By Bhavin Shah

The ability to pinpoint a mobile device user’s location, especially indoors and in urban areas, is expected to dominate successful mobile marketing business models this year.

When mobile marketing is fueled by a high-accuracy indoor/urban location capability, a self-perpetuating virtuous cycle of positive business dynamics enters into motion.

The effect of that virtuous cycle will ripple across the industry ecosystem. Increased revenues and market share are in store for wireless carriers with a high-accuracy indoor/urban location capability and a compelling approach to mobile marketers.

“Creatively designed, carefully targeted, and strategically priced, these newer, better (location-based) offerings can differentiate the carrier and its services portfolio from other competitors who often only offer a very coarse level of position accuracy,” said Jeanine Sterling, senior analyst for the mobile and wireless communications practice at Frost & Sullivan, in an Oct. 19, 2010 press release.

Good to good
In the new year, the virtuous cycle’s spin will feed and be fed by multiple positive trends for mobile marketers, and a revolution of good things will begin to occur.

The ability to precisely locate mobile device users enables site-specific promotions and other marketing initiatives of unprecedented contextual relevance. This encourages more users to opt in to receive promotions.

Consequently, sales climb and, in turn, companies are willing to boost investment in mobile marketing. Campaigns are improved, and the cycle begins anew.

Evaluating and improving campaigns
Measuring campaign effectiveness always challenges marketers, but high-accuracy indoor/urban location capabilities will begin to fuel efficient analysis of valuable metrics that definitively prove a campaign’s effect and illuminate opportunities for enhancement.

Carriers with such a location capability are automatically collecting the data that mobile marketers need – the rate of shoppers passing a mall storefront who responded to a text advertisement, the distance a user traveled to a store after conducting a smartphone search or the number of cars that passed a billboard.

Business opportunity exists for carriers who show enterprises and agencies that they are the best-equipped to supply high-accuracy location and other subscriber data.

Carriers’ opportunity
Might carriers this year be spurred into full-out offensive to reclaim market leadership in marketing and monetizing location-based services?

Apple and Google have taken the lead here, but non-carriers cannot match the location capability delivered by carrier network-based technologies such as radio frequency pattern matching, which is especially accurate in the critically important indoor and urban environments.

Mobile marketing offers carriers a way into the game that would sidestep head-to-head confrontation for the consumer with Apple and Google, while at the same time providing entrée to the less-fickle business-to-business market and its higher average revenue per user.

B2B surge
If companies are successfully convinced of the business potential of the high-accuracy indoor/urban location data that carriers can offer, a surge in B2B mobile marketing investment will undoubtedly follow this year.

Certainly, the audience exists to justify intensified B2B mobile marketing, as business users comprise a large portion of location-enabled smartphone users. The resources are apparently there too since “nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession,” Jia Lynn Yang reported in The Washington Post newspaper on July 15, 2010.

High-accuracy indoor/urban location offers compelling potential for mobile B2B marketers.

Trade-show attendees near a company booth could be targeted with enticements to visit. Profiles of sales leads could be assembled by combining location capability with other smartphone features such as search and application downloads.

Direct mail’s decline
High-accuracy indoor location capabilities are also expected to affect the direct mail industry.

Look for mobile marketing to go green this year. Location-enhanced mobile marketing delivers a superior degree of contextual targeting that cannot be achieved via traditional, paper-based campaigns.

This is welcome news to direct mail’s recipients, who would rather eliminate its irritation, and its senders, who would prefer to skip the considerable investment in required resources such as paper, printing, postage and transportation.

The Mobile Marketing Association projects that direct-mail budgets will dip 17.5 percent from last year to this year. Advertisers will increasingly brand campaigns and products as explicitly green, maybe even calling out those competitors who do not engage in environmentally friendly mobile marketing.

Mobile marketing enhanced with a high-accuracy indoor/urban location capability puts mobile users in control of what information they receive and helps ensure that the information is of high contextual relevance.

Ongoing technological innovation will yield even greater location precision and, thus, marketing sophistication, leading to a self-fulfilling virtuous cycle.

The “Z” coordinate, elevation, will next come in to play.

Today’s ability to locate a shopper in the vicinity of a storefront will evolve into tomorrow’s need to identify shoppers in stores by aisle and floor height. This breakthrough will accelerate the virtuous cycle’s revolution in mobile marketing – and keep it spinning well beyond 2011.

Bhavin Shah is executive director of marketing and business development at Polaris Wireless, Santa Clara, CA. Reach him at [email protected].