A lot of investors and commenters have talked about local commerce as a key business model for mobile-social services.
In this scenario mobile users will share their location by checking in, and in exchange will will receive coupons or other kinds of discounts from nearby businesses.
In a new research report from BI Intelligence, we look at how this model might not make as much sense as some are proposing. Checking in is not becoming a mainstream activity (see chart) and local couponing experiments aren't working so well.
So, what business model that could work for social-mobile apps?
One answer is social discovery: using social apps on mobile devices to find nearby people and places that are most relevant to what users are doing at that particular moment.
Here are some ways that social discovery could work:
- Contextual relevance: To spur spontaneous purchases from mobile devices, apps must understand information like the user's past buying habits, preferences, tastes, and so on. This is precisely the kind of information users share through social networks and apps.
- Services and experiences, not goods: Social discovery works best for service-based businesses like restaurants, bars, hotels, and event tickets. These kinds of services are open to the sort of last minute spontaneous purchases that users are likely to make on a mobile phone.
- Brand advertising: Brand advertising on mobile devices is a tough prospect -- phones don't support the full-screen interactive ads common on the front pages of popular web sites. But social discovery apps that focus on fun experiences with friends could become a good bed for positive brand associations.
To see the full analysis on how social discovery could work, access our full report and sign up for a free trial subscription of BI Intelligence today.
In full, our report:
- Digs into usage habits of social networking on mobile phones.
- Explains new business models that will arise, with some help from two entrepreneurs in the social discovery space.
- Looks at which companies are best poised to profit from the intersection of these two trends.