Location-based marketing is the next big thing

Over 90% of all web traffic will be video by 2025 in many developed nations. It is already the case in the UK that BBC iPlayer, NetFlix and YouTube alone account for more than 50% of the nation’s web traffic.

Browsing or anything else, – the costs of providing such services are dwarfed by streaming video. Therefore today’s telco business models may be completely broken. Telcos are rapidly becoming one thing: video providers. Data traffic on mobiles will increase 1,000 fold in the next 5 years, on 50 billion mobile devices connected to 5G, running at 10gps. That means an entire high-definition movie will download in less than 3 seconds. So telcos are making every effort to develop new kinds of business, for example, helping corporations run IT services, providing comprehensive data storage, becoming banks, and so on.

The lesson of history is that all successful innovations are copied rapidly, as competitors converge onto the same things. Convergence means that the only way to make your product stand out is on price, since everything else is so similar, and that means a desperate spiral to the bottom on profitability. So expect hundreds of new entrants into the world of telcos over the next few years, all copying things that work well already, and few survivors. Expect one or two to become household names, growing from almost nothing in less than 5–10 years, winning almost entirely on price alone. Expect huge pressures on profits of today’s telco giants as a result.

Location-based marketing is the next big thing in a mobile world, the most important thing to know about any customer is where they are right now, and where they have been. That tells you a huge amount about how they are likely to be feeling and acting, especially when combined with other data we have. Here’s an example of location-based marketing. Coca-Cola has an app that records your favourite drink, and a vending machine that can produce infinite variations to create a customised drink for you.

As you walk around, Coca-Cola can (with permission) see where you are. If you are close to a machine, it tells you. As you approach, it makes the drink, and as you pick it up, the machine charges your phone.

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