Proximity Marketing

Introduction

Proximity Marketing is the practice of using consumer physical location to wirelessly deliver spacial and temporal marketing materials while optimizing communication, consumer tracking, and data collection.  At its core, proximity marketing is any system that utilizes location services to directly communicate with a customers portable devices (smartphone, tablet, etc.).

History

IP Tracking

In the early 90's home use internet became readily available via dial-up. For advertising agencies, this meant the delivery of digital marketing to individual homes based on IP address supplied by Internet Service Providers.  Ads could now be targeted to a specific IP range, or even a specific computer based on location, usually comparable to the size of a postal area.  The main deficiency with IP tracking for marketing purposes was the inability of knowing who was on the other end of the home PC. At the time, most households had one PC for the entire house, and determining which family member was using the PC was problematic.

Mobile Phones

Although Apple is viewed by most as the beginning of Smartphones with the introduction of the iPhone in 2007, IBM had the first Smartphone to market in 1994 followed by Blackberry in 2002.

iPhone image

The color display of the iPhone and concept of Apps made the iPhone an immediate success and a disruptive innovation to the cellular phone market.  This led to the beginnings of location-based marketing. This meant two things:

• The possibility to advertise to an individual based on physical location while moving, and advertisers knew exactly who was getting the information.
• Location-based marketing companies now had a means of segmentation down to a single person...the concept of advertising to one.

GPS & Geo-fencing

The iPhone also introduced the use of GPS (Global Positioning Satellite) for location services for maps, directions, etc. It was now possible to use a device’s precise GPS location to determine device location, thereby locating its owner. This process is known as geo-fencing.  A geo-fence is a virtual boundary that is defined in order to perform a specific response once a device enters or leaves the virtually defined area.

RFID

RFID (Radio Frequency Identification) is thought to have been invented in the 1940's.  The technology uses electrified magnets to automatically identify and track RFID tags attached to objects.  The tags contain electronically stored information. RFID tags are used in supply chain management and asset management.

NFC

NFC (Near Field Communication) enables two electronic devices, one of which is usually a portable device such as a smartphone, to establish communication by within close proximity.

Photo of smartphone contactless payment. Photo by Jonas Leupe on Unsplash

NFC is actually a sub-category of RFID. Nokia was the first to market with an NFC-enabled cellular phone in 2004; however, the first consumer trial of NFC tags would not occur until 3 years later. Samsung and Google jumped into the mix in 2010. In today's market NFC is most notably used for contactless payment systems.

Beacons

Beacons are small Bluetooth devices that can interact with a mobile device. This interaction allows the device to understand exactly where the mobile device is with an accuracy down to 3 feet. The interaction can be alerts, coupon offers, product information, etc. There are two main types of beacon technology; iBeacon (Apple) and Eddystone (Google). These devices are deployed everywhere from shopping malls, museums, restaurants, and sports stadiums.

Technology

RFID

RFID (Radio Frequency Identification) are small electronic devices that consist of a small circuit board (chip) and an antenna combined into an RFID tag.  A tag typically is capable of carrying 2 kilobytes of data. The tags contain electronically stored information. Passive tags collect energy from a nearby RFID reader's searching for radio signals. Active tags have a local power source, usually a battery, and may operate hundreds of yards from the RFID reader. The RFID device can act like a bar code or a magnetic strip on the back of a credit card. RFID tags have a unique identifier for each tag.  Similar to a bar code or magnetic strip must be scanned to get the information, the RFID device must be scanned to retrieve the identifying information; however, the tag does not need to be within direct line of sight of the reader, so it may be embedded in the tracked object and multiple tags can be read at a distance.

NFC

NFC (Near Field Communication) is a short range wireless communication that uses magnetic fields to enable communication between two devices when touched together, or brought within < 2 inches of each other. NFC devices are used in wireless payment systems, similar to those used by credit cards. NFC is used in social networking for items such as contacts, photos, or videos; And is commonly used for electronic key cards as well as wireless battery charging.

Beacons

Beacons are small BLE (Bluetooth Low Energy) devices used similar to a localized radio transmitter.  Each beacon transmits four pieces of information:

• Unique Universal Identifier (UUID): The beacon’s general information and unique identifier.
• Major: the beacon’s spatial information, generally a location.
• Minor: a more detailed or minute information.
  
• TX Power: The strength of the signal that is exactly 3 feet from the device. TX is used to determine proximity or distance of devices from the beacon.

This information is broadcasted several times each second within a short range (< 3 feet). Beacons are made up of three components: a radio, a battery, and a CPU (Central Processing Unit) embedded on a small circuit board. The Unique ID of a beacon is broadcast to a receiving device (smartphone), then software on that device interacts with the content being broadcasted by that individual beacon. There are two main corporations in the beacon market: iBeacon (Apple) and Eddystone (Google). iBeacons are narrowly focused on communicating with IOS devices; whereas, Eddystone is an open platform designed for flexibility.

Security & Privacy

Although security and privacy concerns are ever-present, most location-based sensor manufacturers have deployed measures to mitigate the items identified below.

