Attribution Failures: The Rise & Fall of Beacon Technology

Blog » Attribution Failures: The Rise & Fall of Beacon Technology

As retailers, it is vital to stay in front of the customer at every stage in their journey, but it takes tremendous effort to be top of mind at the time of purchase. The ability to leverage technology to measure the effectiveness of these efforts and attribute value to each phase is paramount, particularly when they switch from online to offline.

Complicating this, the buyer’s journey has become increasingly non-linear; instead of a straight line, buyers zigzag across social networks, review sites, and websites. Brick and mortar, which used to be the primary (and sometimes singular) touchpoint in a buyer’s journey, has been largely reduced to one of many. Retail stores are being increasingly used as testing facilities where consumers go to try on or test out products before ultimately buying online, or alternatively, they will conduct endless amounts of research online looking for the best deals before choosing a store for their final purchase.

Despite this dramatic shift in buyer behavior, 85% of final retail sales still take place in-store, even after factoring in items that are not normally purchased online, such as automobiles and restaurant sales. In-store sales are not going away any time soon, and the pressure to close the attribution gap is growing every day.  

Since the e-commerce evolution began to take shape more than 15 years ago, retailers have been looking for ways to track that journey and find full attribution between online promotions to in-store purchases. Hundreds of tools emerged promising to solve the attribution problem, and O2O (online to offline) commerce has experienced a number of players coming at the challenge from different directions, with widely varying degrees of efficacy.

One of the original promises was beacon technology.

Beacon Technology

History of the Beacon

A beacon is a small wireless transmitter which sends signals via Bluetooth to nearby mobile devices. The devices (generally consumer smartphones) communicate with the beacon, allowing for a number of useful applications discussed below.

Beacon’s history dates to 2013, when Apple introduced iBeacon as part of iOS 7. Not long thereafter, retailers including Macy’s jumped on board, adding small (and eventually smaller) bits of hardware to their stores, enabling communication with customers’ mobile devices, now including Android.

In 2015, Google entered the space with the launch of Eddystone, a platform-agnostic competitor to iBeacon. The failed rollout was emblematic of the problems facing the technology from the start — aside from being downright creepy, it was too difficult to implement for your average retailer, placed too high of a burden on the consumer, and was unable to provide accurate attribution even while synced to Google Ads. Many local retailers that received Google beacons threw them straight into the trash.

Beacon’s initial success was not in its actual functionality, although some businesses certainly profited, but rather in the question it was trying to solve: which online advertising dollars are resulting in in-store sales? With a beacon successfully installed in their location, a retailer could attempt to measure attribution from someone who saw the online ad, then visited the store.

Beacon is also used to capture the attention of potential customers by prompting their mobile devices to display an alert when they are close to a store location. This kind of “proximity marketing” was touted as a benefit for many types of retail businesses.

A beacon also had the potential to be a boon for SEO results if customers posted reviews or other user-generated content, prompted once again by a beacon-delivered message from their device. And beacons allow for so-called “hyper-local targeting,” concentrating marketing efforts on economically significant locations.

The Beacon’s Downfall

A major contributor to the collapse of beacon technology was difficult implementation on both the consumer and retailer side. Beacon is dependent on users having the app for a specific store installed on their phone — with Bluetooth and privacy settings properly configured — in order to work. Convincing consumers to download yet another app proved to be a major hurdle, regardless of how relevant the promotions were.

For most retailers, the expense of developing an app specifically for this technology was prohibitive. For huge retailers like sports venues or big box brands, it was less of a problem. But for many businesses, the cost and obsolescence risk alone made beacon a non-starter.  

Had the ROI been more significant, perhaps we would all be living in a beacon-filled world today. Unfortunately, beacon attribution never really lived up to its promise. Many beacon-based ad platforms charge business owners whenever a smartphone that has received your ad comes within a certain distance of your location. This kind of attribution isn’t all that useful if you are trying to track (and maximize) sales, and it paved the way for cost per visit marketing (CPV) vendors to enter the space. The problem with CPV is that if someone visits but doesn’t buy anything, your beacon-based system will count that a success and charge you for it. (Compare this with card-linked offers, where attribution for actual sales are the key performance indicator.)

Back in 2015, Beacon Technology was showing nearly unlimited promise, touted as “the missing piece in the whole mobile-shopping puzzle.” Some of the prognostications came true for a time, for some businesses. That dream never materialized. Luckily, there’s a new generation of O2O tools, where you only pay when the sale happens, which are helping business owners cash in on the commerce that surrounds us.

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Posted in: O2O

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