How the Beacon Bubble Burst in 2015

There has been a lot of speculation regarding the adoption rate of beacons. Despite receiving widespread media coverage over the last several years, beacons are yet to penetrate the everyday shopping experience. In early 2015, the space was getting a lot of attention with the launch of beacon-based activities from global technology players such as Facebook, Twitter and Google. In the first half, we also saw a lot of proximity marketing niche players working in this technology space. Beacons started on a very high note in the beginning of the year and ended on a very low note with regard to momentum. It is yet to be seen how things move from pilots to scaled commercial deployments. The space is still backed up by top notch technology companies such as Google and Facebook which proves that the technology is not dead and has the potential of making a comeback.

Beacon technology is expected to revolutionize the customer’s retail experience. It has potential to integrate all steps of consumer’s retail experience from product selection to payments to rewards. – Study participant (retailer)

Let’s start on a positive note with respect to the beacons space in 2015:

Facebook: The technology company entered the arena of proximity marketing with Bluetooth beacons in February 2015. The new service can be used to send information to users based on their locations. The information can be about shops, landmarks, etc. near the user’s location. The service, dubbed as Place Tips, can make a mark in terms of users’ digital presence and will be driven by the rising penetration of smartphones that can continuously broadcast the user’s location.

Place Tips will send information to users about the highlighted locations, as derived from their Facebook pages. This information would be displayed on top of news feeds on the user’s smartphone interface. In July 2015, the company made the beacons free and available to thousands of small and medium-sized businesses across the US.

Google: In July 2015, Google launched its open-source platform for Bluetooth low energy (BLE) electronics beacons. Google’s new open-source specification is called Eddystone. Eddystone is available on GitHub under the open-source Apache V2.0 license. Unlike iBeacon, Eddystone supports multiple types of framing data. It supports versioning and is compatible across Android, iPhone and other platforms that support BLE beacons. Beacons have a special identifier that lets any Bluetooth smart device identify its signal and perform actions.

Twitter: Twitter Ventures, the investment arm of Twitter Inc., made a strategic investment in Swirl Networks Inc., in May 2015. Swirl Networks is a leading provider of proximity-based indoor mobile marketing platforms. Swirl is known for leveraging Bluetooth low energy and Apple’s iBeacon technology. By leveraging Bluetooth low energy and Apple’s iBeacon technologies, the Swirl platform helps retailers and brands deliver highly relevant digital content and offers to consumers’ smartphones while they shop in specific areas of a store.

Proxama: Proxama PLC, one of the leading mobile proximity marketing firms, announced an exclusive, long-term partnership with Ubiquitous. Ubiquitous is the UK’s largest provider of taxi advertising. The partnership was aimed at expanding Proxama’s network of beacons, enabling texts to be delivered to an engaged audience while traveling. Proxama’s network connects users to brands via their mobile devices with Bluetooth low energy (BLE) beacons.

Target: In August 2015, Target implemented a pilot beacon program in 50 of its store locations. These beacons send timely deals and recommendations on nearby products and more to customers’ mobiles whenever they browse within the range of the devices. To use the service, customers first needed to download or update to the latest version of the Target iPhone app (version 7.4 or higher) and enable Bluetooth in the phone’s settings.

Freckle IoT: Freckle IoT (The Internet of Things), an ad tech company that activates next generation connected devices, announced its partnership with Blue Bite, the mobile standard in Out-of-Home, which provides mobile technology for the retail industry. This partnership was followed with the deployment of 60,000 beacons across the US, creating North America’s largest proximity network and spearheading innovation in mobile location-based services.

Case studies of retail beacon which showed impressive results:

Chow Tai Fook: Chinese Jewelry brand Chow Tai Fook explored an opportunity using the beacon technology within WeChat mobile text and voice messaging service and Sensoro. The program generated more than $16 million in sales for the retailer. During the Chinese New Year 2015, beacons were deployed in 237 Chow Tai Fook stores in Beijing, Shanghai, Shenzhen and Guangzhou. The jewelry brand worked with beacon technology provider, Sensoro, to deploy beacons in its stores.

Lord and Taylor: Lord and Taylor, a Hudson’s Bay Company (HBC) that operates more than 130 Lord & Taylor and Hudson’s Bay department stores, adopted a more systematic approach in deploying beacons.

In the initial phase, the retailer began testing a location-based coupon app called SnipSnap in the month of May 2014. The test involved sending mystery coupons to users, when they were within 500 meters of a store. By the end of July 2014, HBC announced that they would be rolling out beacons across select US and Canadian stores. The engagement with push messages was as high as 50% and the click-to-claim coupons showed 20% results.

There were some exceptional results from the implementation of beacon technology as we saw in the above case studies. But the space has still not reached its potential as was expected by most of us. The year 2015 saw some activities triggered by technology companies and startups but most of them are still in their pilot/beta phase. Apart from them, there were FIs and banks that either implemented or are still in the process of implementing beacon technology to leverage their services and to increase their customer engagement. Some of the banks were Barclays, US Bank, Access Bank and Westpac.


There are certain challenges that retailers and beacon companies face which are resulting in the fallback of the technology. Here are some of the challenges:

– There are a number of layers of permissions that consumers must allow, such as: Bluetooth must be turned on, location services must be accepted for the app, the phone and operating system must be current, and customers must also opt in to receive notifications from the retailer or business.

– Companies/businesses should consider an emerging SDK (software development kit) network that leverages other apps for finding your beacons and locations. The technology should be made compatible with both iOS and Android.

– Security concerns regarding the scanning of existing beacons technology by intruders who can also target retailers who are exposed.

– Poor user experience: According to a recent survey conducted by Oho interactive with 35 of the top beacon CMS and hardware providers, nearly half of companies claimed poor user experience as one of their top concerns.

– Deployment of the technology: There are a number of factors, right from deciding on how many beacons need to be deployed (and where) to optimizing alignment of multiple beacons in order to reduce interference.

These challenges resulted in some failures and lot of projects couldn’t move beyond pilots. Here are some of such failures:

Apple’s iBeacon: There was no major news from the American multinational technology company which was a huge disappointment. iBeacon, a protocol developed by Apple was introduced in 2013. The iBeacon technology is still in its infancy and after 2014, there were no major developments in the protocol.

Virgin Atlantic: In July, 2014, Virgin Atlantic deployed iBeacons in the London Heathrow Airport terminal 3 to test the technology. With this, travellers with the Virgin Atlantic app could receive notifications on their smartphones through iBeacons. But after that, there was no major news from the company regarding the deployment of the final phase of proximity marketing strategy.

Major league Baseball: Major League Baseball was one of the early implementers of the technology at stadiums across the US. Two seasons later, the technology is deployed at a small subset of stadiums and is delivering only a single welcome message through an application that has downloads of only eighty thousand compared to the tens of millions who visit a ballpark each year.

Predictions for 2016:

In a recent podcast published by LTP which talked about the FinTech predictions of 2016, mobile payments guru Nick Holland made the following prediction about beacons:

In 2016, we might see a lot more activity around beacons enabling notifications of the customer entering the store, and that effectively being the start of the checkout process. I think we can see some activity there with tons of money going into this space. We have got Google in this space; we have got PayPal in this space. These companies are desperate to extract information like: who you are, where you are, when you arrived and ultimately what you are buying as a result of being in that place. There is another dynamic here that banks potentially have earned—the goldmine of data of what consumers are actually purchasing. The information which can be derived from consumer behavior can be revolutionary.