Are we on our way to an Internet of Beacons?

Source: Estimote

A lot of people are wanting to know more about these ‘beacon’ things. What are they in the first place? What do they do? And– a question recently assessed by Reveal Mobile– how many of them are already out there??

Let’s start with the basics: Beacons are tiny sensors which, as their name suggests, constantly emit signals of their presence. When another sensor passes, say the ones in your smartphone, these beacons can trigger things to happen. Pass a beacon on the way to the sneakers section, how about a coupon for sneakers? A thousand people [‘s smartphones] move through the store in a given way; store operations might use this information to adjust energy allocation throughout. The use cases are endless… but are the beacons?

Reveal Mobile published research looking at this question– a question many (industry analysts, retailers, and yes even some consumers) are asking: How many beacons are there in the US today? Let’s take a look at the source: 

(Excerpted from Reveal Mobile’s blog post)

“Since June 2014 we’ve been detecting beacons across the globe, but primarily in the United States.  We do this to build anonymized mobile audience data. Our SDK, embedded in over 80 apps reaching over 2M monthly unique visitors, picks up beacon signals, assuming the user opted in to share location and has bluetooth turned on. […] The total beacons that we have detected, located, and classified thus far in the United States: ~64,000.  Of that, we can verify the manufacturer on ~17,000 beacons, or 26.5% of the “known” beacons.”

RevealMobile_BeaconPieChart

(Forgive the error, 7.3% should read ‘Twocanoes’ on the pie chart)

Now, for the 64,000 Beacon Dollar Question

These numbers may be directionally accurate, in terms of manufacturer market penetration, but I believe less so in terms of true volume. As the article points out, tracking beacons [signals] through Reveal’s methodology assumes/requires that shoppers indeed

  1. Have smartphones
  2. Are opted-in to location tracking
  3. Have BLE turned on

That’s a lot of friction to assume accuracy. Also, depending on shopper demographics like age, income, region, etc. this may impact whether a beacon is being ‘counted’ in the study. It’s also worth noting that globally, beacons are only compatible with 1/3 of smartphones, although this may be slightly higher in the US where iPhone penetration is strong.

Perhaps a better metric for beacon count would be #shipments sold across manufacturers, or an aggregate count from beacon management solution providers.

BI_BeaconInstalledBase2014

While to me, someone who looks at the industry, ~64k feels low, even in these early days, data from Business Intelligence suggests it may not be far off. To consumers, this number may seem quite high.

It’s also worth noting many companies (especially B2C companies– for which this methodology only accounts) deploying beacons are still in the ‘experimentation’ or pilot phase. So while these brands (McDonald’s for instance) may be gaining media attention for such deployments, they have yet to roll out the full implementation across multiple (or all) locations.

To Beacon or Not to Beacon: Retailers Seek Guidance

The larger point to derive is that beacons are a technology with which stores are experimenting, yes today. And if we take BI’s compound annual growth rate of 287% (!) as plausible, we can extrapolate that they will indeed become much more pervasive than they are today, and that brands are just laying the foundations for these deployments now.

 All this said, retailers shouldn’t see beacons, or these alleged beacon statistics as an imperative to start sticking little sensors all over their stores. Instead, they should view beacons as a potential means through which to better engage their customers– whether directly through [opted-in] location-based content or offers, or indirectly, through better supply chain management, or by optimizing store layout based on traffic flow or dwell times. Objective first, then technology; not the other way around.

Beacons, Cookies, & Potential for Crumble

Finally, the most important point of all that retailers should consider when it comes to beacons is that of privacy, ‘creepiness’ and the idea of ‘digital ethics.’ In some ways, beacons are like online cookies: little signals and receptors that track individual customers. But unlike online cookies, they exist in the physical world. When I put my consumer hat on, the question I want to know is: How many beacons are already out there that have already pinged me and my smartphone… without me knowing it?

Our research finds that when applying digital techniques in physical spaces, brands must completely re-think how they articulate value and build trust with consumers. This means that retailers must think first and foremost about how they are messaging and informing consumers around beacons, around in-store content or experiences. Without directly addressing how, why, and at what expense and value these technologies enable in-store experiences, retailers risk annoying people, freaking them out, or prompting them to opt-out– which goes against the whole objective in the first place.

 Have you had a creepy in-store experience? We want to hear about it. Creep-avoidance in an increasingly sensor-filled world is the topic of our next research report. Feel free to comment below or email me directly at jessica@altimetergroup.com to share your insights.

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