Quick-serve restaurant chain Sonic, clothing and accessories retailer American Eagle Outfitters and outdoor recreation gear and sporting goods giant REI have all launched location-based mobile marketing initiatives to drive consumers into physical stores.

These brands are using Placecast?s ShopAlerts to deliver location-triggered mobile messages when shoppers enter geo-fences that can be created around virtually any area. The service has been previously tested in trials and Placecast claims that it has already demonstrated promising results for retail marketers across the United States.

?One of the challenges retailers are wrestling with is generating in-store traffic?they are looking to drive traffic into their physical stores, and that is what ShopAlerts is designed to do,? said Alistair Goodman, CEO of 1020 Placecast, San Francisco. ?The platform uses mobile to deliver messages that consumers find relevant and valuable and it actually drives users to physical locations.

?Several retailers worked with us on trials through the fall and holiday season, and the reception was very positive from consumers and the brands themselves,? he said. ?ShopAlerts is a mobile marketing tool that lets retailers extend everything they?re doing into mobile and send out relevant messages based on place and time.?

1020 Inc. is the developer and owner of Placecast, a location-based platform designed to use digital marketing on mobile to drive consumers into physical environments. 

Current partners include Navteq and Alcatel-Lucent. In addition to Sonic, American Eagle Outfitters and REI, brand clients include FedEx Office, Avis and Budget Rental Cars and Hyatt Hotels.

Outdoor gear and apparel giant The North Face Inc. also tapped Placecast to roll out its first-ever location-based mobile marketing campaign this month in New York, Boston, San Francisco and Seattle (see story).

How ShopAlerts works
Sonic, American Eagle Outfitters and REI are leveraging Placecast's ShopAlerts retailer marketing service to engage opted-in consumers with time- and location-targeted text messages.

Each brand can create their own version of the service. Then consumers choose the brands they are interested in, and may opt-in through a variety of ways?at the store, via SMS by texting a keyword into a short code, online, a mobile Web site or social network such as Facebook.

?Clients we?ve worked with are using many different ways to get consumers to opt in,? Mr. Goodman said. ?Any of the established touch points a retail brand already has with a consumer can be leveraged to bring them into the program.?

Once ShopAlerts is activated, consumers go about their day and the service automatically alerts them when they are near a location that they are interested in or when the brand is offering sales and specials.

ShopAlerts works on any phone, which is a benefit for retailers who wish to reach the 196 million Americans who do not own smartphones but are interested in such shopping deals.

What is a geo-fence?
ShopAlerts geo-fences are virtual boundaries that can be targeted via location-based marketing.
Using geo-fencing, the service enables retailers to talk to their customers when they are near a store, shopping nearby, or doing other things they enjoy.

Geo-fences can be created around any location and are set to trigger a personalized marketing message to opted-in consumers entering the defined area on their mobile phones.

Customized messages are created and delivered automatically to shoppers, creating a one-to-one communication channel based on place and time.

Pilot programs
Since September 2009, the ShopAlerts service has run pilot programs across the U.S. with several major retailers including Sonic, American Eagle Outfitters and REI.

Participants in the programs were surveyed with the following results:
 
Sixty percent of participants said that they found the location-triggered messages to be cool and innovative.
 
Seventy-nine percent said it increased their likelihood to visit a store.
 
Sixty-five percent made a purchase as a result of a ShopAlerts message.
 
Seventy-three percent of participants said they would definitely or probably use the service in the future.

Results show close to 90 percent of participants were driven to stores after receiving location-triggered alerts, according to Placecast.

Now, retailers are rolling out larger-scale commercial launches of the location-based marketing initiatives.

Business-to-business
ShopAlerts is designed to work within the existing marketing structure and needs of retailers. The program is integrated into retailers? CRM and marketing programs.

Message content can mirror retailers? existing marketing calendars, current promotions or on-the-fly events opted-in consumers may find relevant.

ShopAlerts is a double opt-in program, so it complies with all the standards and guidelines currently in the marketplace today, according to Placecast.

The call-to-action must make it clear what consumers are signing up for, and they can opt-out any time by texting the keyword STOP, as per Mobile Marketing Association guidelines.

Placecast manages a continuously updated set of location data, with more than 50 million locations in the U.S.

The company does not operate on a CPM or a CPC model, as it is focused on brand retention, not acquisition.

Placecast?s marketing program is similar to a CRM program, with a set-up fee and a monthly fee that is scaled based on the number of users and geographies retailers make available.

Placecast will be testing different levels to make sure consumers find this a valuable service, not intrusive.

A customer has to cross a geo-fence to trigger a message, and the maximum number of messages that a user could receive in a week is three, with at least 24 hours between them.

Retailers can control the frequency, so they can also reduce this number if consumers want less.

?Relevancy targeting can include weather, traffic, demographics or psychographics for a particular area or events going on at a particular time to increase the relevancy of the message being delivered,? Mr. Goodman said.

?Retailers are using this in a variety of creative ways,? he said. ?Marketers are promoting specific items in a store, which could feature a discount code or a coupon associated with it.

?In other cases, brands are extended all of their marketing messages into mobile and placing geo-fences outside of their stores, or in other locations from a stadium or arena to a hiking trail to a beach.?

Location-based services in general are on the up and up, and location-based marketing is especially useful for retail brands with bricks-and-mortar locations.

Due to the retailers? need to drive consumers in-store, location-based advertising has nowhere to go but up.

?Retailers in the U.S. have spent $23 billion driving traffic to their stores if you count all of the different mechanisms they?re using to promote that,? Mr. Goodman said. ?Juniper Research is projecting that location-based marketing will generate $12 billion worldwide by 2013.

?There are a lot of indicators that mobile and location-based offerings have an enormous amount of growth potential,? he said. ?Location a very important relevance indicator for marketers?where we are is a fairly strong indicator of what we might be interested in.

?There will be a lot more innovative programs being offered that are tied to location-based technology.?