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Location-Based Apps Not a Winning Proposition for Consumers

Location-based applications such as Foursquare, Gowalla and Facebook Places have not lived up to their promise to drive customers to businesses in droves, according to a new study. Concerns regarding mobile privacy and security are keeping consumers from checking in.

Compounding the problem is a pervasive lack of awareness by smartphone users that such apps exist, a survey by digital marketing agency White Horse revealed.  They found that fewer than 60 percent of respondents knew about location-based mobile apps and just 39 percent used them.

Facebook's entry into the market helped boost awareness.  Facebook Places quickly passed earlier market pioneers such as Foursquare and Gowalla, the two services that introduced check-ins to the world at large. But mass adoption is still a glimmer in the eyes of marketers.

Their come-ons to consumers, including deals and discounts for checking in, are not ginning up much interest.  Most smartphone users told White Horse that social connections were the biggest attraction for location-based apps.

Among those who were familiar with them, 41 percent said connecting to people they knew or could meet was the main benefit, followed by finding places their friends liked (21 percent) and being able to keep track of their movement patterns over time (17 percent).

Just 8 percent thought discounts and rewards were the most important benefit, and only 4 percent cared about the gaming elements of checking in .

Privacy issues are the major concern keeping consumers from adopting these location-based apps.  When Nielsen surveyed U.S. smartphone users last month who had downloaded such apps, at least half of the respondents said they were concerned about privacy.

Marketers have their work cut for them to convince consumers that location-based apps are worth using, according to eMarketer.  They need to come up with ways to make them more relevant while assuaging privacy and security concerns.

And most importantly, there has to be an adequate consumer payback. Becoming the mayor of Business XYZ isn't much of a value proposition for most consumers.

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.

Ned Smith
Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.