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CONTENTS
INTRODUCTION
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ADVERTISINGS SHIFT TO MOBILE
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MOBILE APPLICATIONS
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LOCATION BASED SERVICES
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THE PRIVACY ISSUE
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CONCLUSION
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PRIMARY RESEARCH
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BIBLIOGRAPHY
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INTRODUCTION
The telephone was invented in 1876 by Alexander Bell. Its sole purpose was to transmit vocal or other sounds telegraphically (findingDulcinea, 2006). An apparatus that at the time was considered revolutionary and innovative, is now regarded as a basic and expected function. Over one hundred and thirty years later, the telephone has evolved to do more than just make calls. It has gone smaller, mobile, they are with us everyday and wherever we go. It knows what we do, who we call and what we text our friends about and advertisers have realised that targeting consumers on their mobile phones is a new and powerful way to get people listening again. When the iPhone launched in 2007 so did a new era of advertising. Users now had the ability to download anything they wanted to their handsets, from music to applications. These applications, or ‘Apps’, were what advertisers were interested in. They could gain consumer awareness by building branded Apps that would be carried inside the phones of millions. One example of a successful branded app was for Golf GTI. They opted out of a traditional advertising campaign and instead pumped all their resources into developing a stylish iPhone App. Users were able to race GTI cars around many different customised tracks and even play against their friends online. In the first four days the App received 750,000 downloads and over 1 million in the first week, it was also the number 1 free app in 35 countries; a lot of product awareness, which generated more than 40,000 GTI requests (Taylor, C. 2009).
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Advertisers are taking over the Smartphone market, making sure they are connecting with consumers in many unique and brilliant ways, but are Apps really that effective and what do they plan on doing next? Now advertisers want to take things further with the introduction of Location-based services, which record your likes and dislikes, and your everyday activity. But is advertising going too far? Is George Orwell’s Big Brother society just around the corner? Just instead of the government, it’s advertisers that know your every move, from what you had for breakfast to what deodorant you use. This report sets out to discuss the progression of advertising to mobile phones and why it is so advantageous to the advertiser, the development of the ‘App’; its successes and failures and finally the newly developed concept of Location-based Services. A recent technological advance that allows access to information and entertainment through your mobile device in relation to geographical position (Schiller, J. Voisard, A. 2004).
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ADVERTISINGS SHIFT TO MOBILE
The advance to mobile was one derived from several different factors, from the development of the Smartphone, to the recession and the fall in client’s revenue, to finally, the advantage of advertising on a personal handset. The mobile phone, or ‘portable handset’ was invented by Martin Cooper in 1973 and it was finally in the1990’s that the mobile phone hit the mass market. SMS became advertisers main target as in September 2001 it was estimated that the number of messages that were sent worldwide increased from 1 billion to 23 billion per month (Barnet, K. 2001). The first to invade the SMS craze and implement a brand advertising campaign was Honda with the help of operators AIS from Thailand (NoventiNews. 2007). Content sponsored by Honda was broadcasted twice a day to user’s phones, which only appeared on their screens when their phone was idle. They contained motorcycle safety tips and instructions on how to drive safely and save fuel. Users were also urged to click on interactive messages to be entered in a prize draw. This was all done in a bid to promote the Honda brand and its motorcycles and it generated much success. Three million impressions were made that were targeted at subscribers in the Bangkok area and more than 100,000 users clicked to participate in the draw and receive more information about Honda (NoventiNews. 2007). Advertisers became very impressed with the possibilities of mobile advertising because of its mass-audience targeting and instant message delivery that Peter Erskine, O2’s CEO, predicted in 2007:
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“It seems inevitable that the mobile screen – just as the cinema, TV and PC’s before – will be used for advertising, and when you consider there are a lot more mobiles than any other device, the rise and rise of mobile advertising is unstoppable.”
But some felt that mobile marketing would only be able to successfully take off when the mobile technologies were adapted and adopted for use and that “SMS or mobile messaging…is still in its infant stage” (Barnet, K. 2001). Mobiles became commonly used for sponsorship or displaying operator logos and advertisers were frustrated with the limitations of the SMS. With text only capabilities, there was no room for visual content, meaning brands that were not well known were unlikely to find it worthwhile to advertise on the mobile (Barnet, K. 2001). Mobile advertising wanted to see something new from the platform.
