Study: 99% of Location-Based Apps to Implement Indoor Positioning Systems

If you build it, they will come. But let’s be more specific: if you implement indoor positioning systems (IPS) in your location-based app, you will be able to get more shoppers into your place of business. Or so this is the thinking of virtually every business and marketing decision-maker behind the development and strategy of location-based apps.

IndoorAtlas, a platform-as-a-service provider dealing in geomagnetic indoor positioning, found that of 301 such decision-makers surveyed, 99% have implemented IPS or have plans to do so within the next two years.

The survey, which was conducted in partnership with the market research firm Vanson Bourne, polled mid- to large-size organizations in the healthcare, travel, transport, marketing, and retail sectors. Conducted last July, the study included input from businesses in the U.S, the UK, Singapore, Hong Kong, and Australia.

“We commissioned this because we wanted to verify our tactics,” said Dan Patton, Chief Commercial Officer of the Helsinki-based company, adding that the regions polled were chosen based on both their reputations for tech-savviness —especially in the field of location-based practices — and areas where English was spoken.

The survey looked at three technologies in IPS: Bluetooth beacon, WiFi, and geomagnetic strategies; the last one being the one that IndoorAtlas was most curious about, given that it specializes in geomagnetic IPS.

“We get between 400 and 500 inbound requests every month from all over world, pretty evenly from Asia, Europe, and America,” said Patton. “It can be difficult to know how many will really convert.”

The survey suggests that more businesses will be seeking geomagnetic deployments specifically as they continue (or start to) invest in IPS solutions: 22% of respondents reported that they were engaged in geomagnetic pilots versus 20% for Bluetooth beacon, and 20% for WiFi.

Why might geomagnetic deployments be gaining traction among location-based marketers? It largely comes down to how narrow one can get in their proximity range.

“Businesses see the need to get down from five meters of accuracy to that one-to-two meters of accuracy,” said Patton.

It’s this level of accuracy that IndoorAtlas aims to provide with its geomagnetic deployment solution. The platform works by using a smartphone’s compass which, Patton explained, programmed to read the magnetic waves of the earth, can also pick up the structural blueprint of a building and its layout. In doing so, the technology can distinguish between stores in a densely packed retail location like a shopping mall or an airport.

“When I think of commercial use cases, its businesses [using geomagnetic deployment] to increase footfall by providing a location-based incentive to go to a particular store,” said Patton.

So, for example, if you’re a business on the right hand side of a shopping center, you can target customers on that side of the complex, Patton explained, while people on the left side of the complex ideally would be served ads respective to where they’re closest. But there’s a problem, and it’s one we see around so many IPS technologies: attribution.

You can prove, with geo-fencing, that a consumer who saw the ad walked into the store offering it. But you can’t prove that they made any kind of purchase.

“To close the loop on [transactions], you need to have access to the store’s POS,” said Patton, who noted that its customer, Baidu, solved this problem by creating a digital wallet. “They can figure out almost instantaneously if the [location-based] promotion is transacted upon via the digital wallet,” said Patton.

Baidu isn’t alone in its advances using IPS. In fact, Asian businesses in general are “ahead of U.S and Europe,” Patton noted when it comes to IPS. They’re especially keen on geomagnetic deployments of IPS because it doesn’t require hardware — an issue that can raise problems around scalability.

“We [consulted] shopping mall owners throughout China and Japan that had tried beacons but to get it to work in as shopping mall they had to install at least 1,000 beacons,” said Patton. “If you own 100, 200 shopping malls that becomes problematic, not so much around cost, but around deployment and maintenance.”

Nicole Spector is a Street Fight contributor.