Geo-Fencing: The Future Of Advertising Is Outside Of Media

We are starting to see the outlines of a revolution in geolocational, text-messaging advertising. The North Face is one of the leaders in so-called ‘geo-fencing’ advertising, where ‘geo-fences’ are created within a certain distance from physical stores, and when people pass inside those fences — and if they have opted in to advertising from the company — they receive promotional text messages:

- Claire Cain Miller, Take a Step Closer for an Invitation to Shop

The North Face’s new campaign, which starts this month, is its first to single out customers depending on where they are physically.

The campaign was created by Placecast, a location-based mobile ad company in San Francisco. It uses a practice called geo-fencing, which draws a virtual perimeter around a particular location. When someone steps into the geo-fenced area, a text message is sent, but only if consumers have opted in to receive messages.

“You say, ‘This is a brand I care about,’ and then you go about your day and your phone tells you when something is interesting,” said Alistair Goodman, chief executive of Placecast.

Placecast created 1,000 geo-fences in and around New York, San Francisco, Seattle and Boston, cities where the North Face has many stores and areas that get a lot of snow or rain, so the company can tailor its messages to the weather. In urban areas, the fences are up to half a mile around stores, and in suburban areas they are up to a mile around stores.

For now, the North Face will send texts about promotions, like a free water bottle with a purchase, and new arrivals, because the company’s gear is heavily seasonal. A text message would say, for example, “TNF: The new spring running apparel has hit the stores! Check it out @ TNF Downtown Seattle.”

Imagine the messaging from Subway, Starbucks, or PF Chiangs. “Caramel Macchiatto half price until 2pm!” “Potstickers and Sing Ha = $4 during happy hour!”

It is going to be huge, especially with young people who text preferentially over talking on their phones. And of course, the retailers will pay for the messages.

And even better than come-ons like these will be the coupons. I am driving past the local Giant supermaket, and I get a text message with an attachment: 2 coupons for brands that I have registered at the Giant website. I turn into the parking lot planning to pick up the Dannon Yogurt and Irish Cheddar that I got those coupons for.

But what Miller completely forgets to mention is that this is direct advertising, like direct mail was. This will end run the media companies who have made their bread and butter from advertising and coupons. If Domino’s can text me a code to get two pizzas half off today, why would the advertise in the local paper?

If the future of advertising is direct and opt-in, through mobile devices to the consumer, the media lose the support of retail and local advertisers.

Yes, consumers still need to learn about PF Chiangs in the first place, but that is much more likely to be a direct experience, too, like going there with friends and then signing up for text-based promotions because it’s mentioned on the menu, or a friend uses a coupon or discount code.

The future of advertising is moving outside of media, and that’s another nail in the coffin for traditional print media.