It was a while before the mobile market progressed. Even though there had been smartphones around much earlier (the first Blackberry was launched in 2002), it was the iPhone 3 that brought new realms to advertising. It launched mid 2007 with its savvy interface and its world of possibilities for the advertiser. An article in Ars Technica, went as far as describing it as “far superior to anything that we had ever used prior.” Now the mobile phone could do more than just send texts, but also view photos and videos; nothing compared to its usability and the rocket in consumer sales (West, J. 2009).
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However, the launch of the iPhone is not solely responsible for the evolution of advertising. When the recession hit in December 2007, all business, including advertisers, felt the strain. Their clients were either ďŹ ling for bankruptcy or sharply restricting their spending and demanding a better return on their investment. Advertisers found themselves abandoning the expensive TV and Print campaigns that we are so used to, and invest in the new market of Smartphones. Incidentally, the decisions for the biggest and most successful pitches on Smartphones for Volkswagen and UPS were down to what the procurement departments had to say in an effort to reduce spending and hopefully gain a bigger revenue for the client (AdvertisingAge, 2010).
If it wasn’t for the tight squeeze in global budgets, would the move to mobile have happened a lot later?
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The psychology behind advertising on the mobile phone was also key. A consumer could be reached on the iPhone in a way that was “more crafty than overt” (Kapok, M. 2009), almost to the point where people didn’t even realise they were being advertised to (Kagan, M. 2008). This being a great advantage as traditional advertising techniques were wearing thin as it becomes “harder than ever to get noticed” (Kagan, M. 2008). Young, tech-able people “don’t care about ads, but about what their friends think” and with Facebook and Twitter easily accessible through Smartphones, being able to link up the advertising with social networks was a cunning thing for advertisers to do. Allowing the consumer to show off to their friends via social networks only increases consumer awareness and reach more than just the person with the Smartphone. It is possible to state that advertising has begun to work with the consumer instead of just being the obvious enticing jingle that people have become so dubious of.
A brand is now your friend, on your mobile, providing you with a service or a game to entertain and inform you. Just have fun, and while you’re at it, take notice of our logo popped strategically in the corner. Eric Perez, Director at Blitz Agency states that the most important and interesting advantage of the mobile platform is that “brands can anchor themselves onto a device that stays with consumers almost every waking minute of their life” (Kapko, M. 2009). So branded Apps were developed. A fun, entertaining package that can be downloaded from a particular online media store1 to your phone that was either a fun game, a useful utility or in some cases just there because a brand wanted an App.
1 iTunes, Android, Blackberry, Ovi by Nokia, all sell mobile applications to specific handsets.
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MOBILE APPLICATIONS
One of the early, most successful mobile Apps to have been launched was one mentioned earlier by VW GTi. But before such success there were some with their doubts as “many industry experts considered the move either visionary of foolhardy”(Solis, B. 2009). Some would just simply not believe that such a product could advertise effectively on just the mobile device. VW pushed for it anyway, in order to be one of the first to experiment with mobile advertising and cut down on their spending. In 2006 they spent $60 million on a big TV campaign for GTi, whereas in 2009 they spent $500,000 on developing an App that assembled an immense response (Solis, B. 2009).
So success can come from advertising on the mobile, but is it really targeting as many people as an ad spot on TV would?
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VW counteract this argument by stating that their iPhone App reached more people than having an advert on TV. In September 2009 there were 50 million iPhone and iPod Touch users worldwide, which was over double the amount of people that viewed the highest rated show on CBS with 21 million viewers (Solis, B. 2009). The demographic of the iPhone’s audience could be called into question as one that would only have a small and similar target audience, not one that has a big and diverse audience to advertise their big product to. However, VW “realised that it’s target customers were most likely among the millions of iPhone customers actively seeking cool Apps.” (Solis, B. 2009) They are young, stylish and extravagant, exactly the type of customer VW wanted to target to buy their GTi Golf. For those that did not have the iPhone this was not a problem as thanks to the sharing capabilities within the App that allowed players to post their races on Facebook and Youtube, those that did not have the App were involved and exposed to VW anyway. With little PR played by VW, the excitement of the App’s users allowed it to spread virally or through word of mouth reaching millions more than a single TV advert would (Taylor, C. 2009). VW was embedded into the handsets of many, allowing them to “generate and maintain a permission based one-to-one dialogue with the customers” (Plummer, J. 2007).
