GPS-Based Mobile Ads: Where Does Privacy Fit?

Just as in real estate, the mobile world is increasingly realizing the value of location, location, location.

But while the housing market wrestles with woes stemming from the subprime mortgage implosion, vendors of location-based services (LBS) for messaging, marketing and advertising are struggling to overcome their own obstacles.

Chief among these is consumer privacy in a highly connected and always-available mobile environment. Wireless carriers already know, more or less, where their subscribers are. Now advertisers are getting the tools to easily piece together a profile based on mobile Web surfing and online activities from increasingly powerful Web-based phones. Not surprisingly, many consumers aren't thrilled at the prospect.

"Most people surveyed view mobile advertising as creepy," said M.J. Nash, chief strategy officer at LBS applications developer WanderSmart. In Japan, for example, a large number of people consider onboard GPS technology and tools as downright invasive, she said yesterday while speaking on a panel discussion here at Mobile Internet World in Boston.

Mobile Location-Based Services on the Move

The pin marks your spot.

Consumer mobile location-based services first became available two to three years ago as the performance and cost of mobile handsets—especially smartphones—made it feasible to launch mobile information services that used location data. The iPhone, and all the clones that sprang up after its introduction, accelerated adoption.

eMarketer estimates there will be over 63 million location-based service users worldwide this year, and 486 million in 2012.

“Consumers have discovered that the appeal of location-based services extends beyond pinpointing locations, businesses and other points of interest,” says John du Pre Gauntt, senior analyst at eMarketer and author of the new report, Mobile Location-Based Services. “Buddy beacons and friend finders based on location-based service technology allow mobile users to determine each other’s physical location.”

Not surprisingly, marketers, too, are interested in mobile location-based services.

“Connecting with consumers at the last three feet of a transaction is the holy grail for advertisers,” says Mr. Gauntt.