Indoor mapping has the potential to become a big business. ABI research projects that indoor maps and location services could net $2.5 billion by 2017. That’s a little over 6% of the $38.1 billion BIA/Kelsey projects for total local digital spend in 2016. But it’s early days and big questions are still looming — particularly regarding Apple. A little over a year ago, the tech giant decided to close off iOS’ wifi API — the data most companies use to determine a user’s position indoors. This was a major hit to a number of startups like British Columbia-based Wifarer that had spent the past few years building Wi-Fi positioning solutions for venues.
Street Fight recently caught up with Phillip Stanger, Wifarer’s CEO, to discuss why indoor location matters for marketers and how startups can navigate around Apple’s obstruction.
Many folks in hyperlocal still struggle to understand how outdoor geolocation works. Give us a short explanation about how Wifarer finds a user’s position indoors.
Fundamentally, we use the Wi-Fi information that comes to the mobile phone — particularly how loud we hear an access point and the unique ID of that access point. Once we aggregate that data with all the other access points in that area, it gives us a fairly accurate idea (what we call a radio frequency fingerprint) of where the person is, down to 4.5 feet. From there, we do a lot of other things to the data to really drive value.
With outdoor location advertising still in its infancy, why should marketers care about indoor positioning as anything more than a novelty?
Let’s look at at two key facts. Eighty percent of all time is spent indoors and nearly all purchases are made indoors. Those two facts alone indicate that indoor positioning could, and should, become a much more higher-value item than outdoor — simply from the basis of marketing and sales. It’s far more important to influence or encourage a sale where a transaction can occur than when someone is three miles away. If you can start to add some contextual information about products and enticements (coupons, rewards, etc.), they become a lot more valuable when you’re right in front of a product with the ability to purchase at that moment.
Explain what’s going on with Apple, and how its moves are affecting the indoor location industry.
When we first launched, the Wi-Fi information which we use to determine location was readily available on iOS. It provided a wonderful service for iOS apps, providing very solid, reliable service. Due to some policy change about a year ago, they removed it from the normal stack that developers can access, relegating the data to a separate stack, which requires special permission to access.
That seems oddly reminiscent of the lead-up to Apple getting into the outdoor mapping game. Any guesses on the company’s motivations?
Apple, of course, marches to it’s own drummer and they’re not big on divulging information. But I can make a guess: Indoor positioning is very valuable, so a lot of manufacturers are eying the service as a potential opportunity to build in-house.
But I would argue that [the nature of the market] makes this difficult. It’s important to realize that there’s a fundamental paradigm shift between outdoor locating and indoor locating. Nothing prohibits an operating system (OS) manufacturer like Google from putting a camera on top of a car and [driving] down every street, in every city, in every country to map the world — that’s possible and perfectly legal. But as soon as you go indoors, where someone actually owns the property, issues arise. Property owners are going to have something to say about it because what you — as the manufacturer — are able to do at that point is remove the venue owner’s ability to control the monetization, user experience, and branding of its property.
Wifarer and others have taken a software-as-a-service model, building maps for individual venue owners. What’s stopping Google, with its extensive mapping resources, from dominating the space?
Much of the above. Google’s indoor positioning system has been live for a year now, and they’re not in any of the major shopping centers — not Westfield, not Simon not General Growth Properties (GGP). I know they’ve had conversations with these folks, and the upshot is that until they can give monetization control and branding control back to the venues, the venue owners are not interested in having them. I’d argue that would be the same situation in which any of the OS manufacturers would find themselves.
So how big is this opportunity?
The size of the market is open to conjecture, but it’s obviously a multibillion-dollar one. ABI research put it at $2.5 billion in two years’ time. Other research companies have put it even higher. I’ve seen projections anywhere between $2.5 billion and $14 billion.
What’s the big story for this industry over the next 12-18 months?
Essentially you have these different kinds of technologies that are all trying to do the same thing and skirt the same issues. When you look at the different solutions, it comes back to the questions of scalability. When you’re talking about special light bulbs for positioning, you have to ask: How scalable is that? Or Bluetooth stickers, again how scalable is that? Or the idea of network-based hardware. What’s the cost to the consumer?
The technology is one thing, but the hindrance from folks like Google and Apple is something else. As far as growth is concerned, we’re waiting on Apple. If iOS begins to provide Wi-Fi information to developers, the thing will explode quickly. But until then, there’s a little bit of treading water going on because the non-Wi-Fi solutions, which do not have the iOS problems, aren’t fundamentally scalable or are less than optimal for users. The most optimal one, Wi-Fi, has to wait for Apple to come around.
Steven Jacobs is deputy editor of Street Fight.