid, but the result is as accurate as it can reasonably be expected to be and probably better quality than if the businesses themselves uploaded the data in the first place.

I thought it was a very clever solution and one that I hadn’t come across before, so I thought I’d share.

I love traveling to Africa and seeing what works here and already looking forward to my next visit.

On the value to consumers of location-based ads:

“For consumers, that’s a simple answer: context. Location is a way to put messages in a relevant and immediate context that makes the consumer’s life easier and better… On the surface, I would love more targeted ads! With trusted brands and the right controls in place I would have no problem letting a brand locate me to give me a better ad experience. The key is the controls, however. Just visiting the brand’s mobile site is not explicit consent to locate me in real time. I would want to dictate how often and in what hours a brand can locate me. In the messaging world, users give consent to receive text messages, and can stipulate a certain number of messages per day/week/month… Regarding getting a real-time location before messaging, that should require additional consent. This is the old concept of permission-based marketing where you must ask me for permission before getting closer to me. Well, gaining my real-time location from the carrier is extremely personal so I am only going to give that up if a brand can offer me some significant value in return.”

On using location simply as an excuse to message customers:

“If a brand doesn’t have something compelling to say in a text message they are better off not sending it. Period. All the user has to do is reply STOP and then that customer is lost. Again, context is everything. Location by itself is not an excuse to message. Brands should tread lightly in the LBS space, because they may soon find they don’t have compelling enough content, or the resources to manage the campaigns, to really do the hype justice. We’ll get there, but we need to take some baby steps first.”

On using geofencing vs. “range searching” (i.e. “location all users within distance X of point Y” for message targeting:

“Geofencing is a specific use case within the realm of location. You need to be locating a phone (with high frequency) to trigger a geofence, because one is totally dependent on the other. Same goes for the “range search” functionality. By “range search” I mean “send a message to all phones within X meters of location Y.” Again, range search requires either high frequency pinging (aka tracking) so you know where the phones are at a given time, or a single massive “locate everyone” investment. In other words, both geofencing and range search depend on frequent location pinging.

High frequency location pinging has implications on device battery life. That’s certainly a downside. End user having to download a tag [an app that runs in the background of smartphones to provide updated location info] is also a downside. Also, device coverage is limited here; while the number of smartphones or open handsets is growing quickly, it’s not near a majority.

However, if the end user has controls to manage his or her privacy and they have visibility into how their location is being used and which brands can track them, and when they get messages, I envision a whole new ecosystem of brands giving their customers incentives to be tracked. The brand says, “we can send you more relevant, highly contextual messages about deals, etc. if we know where you are.” The users either will or will not accept those terms. The benefit is that brands develop location profiles of their customers, and customers get better service.

In the near term, I think a good middle ground for marketers is pinging the carrier networks for real-time location prior to doing a marketing blast, and then tailoring the outbound messages accordingly. Take a big retailer for example: they could craft a blast for their entire list, with default more generic messages for people not near a store. People near a store get a very targeted message, and everyone else gets the normal marketing message.”

Now while I’m not sure I completely agree with everything in there , I think there’s a very valuable point at the end of Matt’s comments: location is a tool for marketers, not a shortcut. Location information needs to supplement the rest of the mobile marketing toolkit, not supplant it.

So it was with some interest I followed some of the tweets coming out of this week’s Mobile Monday London, which was about location. It was apparently inspired, in part, by an article from Mobile Entertainment dispelling that industry’s top 10 myths, which included this gem:

9. “Location-based technology is intrinsically exciting for consumers…”

No it’s not. The phrase “location-based technology” intrinsically puts most people who aren’t in the mobile industry to sleep. And they look equally unimpressed if you promise them their phone can guide them to the nearest cashpoint… The problem is that this is all still technology-led. The assumption that everyone wants to track their friends – and especially that they regularly go out in town with no specific plans in mind of who to meet or where to go – is unproven at best. As is the idea that people want to geotag all their photos and videos and share them with the world, all the time.