As the consumer downloaded the App in order to play it and race against their friends it did not feel or come across as advertising. The consumer felt like they were in control as it was their choice to place the App onto their mobile and use it. The brand did not interrupt their television show or film but provided them with a new and exciting game that also allowed them to socialise with friends.
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Viximo, a social App and game developing company stated in their 2010 market report, “Brands have the power to transform a mundane item into a highly recognised and sought after product.” They explain this by talking about the plain white T-shirt - look how expensive and desirable it becomes once you place a popular brand on it. Research conducted by comScore in 2007 found that 40% of heavy gamers agree that games feel more realistic when actual brands are embedded in games (Plummer, J. 2007). Mobile applications “help further imprint their brand on the public” (Topper, H. 2009) by associating their brand with an exciting and modern mobile App.
But aren’t people a lot smarter these days when it comes to advertising? Brands don’t have the same control over customers as they used to. Look at the rise in popularity of Poundshops and budget clothing retailers. People have become astute consumers. With this comes the downfall of many Apps. Aaron Watkins, of the mobile marketing agency Appency, explains that customers are likely to skip over the most function-rich branded Apps simply because they’re branded. Could this be from previous dislike for the brand? Or from not having an affiliation with the brand?
Should the brands be in the background of the App, where they attract the customer with another function entirely that may change the perception of the brand and in turn grab another consumer?
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A study by the PR agency Porter Novelli found that the launch of a branded App didn’t generate any big spike in volume of online chatter and any uptick in conversation volume tapered off quickly in the days after the Apps rollout (Chang, R. 2009).
Joe Russo claims that part of the problem is the vast sea of Apps – now numbering more than 100,000 - which is swallowing the prospect of building any significant buzz. Has the novelty worn off with consumers? At the beginning, being able to race against your friends in a new limited edition Golf GTi was exciting, now with several concepts being over used and the lack of innovation1, people are bored once again (Romano, F. 2010). More thought needs to be made before developing an App. Will the App be new, exciting and interesting for the target audience? What is the need for the brand to have an App? It is not enough to just make a branded App simply because it’s the modern and expected thing to do. At a talk during Internet Week Europe, Fernanda Romano from Euro RSCG talked about her annoyance of the ‘the blind race to the future’:
“People are obsessed with the future, we’re trying to always do things first…we want to find what is the next use of Twitter…There is a need to serve the present and if it is right for the brand or the message then we use (Twitter), of course we would say go do that.” With mobile Apps slowly taking a backseat when it comes to mobile advertising, advertisers are now looking towards Location-based Services, the newest, and for some, worryingly intrusive way to promote a brand.
2 Golf GTi, BMW, F1 and Ferrari GT all have similar racing apps. There are also endless amounts of apps for food brands such as Pizza Hut, Burger King and Starbucks, that provide the similar service that allows you too order online, find your nearest store and share your meals with your friends.
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LOCATION BASED SERVICES
A Location-based Service refers to any service accessible through a mobile device, that utilizes its geographical position. Several networks and apps implement this service. For example, any mobile service that identifies the nearest cash machine and provides directions to your destination. What was once an innocently accommodating information-based service, has now inevitably fallen into the hands of advertisers, who are experimenting with producing new and exciting ways to the grab consumers’ attention through location. Brands have already put to use some techniques using ShopAlerts geo-fences that are located in a specific area, usually around the brand’s store. When a customer is near the store, shopping nearby or simply walking through, the geo-fences trigger a message to their phone, which provides them with a coupon or offer that they can use in store. Starbucks in America were one of the first a highly recognised brands that experimented with this concept, offering any Starbucks coffee for $1 to whoever was near the store. Great if you really wanted a coffee but just didn’t have the full amount in you purse; not so great if you don’t like Starbucks. For some this made this ‘utility’ just another annoying gimmick interrupting your day.
