Starbucks to bombard people with money-off vouchers direct to their phones when they pass coffee shops

By Sean Poulter for the Daily Mail
Updated: 03:07 EDT, 19 October 2010

Shoppers are to be targeted with money-off electronic vouchers as they wander the High Street with the arrival of 'Ping Marketing'.

The electronic vouchers will be sent direct to a mobile phone by coffee shops such as Starbucks or beauty brands such as L'Oreal as they pass stores offering deals.

The technology relies on the GPS satellite system that allows mobile networks to track people every minute of the day via their mobile phone.

The system has created concerns that the tracking of the movements of consumers by stores chasing sales is a threat to personal privacy.

Customers who sign up for the scheme will be sent a text message when they pass every Starbucks

However, O2, which is the first mobile network to trial the system to Britain, says customers must actively opt-in before they receive any vouchers.

So far, the network has signed up more than one million Britons to the system.

The new way of targeting shoppers is known as geographic marketing, directing advertising and offers to people based on their specific location.

When the consumer moves within a set distance of the store  - passing through a so-called geo-fence - the voucher is sent automatically via a text message to their phone.

The idea has echoes of the film Minority Report in which Tom Cruise was recognised as he passed a Guinness billboard and a personalised greeting was played to him.

Starbucks and L'Oreal have signed up to a six month trial. Others will join soon and, eventually, most stores on the High Street could  use the system to entice custom.

The Starbucks deal will include deals such as 50p off a take-out coffee. People in a supermarket might be offered a voucher to get 50p off its Via instant coffee.

L’Oréal is using the geo-fences set up around Superdrug, the high street health and beauty retailer, to promote sales of its Elvive brand hair products.

The 'ping marketing' is the result of a partnership between O2, which is Spanish-owned, and Placecast, a Californian company, which is already successfully using the technology in the US.

Placecast’s customers have included clothing stores such as North Face and American Eagle along with restaurant chains.

Some 65per cent of customers who were part of initial programmes made a purchase as a result of receiving an electronic voucher.

Some shoppers might consider the system an irritant, however the firm said 60per cent of participants in the US found the location-based messages to be 'cool and innovative'.

The idea is that people get electronic vouchers which are specific to them, rather than useless spam.

When O2 customers register for the scheme, they input information about their age, gender and interests such as football, travel and cinema.

Managing director of O2 Media, Shaun Gregory, said: 'The growth of location-based services will create a golden age for proximity marketing.

'It fuels a growing expectation among consumers for personalised advertising via their mobile phones that is directly relevant to their passions.

'The market potential here is huge - it has already had massive success in the USA - and this is another nail in the coffin of the old model of reaching mass audiences in one go.'

Placecast chief executive, Alistair Goodman, said: 'The service allows consumers to go about their day and automatically alerts them when they are near a special offer available at their favourite retailers.

'This is truly marketing as a service to consumers, not an intrusion, enabling people to connect with brands at the right place and in real-time, all via their mobile phone.'