Beacons come in all shapes and sizes. Image by Tom Davidson, via Flickr.

Beacons come in all shapes and sizes. Image by Tom Davidson, via Flickr.

The recent launch of the iPhone 6 brought with it a bevy of upgrades and product introductions, which have piqued the marketing and tech crowd’s interest in mobile payments and hyperlocal advertising.

The upshot is that many observers are looking to Apple’s iBeacon system as the shiny new technology that will usher in a new era of brick-and-mortar retail marketing.

So what is iBeacon, anyway?

Released with little fanfare in 2013, Apple’s iBeacon system adds location-awareness capabilities to mobile devices equipped with Bluetooth’s low energy BLE 4.0 wireless technology.

While iBeacon belongs to Apple, “beacon” is the generic term used to refer to similar location proximity systems.

Mobile devices pick up signals the beacons transmit, which then trigger apps to carry out various tasks, such as opening applications, sending notifications or else communicating with other smart devices.

What it means for brands

There are plenty of reasons for marketers, notably in the retail space, to be excited about beacon technology.

A study conducted by mobile ad platform NinthDecimel [PDF] found that brand promotions sent to mobile devices are more likely to influence grocery shoppers than user-initiated behaviours, such as looking up a review. In another study, ad platform MyBuys, found people reward retailers that personalize their shopping experiences.

Both studies point to two trends in the retail space: Readiness to accept notifications that improve the retail experience, and demand for personalization.

iBeacon offers a solution for brands looking to capitalize on both of those trends. As Lisa Falzone, CEO of iPad point-of-sale company Revel Systems, told Wired, “iBeacon holds tremendous promise for the retail industry by providing a more customized approach to in-store shopping.”

This kind of potential has encouraged retail channels such as Apple, Macy’s and Waitrose to become early adopters.

Last year, Macy’s launched a trial where shoppers who entered its stores armed with the retail app shopkick received product promotions. The trial’s success led Macy’s to expand iBeacon use nationwide.

Beacons can also be used as a means to increase brand visibility through social sharing. Greece’s War Museum of Thessaloniki, for example, uses iBeacons to encourage visitors to share their experiences on TripAdvisor, which resulted in an increase in the museum’s reviews – with 54 percent of their current reviews published within the first three months of the iBeacon campaign.

The promise of utility

Beacons are game changing, claim enthusiasts, because they achieve the holy grail of 21st century marketing: By knowing where people are, beacons allow brands to give people exactly what they need, exactly when they need it.

Major League Baseball introduced the technology at the start of the 2014 season, allowing people to check in and receive special offers via the At the Ballpark app. The plan, according to MacRumours, is to eventually provide useful features like in-stadium directions and point of interest information.

In Antwerp, the Rubens House museum has been outfitted with iBeacons. Visitors can use a custom app to take tours and uncover information about the museum and its artifacts.

But not all attempts have succeeded. Virgin Atlantic recently ran a six-week iBeacon trial for their Upper Class passengers at London Heathrow Airport. Passengers with Apple’s Passbook received notifications whenever they were in range of iBeacon transmitters at select locations.

The airline opted not to extend the initiative, however, because of limited passenger adoption rates – with most not enabling Bluetooth, a requirement for iBeacon functionality.

The result, according to Tim Graham, technology innovation and development manager at Virgin Atlantic, was that “rather than offering a better customer service, the use of iBeacon with Passbook offered a poorer experience to the majority of passengers.”

And herein lies one of the biggest roadblocks to beacon proliferation: limited user adoption.

A beacon (left) transmits a signal to the smartphone, which prompts an app to open. Image by Jonathan Nalder via flickr.

A beacon (left) transmits a signal to the smartphone, which prompts an app to open. Image by Jonathan Nalder via flickr.

The challenge of context

Mark Hung, an analyst at market research firm Gartner, says less than one percent of stores in the U.S. use iBeacon technology.

Aside from privacy concerns, part of the problem is that beacons don’t work without an app. Without one, the beacons wouldn’t have anything to communicate with. Some apps, like shopkick, partner with multiple retail outlets, but as of yet, there is no universal platform that brands can use to deliver people information, which means the bulk of businesses will have to convince people to download their own apps.

“This might seem obvious to those who know how the beacon systems work, but it’s still a pretty significant problem to anyone who doesn’t specialize in app download marketing,” writes Jason Del Rey in Re/code.

There’s also the danger for brands to abuse push notifications. As Brent Hieggelke, CMO at Urban Airship, writes in Re/code, “After a few too many buzzing, irrelevant alerts, the best you can hope for (perhaps naively) is that customers tune you out and let your brand remain on their mobile devices.”

Despite these setbacks, the hype machine keeps chugging. Tim Graham of Virgin Atlantic remains committed to the technology, even though they didn’t get it right on the first try: “…we are still exploring uses for iBeacons with iOS applications and feel that this combination could provide a much richer customer experience in the long term.”

Beacon technology is still in its infancy. We’ll see whether it grows up.

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