Presence Marketing: GPS vs. Active RFID?

There are several location-based service (LBS) applications, such as Loopt and Mapquest's FindMe. These are based on GPS, and focus on finding friends, restaurants, and other points of interest in the vicinity of a person.

There is another very compelling location-based application which can be best described as “Presence Marketing.” Presence Marketing identifies the presence of customer within a retail store, and also tracks the shopper's behavior to enable a brand company to market directly to its consumers within a physical retail environment. The question is: what is the best technology to implement Presence Marketing: GPS vs. Active RFID?

For Presence Marketing to be effective two important concepts need to be implemented. The first is “Presence Identification”, that is the identification of a customer upon entry in a physical retail environment. The second is “session-metrics” defined as the shopping pattern of a customer in a physical store including time of entry/exit, departments visited, time spent, products tried. And the technology which can best satisfy these two concepts would be ideally suited for Presence Marketing.

For GPS-based phones to implement presence identification the perimeter of every store in a map would need to be defined as a polygon of geo-coded x,y coordinates. This creates what is called a geo-fence for every store in a mall. In order for a GPS based system to know when a customer entered a store, that is, entered the perimeter of a geo-fence the GPS-based phone would have to constantly send its location to the carrier -- the carrier in-turn would send it to the application server which would see whether the geo-coded location falls in the geo-fence. This method has several drawbacks: firstly GPS and even assisted GPS (AGPS) which most of the GPS-enabled phones have implemented does not possess the accuracy to know whether a customer is within a small geo-fence of a specialty store like Coach or Cache. Secondly the phone would need to constantly send its X,Y location to the carrier. For this the GPS chip would be constantly active and would drain the phone battery very rapidly. Finally the carrier would impose a service charge for relaying the location of the customer to the application server constantly – and this charge, however small per request, would add up to be a significant cost. Outdoor LBS applications such as Loopt or FindMe send very few requests because they only do so when the user initiates the request.

An active RFID system installed at the entrance of a retail store would be able to conclusively identify a card carrying customer upon entry. The customer would not have to remove her card from her wallet -- the read range would be adequate. In order to capture session metrics an active RFID system would have a few internal hot-spots in key locations/departments within a store and would track the presence of a customer in the vicinity of these hot-spots. A GPS based system would have to create even smaller geo-fences to define these hot-spots and would have the same drawbacks described above in knowing whether a person was in the vicinity of a hot-spot.

Therefore GPS is much better suited for outdoor Location Based Applications. And to track shoppers indoors, within a retail store or bank and enable Presence Marketing, Active RFID is clearly the most suitable technology.