What Is the Future of Proximity Marketing? (emarketer.com)

Retailer uptake of new proximity platforms will be limited to small-scale tests in 2014.

Embattled by stiff online competition, brick-and-mortar retailers are looking to the internet for inspiration to improve the in-store experience. Online cookies, pixels and social logins track the shopper across the web, offering insights that ecommerce sites in turn rely on to advertise and merchandise effectively. A slew of new proximity platforms offer comparable tools for brick-and-mortar retailers, according to a new eMarketer report, “Proximity Marketing in Retail: Can Ecommerce Tactics Revive Brick-and-Mortar?”

Although aspects of proximity marketing—targeted marketing with a geographic radius of roughly 100 meters—have been in place for nearly a decade, the field is still new enough to make it extremely difficult to forecast. Its uptake depends on two overarching factors: retailer interest and consumer acceptance.

Right now, the only thing that everyone agrees on is that 2014 will be filled with small-scale tests to see whether the latest generation of proximity platforms can significantly improve the shopper experience and the retailer’s bottom line. Beyond that, opinions are split. On the bullish side, some foresee a radically transformed environment in which the world is, in essence, a personalized and interactive catalog to be browsed and shopped with a smartphone or wearable device. At the other end of the spectrum are those who expect the widespread testing of proximity platforms to show them unready for scaling and hampered by fragmented services, operational complexities and consumer reservations about privacy.

Although cautious about beacons, David Edelman, partner and global co-leader of the digital marketing and sales practice at McKinsey & Company, is bullish on how the whole range of proximity platforms could transform commerce. In an April 2013 article he co-authored, Edelman described a future in which any object, or even any advertisement, could trigger proximity marketing and direct-response mcommerce. Notably, though, this scenario could help manufacturers and ecommerce players reach consumers directly while potentially bypassing brick-and-mortar retailers.

Proximity platforms could also transform digital out-of-home, or even traditional billboard marketing. iSIGN’s Bluetooth- and Wi-Fi-based product already can send rich media to phones in conjunction with signage, and it requires no preinstalled app. Other possible applications abound. Bus stops, sporting arenas and events are all areas where beacons or even near field communication chips could create multichannel campaigns outdoors, essentially turning a poster with a beacon into a palpable real-world portal into the ecommerce realm.

On the other hand, operational complexities and opt-in requirements could stall widespread marketing via beacons for years. Without the infrastructure to link CRM systems to planograms, large retailers won’t be able to provide a user experience notably different than what’s possible through existing digital media. With all of the challenges around data integration, the huge task of fully integrating planograms, inventory and CRM may take a backseat. A December 2013 survey by ExperianData Quality showed geolocation data as a relatively low priority for data management decision-makers in the US and key European counties, with only 20% of respondents listing it as the most important data priority.