Companies in the location-based services (LBS) industry face bigger threats than one another
The tech press often reports on the so-called location wars between companies like Foursquare, Gowalla, SCVNGR, Whrrl, MyTown, and the new kid on the block, Facebook. While this makes for great headlines, it's just not how we view the emerging LBS industry.
All companies have both direct and indirect competitors. As counterintuitive as it may seem, the latter can often be more significant than the former.
Take the example of Porsche. Its direct competitors include Maserati, Aston Martin, and BMW. These are the supposed apples-to-apples comparisons that consumers and the automotive press make. Yet Porsche actually considers personal watercraft and aircraft i.e. big-ticket toys as much more of a threat to their business and growth. Which is to say the company is less concerned about a consumer's choice between a Carrera and DB8 than whether to splurge on a sports car or boat. This is partly a matter of confidence in the Porsche product and brand, but it also represents big-picture thinking. If people are buying more boats and planes, it's bad for everyone in the sports car business, especially the leader.
The success of LBS will not be determined by which individual company has more users, cooler gaming mechanics, or the most charismatic CEO. The space, which is massive, will succeed as a whole, and marketers and consumers hold the keys to this success.
Therefore, the more notable competitors are the alternatives to LBS. What other choices do consumers have when using their smartphones? What choices do marketers have in reaching consumers when they're out and about? The challenges are shared and universal.
Part of our mission at MomentFeed is to educate the marketplace, namely marketers and the media, about LBS and all it has to offer. This is partly because our success depends on healthy growth in LBS, but it's also because we're passionate about the value of LBS for consumers and marketers alike-the value of making that connection and opening that dialog in the moment.
In order for LBS to succeed, though, it first has to capture the attention of consumers. Since attention is finite, this means diverting (stealing) it from other areas of interest. It also means changing consumer behavior. Or more specifically, evolving consumer behavior, as checkins are essentially a new type of status update/brand engagement. Beyond early adopters, mainstream users need a compelling reason to embrace LBS. In addition to the utility and entertainment value, this is where marketers come in.
The LBS experience and value proposition will be heavily influenced by marketers through loyalty programs, coupons, and other ways to make it something consumers want to participate in. In fact, marketers will be key drivers of adoption by promoting LBS to existing customers. As with shifting consumer attention, this requires a shift in marketing resources, thereby stealing from other areas of a budget. This has to make sense. It has to be compelling. Ultimately, it has to perform.
The true competition for LBS comes from alternative channels and their associated line items in a marketing budget. This is a formidable challenge, and no single company in the LBS space can compete on its own. It goes without saying that none of the alternative channels-television, outdoor, gaming, search-is represented by one company.
In many ways, this is why we started MomentFeed. We represent the LBS space as a neutral third party to further the interests of this new industry. We're guided by the objective data of our partners, the performance of individual campaigns, and our extensive domain expertise. We serve our clients (marketers) in good faith and promote the whole of LBS to the press. For us, the competition is anything other than LBS. And we're quite confident in our competitive advantage.