Marketing of the future. iBeacon: how it works and who needs it

iBeacon transmitters can be used as an indoor positioning system or a marketing channel. They are widely known among IT professionals. However, for ordinary people one of the leading-edge techology of the decade remains a puzzle.

Lower-case “i” in “iBeacon” hints where this marvellous technology comes from. Apple announced iBeacon in 2013.

What is iBeacon and why is there so much fuss about it?

Official Apple website humbly states that iBeacon is “a new technology enabling new location awareness possibilities for apps”. In fact, it’s a powerful marketing tool which helps to interact effectively with your target audience and improve sales performance and customer loyalty.

Beacons are tiny transmitters sticked onto a wall or place indoors or outdoors. Generally this technology is used in three ways.

The first and the most popular one is to send smartphone users personalized informational or advertising push-notifications. Users need to have special apps on their mobile devices that connect with beacons. When a user is close to selected locations (for example, shops, museums or hardware store shelves), the app automatically sends him a notification.

With the help of beacons it’s possible to quite accurately determine how far a user is from a certain location. Reasonable marketing department would avoid message overload — one or two notifications are enough depending on your goals.

McDonalds was very successful testing iBeacon technology with its deal of the day. They informed customers about special prices on McChicken Sandwiches and Chicken McNuggets. The promotions increased sales of these meals by 8 percent.

The second way to use beacons is indoor navigation. Users see sort of an interactive map of a building on their smartphone screens. For user convenience you can mark all the key spots and specify some information about them. A user can also get directions from his current location to the selected location in the building.

In Russia this technology is developing rather slowly, whereas in European countries this navigation system is implemented in almost all major locations with high foot traffic. Most often this technology is used at international exhibitions. With the help of a detailed map of an exhibition area it’s very easy to get directions to an object or hall you are interested in. In this regard SPIEF comes to mind — there were a lot of girls who volunteered to spend hours in the heat or rain with direction signs in their hands.

The last but no the least way to use beacons is to collect real consumer behaviour statistics. You can analyze a route of a certain customer or general customer behaviour trends in certain areas. It’s quite a WebVisor for marketing experts which allows to optimize the display of goods and spot “hot” and “cold” zones of a certain area.

For example, when a potentional buyer is passing by an electronic store, the app advises him to check out this store. The app advises to buy not just some cut-price article, but makes personalized offers to every customer. If a buyer spent five minutes by the shelves with TVs during his last visit to the store, the app will advise him to buy one of those TVs.

In Russia this system is currently being implemented and adjusted. Apart from reliable devices, there should be competent and quick-witted marketing specialists, who can organize sales process properly.

How it works

The three foundations of this technology are: 1) beacons installed across a public place; 2) Bluetooth in discovery mode; 3) application of the public place installed on a user smartphone. When a user gets into a beacon coverage zone, the app sends a certain notification assigned to this beacon.

iBeacon uses Bluetooth Low Energy standard, which provides 30 times less power consumption than Wi-Fi. A beacon battery can work for more than one year before it should be replaced. Transmitter coverage varies from 10 to 30 metres (10 metres is more likely, though) depending on local conditions. A beacon can determine user location to within 1 meter.

The price of a beacon varies from 18 to 35 dollars. You can buy it in Russia from resellers or order abroad.

The shortcoming of using this technology is that you can only get useful information if Bluetooth on you device is switched on. So either you keep Bluetooth Low Energy mode always on (which is already not “low energy”), or you have to switch it on near selected locations (which you can just forget to do without a reminder — Bluetooth is not very popular function among users).

iBeacon working principle

Generally, there are three main types of beacons:

  • Cross-functional iBeacon, which can be used in the temperature range from -20°C to 60°С.
  • ToughtBeacon, which is implemented with polycarbonate case specifically for using outdoors and/or in tough weather conditions.
  • CloudBeacon, which uses cloud technologies and allows to control a lot of beacons at the same time.

Who needs it

Though a lot of iBeacon software developers promise you the moon after installing iBeacon hardware, not all companies can really make money from this.

This technology is more for major companies and shops that are already well-known among public. For a start-up company it’s just impractical to invest millions in the app development and expensive beacon hardware. It won’t be soon before these investments pay off if at all.

This article prepared for VC.ru