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However, American Eagle and Urban Outfitters have also employed mobile marketing incentives to drive customers to their stores and were very pleased with the results. 65% of participants made a purchase over the course of the programs and 79% said the program increased their likelihood to visit the stores (Butcher, D. 2010). Allistar Goodman, CEO of 1020 Placecast, states “every piece of mobile advertising will eventually have location as a component of it.” This is because of the developments currently happening with Location-based Services. There is a new era of ‘check in’ networks emerging that allow you to share your location with the world. Foursquare allows you to create an account, connect with friends also using the service and ‘check in’ to update and share your location. Points are awarded for ‘checking in’ to different venues. With these networks people willingly share their top visited locations, allowing advertisers to begin their quest of targeted advertising. Intel Capital’s Tech Investor, Eghosa Omoigui, says:
“It’s all about offering a menu of incentives…Starbucks coupon should be shot…there are people who don’t like Starbucks. Intervening with someone’s workflow while they drink Pete’s coffee is offending – where is the intelligence layer?” So thanks to Location-based Services, networks such as Foursquare and the new Facebook Places1, make sure brands only speak to those that are interested. This targeted marketing can be accomplished, but it is still in its infant stages.
3 Facebook Places has the same concept as Foursquare but relies on the notion of people simply wanting to tell their friends where they are. No points or badges are awarded. Similarly to the ‘tell your friends how you feel’ concept behind their Status changes.
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Gap recently took advantage of Facebook Places successfully by giving away 10,000 pairs of jeans free to any customer who ‘checked into’ the store via their mobiles for one day only under a first come first serve basis (Parish, N. 2010). But how could Gap possibly benefit from giving away10,000 pairs of jeans in one day? The answer is behind simple consumer psychology. 10,000 people have just walked into the Gap store and received a free pair of jeans, what would be the harm in buying a top to go with it? All Gap want is to drive more customers to their store that wouldn’t have ordinarily come, in hope that they spend. On the day, 400,000 people participated and those that did not get there in time received a 40% discount, pulling in even more revenue for Gap (Parish, N. 2010). There is one flaw behind this type of marketing however.
Isn’t the whole point of advertising meant to produce awareness and sometimes desire towards a brand, not to entice those that already affiliate with it?
Surely advertisers want to encourage new consumers to their product as well as rewarding the current ones? Those who arrived to the Gap store on the day of promotion were certainly regular customers, who kept up to date on Gap products and promotions. The VP of Groupon, Mihir Shah, somewhat selfishly points out when talking about the downfalls of LBS, “I don’t wanna make an offer to someone already buying Gillette.” So advertisers want to take it one step further. As well as knowing all about the most popular places you like to visit they also want to know your music tastes, your favourite type of entertainment, what films you like to go watch etc. The possession of this type of information would allow them to know exactly who to advertise what to, whether it be a current customer or someone who has similar tastes and would may like to try out the brand. This type of advertising is undeniably in the near future, with merging existing networks together as Tessa Wegert predicts,
“targeting won’t just be done on location alone; interaction with iTunes and Apples App Store will also serve to provide data that can be employed by advertisers.”
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Just think of the precise targeting Facebook could achieve. It’s already halfway there with ad banners specific to the information on your profile and with the newly implemented Facebook Places. Brands will soon be foolish not to use Facebook as a medium to target through. In 2008, Om Malik spoke about the future of targeted advertising, “consumers will have advertising move with them, as their mapping applications, unobtrusively present ads, offers, coupons, based on their opt in preferences”. However, his article, Are you ready for Location-based advertising, neglected to mention the issue of privacy, an issue currently holding back the development of such targeted advertising.
Ultimately, the big question is, will people sacrifice their privacy just to be able to receive adverts that they know they will be interested in?
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THE PRIVACY ISSUE
“Being able to marry data about users location and data about users likes and dislikes…raises the bar in terms of relevancy of advertising messages.” (Elkin, N. 2010) That’s what the analysts at eMarketer think, but what about the customers who have to give out this kind of personal information?
It can be said that people are somewhat scared and suspicious about ‘Location-based tracking’.
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In San Francisco Bay there are ‘FasTrak’ lanes for cars that allow drivers to use a wireless device to automatically pay bridge tolls. Yet every day people wait in long lines willing to pay the extra dollar so they will not be geo-tagged (Foremski,T. 2010).
