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August 11, 2010updated 19 Aug 2016 10:05am

Is location-based advertising the future?

Mobile start-up promises advertising revolution, but what are the implications?

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Advertisers have always sought better ways of targeting consumers, but now a start-up company is promising to give them a way to target prospective buyers while they are actually holding the potential purchase in their hands. Soon, you could be sent advertising messages each time you pick something up off the shelf.

CheckPoints, which has just been given its first million in funding by its very founders, brothers Mark and Todd DiPaola, is an advertising and rewards system that could make popping out for a bit of window shopping a rather different experience.

"There are two sides to our business model," CEO Mark DiPaola told me. "For advertisers, it is a product discovery and connection engine, enabling advertisers to reach any consumer, in any store, while they are actually in an aisle with their product in their hands. This is a quantum leap forward for advertisers."

"For consumers, it gives them the ability to ‘check in’ at different locations and scan the barcodes of different products to earn ‘CheckPoints’ which they can redeem for real rewards at the CheckPoints Reward Store, for example airline miles or gift certificates," DiPaola said.

So how does it work?

When the scheme goes live in the US in the Autumn, with other countries to follow, users will be able to sign up at CheckPoints.com and download an application to their iPhone or Android smart phones. Then, CheckPoints will alert them to promoted items near to their location (using the GPS sensors in their phone to know where they are) that could help them earn CheckPoints.

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All the consumer then needs to do is find the relevant store (with the help of a map on their phone) and scan the barcode of that item. They don’t need to buy the item, just to pick it up to scan its barcode, in order to earn some CheckPoints. But here’s the crucial bit: as soon as the consumer scans that barcode into their CheckPoints account, the advertiser of that item is able to send them a personalised message to encourage them to actually buy it.

shop window

DiPaola hopes that advertisers will try something a little more inventive than just sending them a message akin to, ‘You’re holding it, now buy it.’ Instead he hopes they will opt to encourage that consumer to visit the brand’s website or Facebook page, perhaps be shown a chart to help them choose the right size or flavour, or simply just a ‘Thanks for looking’ type message. Of course there is potential here for more sophisticated communications, such as ‘Not sure about this purchase? Speak to a BrandXYZ operator live now to have your questions answered by clicking here.’

One obvious question is what will stop canny consumers simply scanning every listed item in a Walmart store, for example, to earn maximum CheckPoints without spending a cent. "It comes down to human behaviour," says DiPaola.

"I am certain there will be some people, who own a $500 smart phone, who have nothing better to do than go to Walmart and scan cereals all day," he said. "But our guess is that some people are suggestible, who scan a bottle of Tide in the cleaning aisle and then think, ‘aha, I do actually need some laundry detergent’ and then buy it. Will it happen every time? Absolutely not. This is a product discovery and connection engine. You can’t get them to buy everything listed that they don’t need, but you have this unique connection because you can talk to them while they are actually standing in the aisle holding the product."

What about the potential to more actively target consumers – perhaps sending them an alert as they pass a particular store to say they can earn some CheckPoints on a product in that store? "Are we going to alert them to offers [near to them]? Yes, that feature is coming, but it will be completely optional," DiPaola said. "I am sure some users will be pleased and delighted by the idea and some will be creeped out and terrified, which is why it will be purely optional."

Security fears?

I’m not nearly as worried about CheckPoints as I am about the social networking sites such as Foursquare, Loopt, Gowalla and BrightKite that encourage users to tell their networks of ‘friends’ where they are, enabling their location to be mapped to within a few feet.

It’s far more obvious to users in the CheckPoints case that they are joining a scheme that could be used to advertise to them, with their consent, based in part on their location. It’s a far cry from the possibility of a 16-year old or younger Foursquare user adding a status update that says they are at home on their own.

"If you want to tell the world that you are in a park on your own, which I wouldn’t recommend, you could use Foursquare for that," says DiPaola. "We are not that sort of a tool."

If the idea of people scanning barcodes in order to accrue CheckPoints sounds a little far-fetched, it’s worth noting that Mark and his brother Todd DiPaola have something of a track record in this space; they created performance marketing agency Vantage Media in 2002 and sold the company for over $150m in 2007.

What about that familial relationship: competition doesn’t seem to have done much for Ed and David Miliband’s relationship according to reports, and Mark and Todd are CheckPoints’ CEO and President, respectively. "If you should never work with family or animals, I’m hoping two negatives make a positive," says Mark DiPaola. "Because I also take my dog into the office every day."

It will be interesting to see how the scheme works in practice. Because of course there’s a simpler way for advertisers to speak to consumers when they actually pick a product up off the shelf: they could always write something appealing on the box.

 

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