Offline/Online Convergence, Mobile Commerce, and Life After Check-ins

Posted on: September 27, 2010
Posted in Mobile, Social, Strategy

Offline/Online Convergence, Mobile Commerce, and Life After Check-ins

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For years, offline merchants have been acquiring data about you in attempts to personalize your experience through loyalty and rewards cards, credit card data, and surveys. But the problem is these interactions occur after it’s too late: at the point of sale. You’ve already checked out and are leaving the store, or have ordered dinner. For a merchant to convince you to add an extra item to your shopping cart, or buy an appetizer with your meal, the interaction must happen sooner.

Online check-ins, as a trend and use-case, have created a remarkably compelling opportunity for offline merchants to interact with consumers who are in the store before the sale happens. When you announce you’re at a store or restaurant by checking into Foursquare or Facebook Places, for example, your experience can be shaped and molded in compelling ways.

This is precisely why check-ins are incredibly powerful—they give the offline merchants an opportunity to shape your behavior before you buy or consume. Unfortunately, check-ins alone provide little value to merchants in the absence of contextual data about you. And checking into a place definitely does not equate to liking it. Imagine how many restaurants you visit, then consciously decide to never return to. Without a feedback loop this context will be used erroneously for future offers and recommendations.

The real power in converged online/offline interactions will come from a hybrid of realtime contextual offers, deals, and advertisements which can change a consumer’s behavior long before any transaction occurs. Recommendations and offers that take into account nearly everything about you as an individual.

This is a why Steve Jobs strategically entered mobile advertising with iAd. Contrary to what Carol Bartz thinks, Apple is thinking way beyond serving brand advertisements within mobile apps. The real potential is about blending offline and online data about you as a person, data that can be transferred across services and devices. iAd is absolutely a secret weapon for Apple to ultimately leverage its micro-payments franchise to influence you at the point of sale. But they could work not just while you’re mobile, but at home as well. Imagine watching rich immersive ads on your Apple TV, which are tailored based on your offline behavior while your iPhone simultaneously knows what channel you’re watching and gives you a click-to-act offer or saves a deal which you can unlock later.

And though Google bought Admob for a simpler reason (to own mobile/online display), it’s clear that their success with Android and momentum with Google TV is driving them toward similar ambitions.

There’s simply no doubt that the offline and online worlds are melding in a way where “ads” will incorporate your presence and behavior across the entire web. Obviously the use of apps and web services on your mobile phone will be the source of a lot of this data. But because apps don’t use cookies like traditional websites do, proprietary layers of data are becoming silo’d inside these individual services and applications.

This is one fundamental reason why you see so many mash-ups and “data threesomes” happening between services these days – there is incredible power in blending silo’d data across web services. For example, say Foursquare reaches beyond check-ins with a recommendation service, while also providing curated offers by tapping into the API of a group buying service. Then imagine this combined data mash-up accessing the API of a mobile payments service like Square to provide not only a discount, but also an integrated loyalty or reward at the point of sale. You get a recommended list of restaurants, check-in with your friends, trigger a context-aware offer, then immediately get a discount and reward when you pay.

This is the future. And ultimately, this creates massive opportunities for companies to enter the fray with great ideas and leverage APIs from other services. Many will end up as commodity layers, but it’s likely that those which play the greatest role in shaping purchasing intent will benefit tremendously from this massive online/offline convergence and acceleration of mobile commerce.

And these trends likely form the underlying strategy for why Facebook is building a mobile phone. They want to become a participant, not just a layer or service, in how this offline/online commerce plays out. This week’s announcement that Target will sell Facebook credit gift cards is another telling sign of Facebook’s ambitions.

That’s why it’s funny when people see Facebook’s push into phones as a basic play to make phones more social. Dan Lyons wrote a silly Newsweek article this week about Facebook not innovating. I believe innovation is alive and well right now, and is likely accelerating. And Facebook’s push into mobile is much more profound than making phones more social – Facebook believes owning elements of the mobile stack will help it leverage its vast social graph to influence offline/online commerce.

And though companies like Facebook and Apple are salivating at the opportunities in this offline/online convergence, so are many startups. TechCrunch Disrupt will undoubtedly mark the arrival of some amazing new startups which are poised to take advantage of these trends as well. We’re on a new frontier of mobile commerce and life after check-ins looks pretty good from where I’m standing.

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