Beacon Blow-up: Will Location-Ad Industry Get The Signal On Educating Consumers?

An “exposé” spooks an ad agency into pulling its beacon test, hinting that the tech is ahead of the public’s understanding.

Maya Mikhailov is the EVP and Co-Founder of GPShopper
Maya Mikhailov is the EVP and Co-Founder of GPShopper

Within hours of social news site BuzzFeed’s report that outdoor ad agency Titan had “hidden” beacons inside 500 New York City phone booths as part of a test, local government officials and the company both issued expressions of regret about the situation and said that the Bluetooth-powered proximity communication devices would be immediately removed.

As Greg Sterling pointed out in his Marketing Land deconstruction of the over-inflated fears mined by the BuzzFeed piece, beacons are a comparatively weak tool for either tracking an individual’s movements or for spamming unwanted communications to people’s smartphones.

But the story of “secret electronic sensors” being placed around seemingly innocuous phone kiosks made the rounds of both traditional and social medial and snowballed before Titan and officials at NYC’s Department of Information Technology and Telecommunications could phrase a proper defense of the beacons. So, even though the beacon’s signal cannot reach a user’s phone unless they agree to accept the connection by turning on their Bluetooth receiver and opening an app, the amplified fears caused Titan to simply pull the plug on the experiment.

“It’s a bit of a tempest in a teapot, but the perception of it far outweighed the reality of what [the city, Titan, and the beacon technology provider in this case, Gimbal] appeared to be actually doing,” said Maya Mikhailov, EVP of mobile retail platform, GPShopper (to be clear, GPShopper was not involved with this case and Mikhailov is only commenting as an “industry voice”). “Frankly, I’d be a heck of a lot more suspicious of free, open-air wi-fi than what someone can do with a beacon. Nevertheless, this situation highlights the need for greater foresight and transparency by the industry in general, not just individual companies in the space.”

Beacon Boom

For the most part, the past year has been an exciting one for the development of beacons, seeing as the geo-marketing device’s entry into mainstream retailing has enhanced smartphone-toting consumers’ offline experience in stores— whether through offering discounts on merchandise or by helping direct shoppers to the items they’re looking for. Good estimates of total active beacon deployment can be hard to come by, but suffice to say that the numbers of retail locations using the devices are in the tens of thousands. By the end of next year, the number could reach 100,000 in the US. (According to an Aug. 2014 estimate by Business Insider, “The beacon installed base will consist of 4.5 million active beacons overall by year end 2018, with 3.5 million of these in use by retailers. )

Over the past several months, major retail brands like Lord & Taylor, Target, American Eagle, Starbucks, Best Buy, Alex and Ani, and Old Navy, among others, began exploring greater use of beacons for in-store marketing purposes. In one of the biggest endorsements of beacons, made just as stores prep for the all-important holiday season, Macy’s expanded its relationship with shopping app platform Shopkick to install the Bluetooth devices in all its 4,000 US locations. In a further sign that beacons are going to become big business on a global level, South Korean location-marketplace SK Telecom acquired Shopkick last month for an estimated $200 million.

gimbal beacons
Gimbal’s blue beacon is just slightly larger than a quarter.

While the existence, let alone understanding, of beacons is lost on most consumers, Apple nevertheless felt its own iBeacon software was worth emphasizing when it previewed its latest operating system update this past June. In addition to Shopkick, GPShopper, and Gimbal, the growing list of retail shopping platforms using beacons for proximity location marketing includes Swirl, Estimote, StickNFind, Euclid, and inMarket. Meanwhile, companies like Finland’s IndoorAtlas and Bytelight are offering retailers alternatives to Bluetooth beacons with micro-location technologies like magnetic positioning and LED lamps, respectively.

Whether or not beacons or another location technology becomes the standard for retailers, as the Titan phone kiosk incident shows, consumer concern about the tracking of their digital lives is rampant, and all it takes is one inflammatory headline to send brands running for cover.

Transparency And Education

Naturally, the key to avoiding any consumer confusion is to be upfront and clear from the start. That’s perhaps a bit harder when doing a vague test of “how, and if, this technology works in dense urban areas,” according to a statement Titan released about its use of the Gimbal-manufactured beacons in this case.

“There are many potential beneficial safety, communication, and way-finding use cases for municipalities using beacons, as well as some potential commercial use cases,” said Dave Etherington, Titan’s chief strategy officer, in a statement emailed to GeoMarketing.

To Titan’s credit, Etherington did offer a straightforward explanation of how beacons can be used, albeit after the fact. “Gimbal proximity beacons do not collect user data/information, they do not send or push content, nor do they track people,” Etherington wrote. “Beacons can only be utilized through users’ smartphones if, and only if, the user has downloaded a specific app with the technology imbedded and the user has specifically opted in. Titan is committed to testing new technologies which may have future benefits to its municipality partners and their constituents. At NYC’s request Titan removed the beacons from all NYC locations and ended the test.”

Asked how brands can explain the use of beacons to consumers in a coherent, accessible way, GPShopper’s Mikhailov highlighted two fairly recent cases that showed the right way and the wrong way to communicate the technology.

Last year, Major League Baseball introduced beacons to ballparks beginning with a careful rollout that started at New York’s Citi Field. That project has been expanding nicely. Meanwhile department store chain Nordstrom had to back-peddle and proceeded more cautiously, abandoning a wi-fi based beacon experiment at 17 of its outlets after customers said they feared being “tracked.”

“The beacon rollout was done well at Citi Field because the MLB was very public about telling fans that they were installing the devices, what app they would need to connect with it, and the sort of valuable information and services people who opted-in would receive,” Mikhailov said. “They were very upfront about the programming that was going to be done, so no one could turn around and accuse them, saying ‘The stadium is tracking you without your permission.’”

The Meaning Of Opting-Out

GPShopper, which works with retailers such as Bebe, The North Face, Express, and others, recommends a “dual opt-in process” with beacon-connected apps. Says Mikhailov, “Asking a shopper to simply enable their phone’s location services is not enough. You should also enable a beacon experience, and explain clearly what that beacon experience is, and most importantly allow consumers to opt out at any point.”

Retailers need to be unafraid of making it as easy for consumers find the opt-out setting in their beacon apps as it is for them to opt-in, much the same way they make the exits to stores clear to shoppers who enter.

“You can’t go wrong with having too much explanation—too much opt-in or opt-out—because if you don’t make it clear, the  initial reaction to this sort unfamiliar technology—especially when it’s something as personal as a smartphone—is always going to be jarring,” Mikhailov said. “But there needs to be more discussion about best practices for the industry, whether it’s through the Interactive Advertising Bureau, the Mobile Marketing Association, or from outside voices like Jules Polonetsky [executive director of the Future of Privacy Forum]. Now’s the time.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.