The next year or two will see some really smart, desirable mobile services launch that use location. But it’s the ones that are actually based on stuff people want to do that will succeed.

Kudos to Stuart Dredge for nailing it on the head. Put another way by @bookmeister: “IMO location is like messaging, billing or identity it will be a part of all good apps, it’s not a service on it’s own”.

Good stuff that pretty much sums up how I’m seeing things at the moment. One further point to make: based on some more tweets, it looks like somebody brought up the old Starbucks ad example again. You know — the “wow, it’ll be awesome for a Starbucks to be able to send ads to everybody that walks by.”

No, it won’t. Russell thoroughly debunked this scenario more than two years ago, and not a damn thing has changed, except the technology. But, like Stuart pointed out, that’s irrelevant. Just because we now have the ability to do something, doesn’t make it useful or desirable. And that seems to sum up much of the mobile location world at this point.

Your thoughts? Who’s got a great mobile service built around location right now? Or am I just totally off the map (ha ha) here?

I think that this is the year when creativity comes to Location and some very interesting things happen as a result – albeit in a small way. We’ll start to move away from find-my-nearest and simple buddy trackers and start to see innovation.

So, I was interested to see Skyhook’s Ted Morgan’s presentation, which came out of the big Mobile 2.0 conference in Barcelona last week. I’d love to have been there, but had a clash. Hopefully next year!

Since January 2009, you can see that innovation has indeed exploded by doubling the number of location services in the market – largely led by iPhone, of course. Creativity has also come to call, with a whole bunch of services from tracking your location history when you’re out drinking, seeing claimed UFO sightings in your area and a kids’ car game based on spotting state licence plates (the furthest away states are worth more points).

Of course, one of the visions behind these types of services is hyperlocal advertising, which will provide an important part of the commercial engine, much as AdMob does today for many Apps, especially in Apple’s Apps Store. However, this has many logistical and supply issues to overcome , where technology can only help in a limited way.

Anyone interested in Location Based Advertising would be advised to read my free White Paper (email me for a copy), as everyone else in this game seems to have a copy. I’ve sent out more than 5,000 in the last 8 years!

Andy's spending an awful lot of time cruising gay pickup joints these days

This idea has been a long time coming – I remember working on something similar back in 2000, although this is clearly much slicker using today’s technology and Loopt have had a product in play for 3 years or more. Further back than that, Google also bought the now defunct Dodgeball and proceeded to do nothing at all with it before finally shutting it down.

As you’d expect from the mighty Goog, it’s a well executed application, though it doesn’t really push the envelope of innovation. What it does do though is circumvent the need to use the operators’ location feeds, which gives them a massive advantage in ability to scale over services that rely on operators, like Loopt. Obviously, this needs to be balanced by the fact it only works with Smartphones – but this is the fastest growing sector after all and certainly Android and iPhone owners tend to be power users of their devices, boding well for this venture.

Having said that, I don’t know if it’s my age, my personality or that I’ve got secrets I’m unwilling to go public with (if so, they’re secrets to me too), but I really don’t like this kind of application. I’m happy to share my general location (like City, as provided by TripIt or Dopplr), but I don’t want all and sundry to see when I pop to the shops or collect my kids from school.

I think that, even more than Facebook et al, it opens up new questions of etiquette. If I give you permission to be my friend on Facebook, I’ve agreed to allow you a certain insight into my life. But what information I choose to share is an active decision and is therefore controlled by me. I can decide whether to put up those pictures of me misbehaving at that party, or not.

However, with buddy-tracking, it’s passive and not controlled or edited in any way. There may be times when I don’t want to be tracked, for perfectly innocent reasons – such as popping out to buy my wife flowers. It’s not going to be much of a surprise if she sees where I am. OK, perhaps that level of granularity isn’t there today, but I’m guessing it will in due course.

Obviously, the counter argument is that you can always turn off tracking – but that’s going to look suspicious, no? And how do I explain to one friend that I won’t allow them to track me, when I do give permission to another mutual friend? And then there’s the whole de-friending thing a la Facebook.