The problem is with the unknown. What will happen to personal information once it has been given out? What could be the downfalls of having so much personal information open to the public? The main drawback with LBS at the moment seems to be a general lack of privacy awareness At a Geo Loco Keynote in 2010 one question was brought up from the audience that demonstrated this point,
“Can you be fired if your employer knows you go to bars five times a week?” (Soule, M. 2010).
Although advertisers acknowledge the issue of privacy awareness, there has been little done to overcome it. The director of ABI Research, Neil Strother, suggests that in order to draw more people in, there needs to be more benefits for the consumer.
He says “some people might be put off by the ‘Big Brother’ aspects of this, but it’s really about the value exchange”. Instead of trying to reassure consumers about the privacy issues involved with LBS, advertisers want to entice people with rewards and perks. Many others agree, suggesting, “if people thought they were getting value out of it, they would feel more comfortable revealing where they were” (Ogneva, M. 2010).
Yet, would ignoring the bigger issue of privacy really help drive the forging of LBS and advertising?
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It has been predicted that insurance companies will start tracking this data because it is so valuable in providing a more accurate way of determining risk, and therefore rates (Foremski, T. 2010). When consumers realise that this is happening will the rewards and perks still have enough pull? People are already very weary of providing personal information in forms and online, as they are aware that their information does get sold to other companies resulting in unwanted cold calls and junk mail. If they are to learn that using a Locationbased Service would have similar results, many people would avoid using them.
Very similar results were found in a small-scale study conducted for this report. 62 people were surveyed in total and asked about their mobile phone behaviour.
A report from American mobile media provider Myxer found that when asking people about Location-based networks, the majority of people who did not use them were simply not interested (Perez, S. 2010).
Privacy was not the biggest concern, but instead the majority were simply not interested in using the facility. Sarah Perez writes this can be easily remedied by improving the engagement hurdle. “By providing more rewards and offering spirited and fun game play, these people may change their minds.”
This primary research revealed a massive 87% did not use check in services at all.
When asked whether they would participate in order to receive more targeted ads and rewards, 47% said no. The reasons for this stated that people didn’t want to be interrupted while they were getting on with their day, and preferred to find this information themselves in their own time. One anonymous person went as far as saying they thought, “mobile phones are just becoming distractions.” 56% of people were aware that their ‘check in’ becomes a semi-public record. It is perhaps surprising that this was not therefore the biggest issue stopping people participating.
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Is it possible they don’t know what this actually means? If they were informed of the true implications of sharing personal information on these networks would this statistic change? Mike Morgan, Analyst at ABI Research shakes his head at the concept of privacy in this modern day in age. He asks:
“Do we really have privacy anymore? The world knows that privacy is a bit of an illusion nowadays and it really isn’t treasured much if you look at all the young people putting their lives up on Facebook.”
Maybe thanks to the development of social networks, it is possible that a concept such as LBS can be implemented in today’s society without any major setbacks. However, it’s very clear that it will not target all demographics. Younger audiences, who have grown up with Facebook and Twitter will feel networks such as Foursquare and Facebook Places are just another way for them to share their exciting lives with their friends. Those that are older and do not have the same association with social networks may think differently. Dan Butcher writes, “it is becoming obvious that many consumers, especially younger ones, have no problem blasting out their current location to the world.” At the moment LBS has been driven by a “small, albeit, passionate group of techies, geeks and social media people” (Ogneva, M. 2010). It will catch on with those who are already ‘social networking mad’ and is definitely not a medium that will entice everyone.
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CONCLUSION
Advertisings massively successful shift to mobile has been anticipated for just under a decade. The beginning of this new advertising medium was brought by the launch of the iPhone 3, a brand new change in mobile interface and the tight spending budgets of advertisement agencies. Some people doubted this bold move, stating it was simply another rush to be the ďŹ rst to successfully take over a new medium, but mobile advertising has produced impressive results in consumer engagement, making mobile just another essential addition to an advertisement campaign. A mobile App gave the brand a stylish impression and encouraged more engagement between the consumer than any medium has done before. However it can be said that the sudden boom of mobile Apps brought short-lived excitement with people wanting to be part of a new craze. Now that Apps are common and familiar, there is simply a lack of interest. But this does not mean the end for mobile Apps. More and more new concepts are being introduced to bring that excitement to the platform once again. Slowly but surely Augmented Reality is being introduced. This concept combines the virtual world with the real one, allowing you to view the world differently through your mobile camera on your screen. As I write this Converse have released an App that allows you to try on their shoes simply by viewing your feet through your mobile camera. On screen your feet will look like they are sporting a brand new pair of Converse.
