Thursday, May 27, 2010

Too Much Hype over Location-Based Services?

Chris Treadaway is founder and CEO of Lasso, a "hyper-local advertising platform for media outlets and small businesses." He was recently on a panel in Austin, Texas with Gowalla CEO Josh Williams, where he may have seemed like a buzz kill to many in the crowd.

Chris tells his story in a post on Mashable titled Are Location-Based Services All Hype? As an avid user of Foursquare, Brightkite and to a lesser extent Gowalla (and the quasi-aggregator Check.in), you might be surprised to hear that I tend to agree. Not that the concept is hype, but that the potential for monetizing it is hype.

In his commentary he offers some metrics that we don't see today, but that can provide real-time (or near-real-time) feedback on how location-based applications are being used:

  • Percent of Active Users: What is the percentage of users who have checked in during the last day? The last week? This will give us an indication of utility and/or fatigue.
  • Revenue: Exactly how is all of this translating into revenue? For the LBS app companies? For brands that advertise? For local businesses?
  • Average Number of Checkins Per Day: How often do people check in? Is this derivative metric improving or declining? This will tell us about the value proposition of checking in for the average consumer.
  • Time Spent in Application: What is the average time spent per day inside the application per user? This informs the market about the experience consumers have with the application and how well it captures users' attention.
  • Percent of Users Who Have Been Inactive Over the Last Month: How many people installed a location-based app but got tired of it and now no longer effectively use it?

While I don't agree with some of his assertions about what motivates people to use these services, the article is a good read from someone who is in the industry and trying to survive off it.

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