Of course, I’m sure many will flock to this service and love it and if you’re under 25, privacy is probably a rather old-fashioned, odd concept anyway, like paying for music or faxing stuff.

But if you do invite me, I’m not accepting I’m afraid, whoever you might be, curmudgeonly or paranoid as it might seem. It’s nothing personal, it’s just not for me. Well, for the moment anyway…

Web developers now face the challenge of connecting people with the information they need, and to make sure they can get it when they need it. One emerging group of technologies, location-based services, attempts to do just that by tailoring your experience of the internet according to where you are. It’s a lot more inspiring than its rather clunky name suggests. The idea is that instead of you looking for the information you need, it looks for you.

“Lots of people are working out ways of using Bluetooth or social networking or GPS to do these things,” saysHelen Keegan, managing director of Beepmarketing and a mobile marketing blogger (http://www.technokitten.blogspot.com). “People are already working out some cool and exciting services.”

But there’s one feature I would love to see supported that would make this app even better for me: support for the “My Maps” function of Google Maps on the web. I discovered this feature accidentally a little while back, and I use it a lot now — especially when I travel, when mapping software and services are their most valuable. For instance, I was up in the California wine country last week, and I created a map with a bunch of different restaurants and wineries and our hotels saved to it. I was able to print this map, and a list of the bookmarks and their addresses, out easily. The problem was that the map covered such a wide area that it was really useful only as a rough guide; I still had to punch specific addresses in to a GPS unit to get usable directions.

It would have been great to be able to access this map I made directly from the mobile application, and allowing users to create their own personal maps and access them would be a great boon for the service. So if anybody from Google’s listening…

One of the true-isms of location based services is that most people spend most of their time in an area they know – in other words, where they live or where they work. This is one of the theories about why “Find My Nearest” services have never really taken off in a meaningful way. I would add that that this is certainly an argument that I’ve subscribed to and promoted for the last 7 years or so.

However, the aggregated search results from m-spatial cast some doubt on this, although it’s too early to suggest that it busts the idea to smithereens.

The Top Ten searches for 2007 and 2006 are:

1 Cinema
2 Fast Food
3 Drinking
4 Taxi
5 Supermarkets
6 Home
7 Electrical
8 Clothing & fashion
9 Clubbing
10 Banks

Now you could argue that a goodly proportion of searches might be to find out the phone number to get more information about them (cinemas and electrical) or to order one in the case of a pizza or taxi. This is supported by the list of brands people are searching for – around 60% are for these sorts of services.

But I just can’t think of a reason why you’d want to search for a supermarket (Tesco is the most searched for term and Asda and Sainsbury’s are both in the top ten). It’s a gut feel thing, but I can’t think that many people would want to call them, so they must be trying to find out where they are. But wouldn’t you know where your nearest Tesco is? And if you were travelling (it’s unlikely that this many people would be outside the area they know, surely?) would you be looking for your nearest Tesco?

The most puzzling one for me though is KFC – number 10 on the list and accounting for 6% of all searches. I can’t believe anyone would ever want to phone one (or buy anything from one, but that’s another story). What would you ask? “Do you sell greasy chicken made to an old dead guy’s secret recipe?”. They don’t do home delivery (in the UK at least), so the only logical reason must be that people want to find their nearest store – inexplicable under the “people don’t use find-my-nearest applications” and inexplicable because the food is errr…well, shite really, but that’s just a personal view.

My final thought is that it might be stuff people want to plug into their personal nav systems to find the way to these places – I assume that’s why “home” is popular. Now, I’m as addicted as the next nav-junkie, but I’d never use it to find my way to the supermarket or KFC. Maybe others would though?

Anyway, just thought I’d share my general bafflement and confusion on this one, proving that I don’t have all the answers, or don’t even think I do.

Can anyone shed more light? What have I missed?

Update: If you’re confused by the reference to brands in this post, there’s another list in the press release that records searches by brands. Click on the link here to shed more light or just trust me that I’ve used the right references. Thanks, Scott.