Yahoo Finance I spy: Beacons being used by stores to deliver deals in exchange for tracking you
Michael Cohen knows it’s here somewhere.
The director of development for Air Miles and I are pacing the aisles of a Rexall pharmacy at the corner of Toronto’s Queen St. and University Ave., peering behind stacks of toilet paper and pushing aside bags of chips like two kids looking for treasure.
“It should be about waist high because most people keep their smartphones in their purses or pant pockets,” he says.
I’m looking for a bug – the spy kind. I picture a miniature radio the size of a button with a spindle of wires. To be honest, I’m not quite sure what I’m looking for but the button-sized radio is my best guess for what a beacon looks like.
Here’s what I do know: I know a beacon is a low energy Bluetooth device, capable of pinging information to any smartphone with the app associated with that beacon and I know that the Rexall we’re in is part of an Air Miles pilot phase (which also includes Staples). They’re testing the use of the technology as a way to send its members customized, location-specific deals when they walk through the doors.
“Here,” Cohen says, pointing my attention towards a blue nub perched high on the wall next to the speakers. It looks like one of the “expert level” grips at a rock climbing wall. “Apparently they were experiencing interference so they had to place them higher.”
It’s unassuming. It’s also the crux of Air Miles’ latest foray into mobile and they’re banking on these little beacon guys to help them deliver the goods, “relevant deals to an increasingly mobile membership.”
Air Miles has seen a 31 per cent year-over-year growth in active mobile collectors over the past three years.
“We’ve had 1.6 million downloads of our mobile app with 500,000 collectors on a monthly basis,” says Emmie Fukuchi, vice president of product development for Air Miles. “The consumer has their phone with them 24/7 – it’s a key channel for them to interact with us.”
For Air Miles, making the experience as simple as possible is vital. For mobile collectors with the app and push notifications/location services turned on, walking in the store will get them a quick welcome notification followed by four to six deals from partner brands.
“It’s really lightweight – they can easily swipe right or left to see which offers are relevant and then save them,” says Fukuchi, adding that once the customer gets to the cashier they scan the deal barcodes and the customer’s membership card, which are all contained within the app. “The beacon doesn’t necessarily know who you are but our app knows who you are so that’s where we layer in a personal element.”
Tracking technology raises privacy questions
Air Miles is by no means the first to use beacons for proximity marketing. Apple introduced the iBeacon feature and software update to iPhones and iPads in late 2013, and retailers like Macy’s and American Eagle started rolling out pilots of their own.
But like any new technology, you don’t know how it’s going to be used until it’s being used. Any tech that works in conjunction with a smartphone – a treasure trove of personal information, movements and analytics – is bound to send a few security and privacy shivers down any digitally-literate consumer’s spine.
“From an individual device point of view the security concerns are pretty minimal, it’s a fairly simple protocol and all simple systems are better than complex ones,” says Stephen Marsh, an assistant professor at the University of Ontario Institute of Technology whose research looks into the phenomenon of trust for computational systems.
Marsh started toying around with beacons shortly after they came out, using them for novel things like sending push notifications when students walk past his office. He points out that the beacons themselves don’t collect data, they just ping it out to anyone nearby with the app much like a billboard or subway advertisement.
“It’s an opt-in system, so once you’ve opted-in and downloaded the app and said ‘yes, I’m interested’ you should be aware it’s possible to know that you are who you are because you keep using the app and walking past these beacons and your app keeps interacting with the device in the cloud and so on,” he says. “There are privacy implications.”
With Air Miles, whether you use the app or physical card, the program is already going to have analytics on where and when you use and collect miles so really, the beacon program just sticks to the status quo. But the use of technology like this raises a bigger point about the growing inclination to trade privacy for deals says Marsh.
“You’re selling your privacy,” he says. “We all do it and that’s okay but we just need to understand that we're doing it.”
But there is a line, as the U.S. Federal Trade Commission showed in April when it flexed its muscles at Nomi Technologies. The FTC accused the company, which uses the 12-digit media access control unique identifier on mobile phones to track the time customers spend in stores, of not informing customers they were being tracked and misleading customers that they could opt out of the program at the store when they were actually only able to do so online.
The abuse of trust is what worries Marsh.
He admits that at least with Apple’s iOS (which he’s more familiar with) when you install an application on the device it asks you for permission to access location based stuff.
“The problem with it is it’s a fairly blunt instrument, when you say yes to location based stuff you’re basically saying yes to the beacon, to the GPS, to the WiFi – to all that kind of information being sent to the app or used by the app and you have no control over which bits,” says Marsh. “At the moment location based services are, in my own opinion, not properly configurable for individual use.”
But when pressed as to whether or not the average consumer has the digital literacy to really know the difference Marsh points to a broader trend.
“I think there’s probably a bit of fatigue of getting asked if it’s okay if the app does this or that or if you trust an app,” he says. “People just tend to say ‘yes, otherwise why would I have installed it?’ – because they just want to get rid of (the notifications) and get to the deal.”
A recent poll by Gallup found that 44 per cent of millennials trust that businesses are keeping their personal information private most or all the time.
“Private companies like apple are building encryption into their messaging applications and the governments want to get rid of it,” says Marsh. “The private industries seem to know what consumers want better than the government does – if that’s the case then people are going to go that way.”
As for beacons, Marsh likes the fact that they don’t store any customer information.
“It’s possible to use them in novel ways and I’d like to see that expand,” he adds. “But there’s money in them and we know if there’s money and analytics to be (gleaned) from using beacons then their use by retailers will grow – and millennials are more likely to share.”
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