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Now advertisers want to see how far they can carry this concept by bringing in new and exciting ways to augment our reality. Charles Arthur, writer for the Guardian shouts, “Augmented Reality: it’s like real life, but better.” Finally, the new implementation of Location-based Services is one with many discrepancies. The prospect of advertisers knowing our preferences is a scary concept to many and several people do not want to be constantly notified about promotions or new products – they will look for it when they want it.
It is clear the notion of privacy within LBS is unaware by many. Once people begin to understand the implications of their ‘check in’ they may think twice before taking part. Will the prospect of promotions on your favourite retailers be enough? The plug for LBS seems to just come from the need to move forward with modern technology, to want to implement all possible avenues the mobile can give without giving its setbacks a good examination.
Once again the ‘blind race to the future’ seems to be an issue, just as it was with the first branded mobile App and when the first brand used Twitter as a form of promotion.
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However these concepts did not have as many drawbacks as LBS seems to have. When conducting my primary research many people were horrified to learn about the consequences of displaying their location and only a very small amount found it a useful commodity. LBS will not be as popular as mobile Apps were, simply because of the cunning way Apps did not come across as advertising and they did not interrupt consumer’s day-to-day activities. It may only reach a handful of social networking fanatics of the younger generation, those that are used to a daily status change on Facebook. Even though the future looks bleak thanks to it’s challenging privacy issues, a report conducted by Juniper Research predicts that by 2014 “LBS could rake in $12.7 billion.”
With projections like these it’s tough to believe every advertising agency won’t want to jump onto this lucrative bandwagon.
However, like many of the new digital concepts that have emerged over the past decade, it wont be long before LBS becomes overshadowed by another bold idea that advertisers will want to experiment with.
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PRIMARY RESEARCH
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33 To give the inforgraphics a closer look please visit: fernandesfolio.com and click on Infographics in the main menu.
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BIBLIOGRAPHY
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Books
Websites
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Viximo Virtual Greats. 2010. Branded virtual goods market report [online] Available at:http://viximo.com/interior/resources/ dowloads/082010-branded-market-pdf [Accessed Aug 2010]
Barocci, R. Hall, T. Plummer, J. and Rappaport, S. 2009. The online advertising Playbook. Proven strategies and tested tactics from the advertising research foundation. New Jersey:John Wiley and Sons. P94-95 Faber, J R. and Stafford, R M. 2006. Advertising, promotion and new media. New York:ME Sharpe. P266-294 Wiedemann, J. 2009. Advertising Now! Online London:Taschen GmbH Krum, C. 2010. Mobile Marketing: Finding your customers no matter where they are. London:QUE Articles Anonymous. 2007. iPhone in depth The Ars Review ArsTechnica Jul. p6 Anonymous. 2010. Planning your next move in Ad land Advertising Age 4 Jan. p1-9 Chang, R. 2009. Mobile Marketing beyond the mobile phone Advertising Age 30 Nov. p10
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Burkit, L. 2009. The best and worst Apps Forbes [online] Available at:www.forbes.com/2009/11/23/best-worst-apps-cmonetwork-branded-mobile-apps.html [Accessed Aug 2010] Butcher, D. 2010. Apple trying to corner market on Locationbased Services Mobile Marketer, [online] Available at:www. mobilemarketer.com/cms/news/ad-networks/6639.html [Accessed Oct 2010 Butcher, D. 2010. Sonic, American Eagle, REI tap LBS to drive foot traffic instore Mobile Marketer, [online] Available at:www. mobilemarketer.com/cms/news/advertising/5497.html [Accessed Oct 2010] Cantone, J. 2008. Companies betting on Location-based mobile ads ReadWriteWeb, [online] Available at:www.redwriteweb.com/archives/location-based-mobile-ads.php [Accessed Oct 2010] Chang, R. 2009. Please don’t build that branded App Business Insider, [online] Available at:www.businessinsider.com/pleasedon’t-build-that-branded-iphone-app-2009-12 [Accessed Aug 2010]
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