RFID

Generally an unencrypted RFID tag can pose a security risk in that it broadcasts its UUID which can enable the tag to be detected by any reader that can decode a radio frequency signature. If there is no association between the tag's UUID meaning without accessing the back-end database, then the relationship between the tag's UUID and the objects that they represent pose no privacy issues.  Most RFID implementations use unencrypted communications for various reasons. Due to this open communication, the main security/privacy concerns are spoofing, eavesdropping, and cloning. Since RFID tags can be attached to nearly anything, the possibility of reading personal information without consent raises serious privacy issues. This has resulted in specific standards developed to address these privacy and security issues.

NFC

Similar to RFID, a main security/privacy concern of NFC is eavesdropping - third party intercepting of signals sent between two devices.  This can be done between two smartphones or between a smartphone and a contactless payment device. In the latter scenario, the third party may gain access to a user's personal credit card information.  Another security/privacy risk is data manipulation. This can occur when a third party intercepts the communication being sent, alters it, and sends it to the original recipient. The information the receiving party gets may be corrupt or modified, and is generally used for malicious activities.  NFC security standards cover communication types and data exchange formats, and are largely based on existing RFID standards.

Beacon

Since most beacons are open communication and location static, the major risks to security/privacy are spoofing and piggybacking. Spoofing a beacon involves cloning a legitimate beacon ID to deliver malicious or false content. Beacon piggybacking is when a third party attempts to find what the beacon ID's are in an effort to use your beacon infrastructure for malicious purposes.

Uses

RFID

In general, RFID is used for asset tracking/monitoring.  RFID tags are used in many industries. RFID tags can be attached to any item in assembly line production to track its progress.  A common occurrence is RFID microchips in livestock as well as domesticated pets. Such microchips have also been used for humans for such things as military identification (electronic dog tag) or access to specific locations within a building. Here are some other examples of RFID usage:

• Pharmaceuticals tracking in warehouses as well as hospitals
• Clothing inventory
• Supply chain management
• Interactive marketing
  
• Inventory tracking
• Real-time location tracking
  
• Access Control
• Attendee tracking
• Libraries
• Laundry/Linen tracking

NFC

NFC works similarly to RFID, although NFC has a much shorter range.  This requires two devices to be within inches of each other in order to communicate. In today's modern society, NFC is commonly linked to mobile contactless payments initiated by a smartphone and wireless battery charging of smartphones. NFC is closely linked to Bluetooth functionality; however, it is general a faster communication. Here are some other examples of NFC usage:

• Keyless entry
  
• Contactless payment
• Embedded advertising
  
• Smart business cards
• Sharing content (photos, videos, contacts, or files)
• Custom program NFC tags

Beacon

Beacons use BLE proximity sensors to communicate with a compatible smartphone or tablet app or operating system. Beacons can be used to determine a device's physical location, track potential customers, or trigger actions based on the device location.  Beacons can also be used as an map for location idenitification, which helps smartphones determine their approximate location or context for a specific time.  Here are some other examples of Beacon usage:

• Track customer movement within a store
• Send targeted coupons
• Attract customers to a store
• Improve conversion rates
• Loyalty programs
• In-store map
  

Data

RFID

RFID data collection is limited to the information stored on an individual RFID tag.  RFID tags broadcast information and do not store information locally on an individual tag. In addition, RFID scanners can also associate location of a specific scanned tag.  In most instances, more complete information is stored on a back-end database where each UUID is associated with descriptive information.

NFC

Similar to RFID, NFC tags are broadcast only.  NFC tags are programmed to perform a specific task.  In terms of contactless payment, credit card information along with a unique transactional CVV is transferred at the time of purchase.  This unique CVV is for one-time use and is associated with a specific phone and transaction to avoid fraud.

Beacon

Beacons alone can only collect location data.  This alone is a great benefit because it provides the ability to collect location-based data that allows brands to track in-store or at-event individual behavioral data.  It also provides insight for popular (least popular) areas which assists with staffing.  When beacons are tied to a mobile app, especially one that asks for social authentication, the amount of personal data a beacon can collect is exponentially increased.

Trends

In the 2002 Sci-Fi film Minority Report, which was a futuristic look at the year 2054, personalized digital marketing occurs as electronic billboards identify consumers via retinal scans and offer sales based on purchase history.  In 2016, Clear Channel Outdoor Americas announced that they have partnered with several companies, including AT&T, to track people’s travel patterns and behaviors through their mobile phones.  They will be able to conclude who is looking at their billboard not with retina-scanning cameras, but by aggregating the data collected by several partners and location data from your telephone.  This will allow ClearChannel to determine the average age, gender and perhaps spending habits of the traffic around their billboards, allowing them to place more targeted ads.  Digital billboards in cities will become more like web banners, changing depending on the traffic.

The global bluetooth beacon market size is expected to reach more than $55 billion by 2025, with more than 450 million beacons deployed. The introduction of next-generation software-based and virtual beacons are expected to boost the market demand.  The key factor driving the industry growth is the increased number of applications powered by beacons.

Growing integration of beacons in cameras, LED lights, point of sale (POS) devices, digital signage, and vending machines is expected to propel the industry growth moving forward. Apart from retail applications, beacons are also projected to become a commonplace for industrial applications.

Industries are increasingly shifting toward the incorporation of beacon solutions from conventional proximity solutions including Wi-Fi and RFID.  Assets based on RFID, and people tracking systems have currently captured a significant revenue share in many industries.  The relatively low cost of beacon solutions is a major factor in current and future adoptions.