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LocalResponse Turns Check-Ins Into Targeting Tool

Written on
May 10, 2011 
Author
Gavin Dunaway  |
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LocalResponse Turns Check-Ins Into Targeting Tool

locationADOTAS - LocalResponse cofounder and CEO Nihal Mehta may be having déjà vu. Back in 2001, he re-imagined the SMS component of his consumer-oriented online city guide Urban Groove, which was hit hard by the doctom crash, into a B2B offering – IPSH, the first full-service mobile marketing agency, acquired by Omnicom in 2005.

More recently, Mehta teamed up with Kathy Leake and Michael Muse to give Buzzd — a consumer-oriented, check-in-aggregating mobile app informing users of the most active locations on the city grid — a B2B-focused rehaul. The resulting service is LocalResponse, “a one-stop shop for aggregated check-ins,” he explains.

Launched in beta last month, LocalResponse offers merchants a relationship management platform that aggregates 1 billion explicit or implicit check-ins from a multitude of social resources — only 5% of those (the explicit kind) comes from check-in king Foursquare, while the vast majority (the implicit variety) are deciphered from Twitter through natural language translation technology. On the platform, merchants can filter consumers by those currently active and the most active over time, and then send them messages via Twitter.

The LocalResponse crew also promised a brand advertising service, and today it has arrived:

Say you’re going to the gym a lot, and you want people to know it (gotta encourage them to check out your improved physique) so you tweet about it constantly: “Just benched 200 lbs. at [Local Gym]!” Through using the LocalResponse check-in aggregation platform, the gym notices your activity. As a full-service ad network, LocalResponse hooks up an appropriate advertiser. A tweet from the gym (but arranged by LocalResponse) directed to you suggests you might enjoy a cool-down smoothie from the chain health bar down the street – you know what? Here’s a coupon for the new Citrus Cruncher.

“Consumers don’t know what LocalResponse is or how it’s involved because the tweet comes from the business,” Mehta comments. “By disintermediation, we’re bringing back the brand-consumer relationship.”

In effect, advertisers are using the “check-in as a proxy for behavioral targeting,” he says. Call it the next step for social monitoring platforms – immediately employing check-in data to drive conversions. Advertisers can further pinpoint audience through demographics, time of day and/or Klout reputation score. Offering a discount is just one approach; as a turnkey ad service, LocalResponse can assist with numerous paths to conversion.

Beta testing with two companies drew click-through rates of 60%, a high number that Mehta equates to the “novelty factor” of the new service – many tweeters initially find it neat to see they’re being noticed by the merchants they frequent (while some consider it stalking…). CTRs of 25% to 40% as well as offer redemption rates of 30% to 50% are more realistic. Also, because the ads come across like part of a conversation, they “drive more followers for both the brand advertiser and the merchant,” Mehta claims.

To avoid consumer ire, Mehta explains there’s a self-regulation system in place that allows users to report spam and opt out of the advertising (1% did in beta testing). However, consumers may also opt in to further offers. In addition, LocalResponse employs frequency capping so merchants can only send a particular user one direct tweet every seven days. A user will receive a maximum of one message from a brand advertiser daily.

While the offering is initially priced on a cost-per-click basis of $1 to $5, Mehta imagines the frequency capping may open up the door to a bidding system – one chain coffee store might be willing to pay more to offer a coupon to a consumer at a rival’s shop.

Cofounder Kathy Leake’s name should sound familiar – she was also one of the minds behind social targeting stalwart Media6Degrees, where she served as chief revenue officer. Last week she officially joined the LocalResponse executive team as president, where she will attract brands to the ad platform.

“Kathy helped put social targeting on the map, and she’s here to do the same with a new form of marketing,” Mehta says. “We want to make sure we deliver real value – an ad so well-targeted it becomes content.”





Reader Comments.

LocalResponse founder Nihal Mehta is speaking Thursday at the Geoworld Summit in New York:

http://geoworldsummit.eventbrite.com/?discount=LocalResponse

Posted by Peter Verkooijen | 3:27 pm on May 10, 2011.

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