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Starbucks breaks first location-based mobile campaign with major carrier

Starbucks and L?Oréal are the first brands on board for a six-month trial that relies on consumers opting-in to receive relevant messages based on age, gender, interests and ? for the first time ? their location.

Telefónica O2 UK Ltd. is the first British carrier to offer large-scale location-based mobile marketing, enabling brands such as Starbucks and L?Oréal to deliver geotargeted SMS and MMS to its opted-in subscribers. The service from O2 Media, O2?s mobile marketing arm, uses location-based geofencing technology via a partnership with mobile marketing company Placecast to power the trial.

?To our knowledge, this is the first time a carrier has turned on a location-based program at scale with their customers,? said Alistair Goodman, CEO of Placecast, San Francisco. ?O2 is one of the largest carriers in Britain, and they?re turning on this program with a million opted-in consumers, with Starbucks and L?Oreal signing on as the first brands.

?O2 can rotate multiple brands through this service, and it gives them the opportunity to create a valuable service for their customers and increase average revenue per user,? he said. ?O2 has a program called O2 more, and we?re bringing the location component to that to deliver these messages, providing the ability to tie in a message and an offer to when a consumer is nearby and able to take advantage of it.

?This is an excellent opportunity to reach the minds of consumers when they?re ready to make a purchase?this is a global carrier embracing location-based mobile marketing on a large scale, which is a huge win for the industry.?

Telefónica O2 UK is a communications company for consumers and businesses with 22 million mobile customers.

Since its launch a year ago, O2 Media has provided personalized media opportunities for brands including Adidas, Cadbury, Blockbuster and Interflora by leveraging O2?s customer data via O2 More.

Case studies include a NatWest campaign that targeted its application at iPhone owners, which received a 26 application response rate, while targeting families with teenage children gave Thorpe Park a near one-in-three download rate for its application.

Placecast?s customers have included The North Face (see story), quick-serve restaurant Sonic Drive-Ins, REI and American Eagle Outfitters (see story).

Tipping point for location-based mobile marketing
With this launch, O2 immediately enables retailers and brands to reach over 1 million opted-in British consumers on their mobile phones when they may be in a mind-set to make a purchase.

According to Primary Impact, 65 percent of customers who were part of initial programs made a purchase as a result of an SMS and MMS, and 60 percent of participants found the location-based messages to be ?cool and innovative.?

The partnership combines Placecast?s location-based experience with O2?s customer base of more than 22 million, its network and O2 Media?s relationships with brands and ad buyers.  It enables brands to target their audiences and give consumers relevant information and offers.

The growth of location-aware services will create a golden age for proximity marketing, per O2 Media. It fuels a growing expectation among consumers for personalized advertising via their mobile phones that is directly relevant to their interests.

How it works
O2 customers can register for O2 More at by inputting information about their age, gender and interests such as football, travel, cinema, coffee and beauty products.

When opted-in, O2 More customers are found to be within a geofenced area owned by Starbucks, those interested in food and drink receive a text message offering them money off Starbucks Via Ready Brew at a nearby branch.

One mobile coupon from Starbucks offers consumers 50-pence-off of their Via purchase.

Starbucks believes that its customers want to find Starbucks locations in new ways.

The brand believes that, by offering discounts for customers who are close to supermarkets and its coffee shops where Starbucks Via Ready Brew is sold, it will encourage brand loyalty and drive foot traffic.

More than 800 geofences were created for Starbucks across Britain.

When opted-in, O2 More customers are found to be within a geofenced area owned by L?Oréal, customers interested in beauty receive a text message from the brand.

The SMS and MMS are promoting the brand?s Elvive hair care products, with a focus on Super drugstores.

?Starbucks and L?Oréal have the ability to trigger those messages when a consumer is nearby and can make a purchase,? Mr. Goodman said. ?These programs are nationwide, with hundreds of geofences.

?More than 1,500 geofences have been constructed nationwide for those two programs alone,? he said.

O2 claims that it protects its customers? privacy by not sharing data peer-to-peer.

O2 does not spam its customers with irrelevant or frequent SMS or MMS?opted-in customers receive a maximum of one SMS or MMS per day from O2 More.

Customers can opt out of the service at any time.

The service works on any mobile phone?not just smartphones?and does not require an application. It has no impact on battery life, as all detection is done as part of the service O2 provides for voice and messaging.

The service is not available to customers ages 16 and under.

Currently the mobile messages contain unique alphanumeric discount codes that are trackable at the user level or the vendor level to keep track of redemptions. The partners may add a mobile bar code element down the road.

?We?re already seeing some really interesting executions,? Mr. Goodman said. ?The biggest difference between the U.S. and Britain is that British consumers are even more receptive to text messaging?they are using it more pervasively.

?In the U.S., messages are frequency-capped at three per week, but we can do more than that in Britain,? he said. ?Consumers find that valuable.?

Final Take