LocalResponse Targets Consumers Based on Tweets, Check-ins

The team behind LocalResponse competed with Foursquare and a gaggle of other check-in services with their previous product, Buzzd. Now, they’re taking those services’ location data and combining it with implicit location information, gathered from status updates, to create a marketing platform that lets companies target consumers wherever they are in real time.

New York-based LocalResponse — founded by Nihal Mehta, Kathy Leake and Michael Muse — pulls in 1 billion check-ins each month from location services such as Foursquare, Loopt, Facebook, SCVNGR and Gowalla. Its natural language engine then pulls out data from other social services like Twitter, Instagram and Flickr to help understand where someone is or is headed to. That’s important because people broadcast their location more often than they actually check-in.

Last month, LocalResponse started offering local businesses the ability to send real-time messages and offers to customers who are in specific locations or are talking about their business. Today, LocalResponse is allowing national brands to identify specific consumers and hit them up with marketing messages.

“We’ve seen a huge change in consumer behavior with people announcing where they are,” said Leake. “This is a big opportunity to react in real time to those check-ins.”

While LocalResponse can pull in data from a host of sources, it can respond through only Twitter. But the company is talking to other services and hopes to deliver messages through a variety of platforms. In the current version, after a user checks into a location or mentions in their tweet or status update where they are or are headed to, an advertiser can push out a tweet to that user with a link to an offer that the consumer can redeem at the location.

LocalResponse offers can target a specific location or widen out to a larger venue, city or region. Advertisers can even choose a competitor’s location, pushing out coupons when a consumer visits there. But companies can also target by more than location. They can filter by demographics, time or even Klout reputation score. The company said the platform has proven quite effective in beta tests, with a click-through rate of 25-40 percent and redemption rate of 30-50 percent. Meanwhile, only 1 percent has opted out of the offers.

The key is building a real-time engine that can be scaled and also absorb and parse a lot of data. That helps LocalResponse offer up the right messages to millions of users. Business customers get a turn-key solution that lets them enter in simple campaign goals, such as building loyalty, cross-selling or poaching customers from competitors. They can push out tailored offers to the right people. Local merchants have free and subscription options for the service, but national brands will need to pay up.

LocalResponse, which has raised $1.5 million from Verizon Ventures, Charles River Ventures, and Metamorphic, said it doesn’t want to inundate consumers with offers. So it promises not to deliver more than one message a day from its collection of advertisers and no more than one offer a week from any one brand or business. This will be important because consumers need to know that the marketing offers won’t overwhelm them. Those self-imposed limits will put more pressure on LocalResponse to offer up the most targeted and relevant ads, which, in turn, will make them seem less like marketing and more like a bonus. If the messages don’t provide real value to consumers, there could be a backlash and people may stop announcing their location. Worse yet, the messages could feel like a form of stalking.

But this is where the market is going, and I wouldn’t be surprised if Twitter, Facebook, Foursquare and many social analytics firms try to go down this same route. Consumers are sharing a lot of information with each check-in and status update, and the ability to mine that effectively could be what separates successful companies from also-rans. LocalResponse has a good head start right now, but others will look to capitalize on the same opportunity..