20/20 Vision: 400 Million Beacons On Track For Global Deployment Within Four Years

Although beacons barely warranted a brief mention when Apple introduced its first mobile proximity platform for iOS 7 a little more than two years ago, the Bluetooth-powered devices that are at the center of cross-channel retail marketing are now poised to reach 400 million deployments by 2020.

The findings, initially reported by ABI Research three months ago, has been confirmed by proximity marketing platform Unacast’s Q4 Proxbook, a database cataloguing location targeting providers.

Despite the fact that roughly 70 percent of consumers have no idea what a beacon is, retailers, brands, ad agencies, have clearly discovered beacons as a way of sending push notifications to consumers who have asked to receive them. As such, whether consumers know what method is causing their apps to know when they’re in the right spot to be sent a notification appears to be beside the point.

Beacons Blow Up

The report’s release comes two weeks after four location-based marketing companies received significant venture capital funding amounting to $100 million collectively — including beacon provider Estimote, which began running Target’s inaugural beacon program last August and just raised a $10.7 million first round — as demands for mobile marketing increase from major brands.

There was further evidence of beacons’ rise at last week’s Toshiba RISE retail tech event, when Rite Aid revealed it’s been working with proximity services player inMarket since the fall on installing beacons at all its 4,600 U.S. stores — the largest single deployment to date.

“Despite some media commentators questioning when beacons will really take off, we now have definitive proof that this is happening right now,” said Thomas Walle, Unacast’s co-founder and CEO. “What excites me most about the numbers from the Q4 Proxbook report is that we are aligned with ABI Research’s latest forecast of 400 million beacons deployed by 2020, meaning we are well on our way to ‘sensor up’ the world.”

The report indicated that Rite Aid’s full-blown installation isn’t an anomaly; there appears to be a trend of pilot programs quickly moving beyond the test phase into complete deployments, suggesting that marketers are seeing encouraging results from proximity marketing.

Among other Proxbook’s other findings:

• Brands coming to their sensors: The number of proximity sensors deployed globally has jumped 52 percent to 5.1 million from 3.3 million.
• Beacon Blankets: About 3.9 million out of those sensors are beacons, which is aligned with ABI Research’s forecast of 400 million beacons deployed by 2020.
• Google is eating Apple: Apple may have introduced marketers to sensors with its iBeacon platform. But because Google’s Android powers various mobile devices — versus Apple’s single iPhone — the iBeacon rival Eddystone, which the search giant launched in July — it’s set to become dominant hardware and software for micro-location targeting.
• The share of Google Eddystone users is growing at a rapid rate to 38 percent of all companies in Proxbook, up from 25 percent in Q3 and 5 percent in Q2 2015.
• At the same time, the support of Apple’s iBeacon has gone down from 96- to 93 percent.
• Glass more than half full: 51 percent of the location-based marketing services in Proxbook are now operating beacon networks (i.e., a large number of beacons in multiple locations, which can be accessed by 3rd parties.)
• The average number of sensors per proximity provider has continued to grow, up by 28 percent from 20,916 from 16,337 in Q3.

As the investment activity we cited earlier shows, the market is becoming more competitive. To differentiate themselves beyond serving proximity-based notifications, these indoor sensor providers are beginning to specialize in specific offerings, such as analytics as well as delivery, and specific industry verticals, such as retail, food services, travel/tourism/airport services, stadiums/sports-concert venues, healthcare, cinema, banking, as well as 12 others included in Proxbook’s coverage.

Deep Linking Changes The Game

Nevertheless, the crowded proximity marketplace shows that roughly 75 of the 244 companies listed in the Proxbook now offer tools for analytics, up from 60 percent in Q3. Despite the growth of beacons across a number of business categories beyond retail, which remains the leading client area, consolidation in the space appears more inevitable.

“Use of beacons became a reality in 2015,” said Jon Worley, CEO of Proximity Marketing Division at Proxama, in the Proxbook report. “However, in 2016 the role and value of beacons will become much clearer. There will be a shift from stand-alone beacon trials to campaigns fully integrated into digital marketing strategies.

“Targeted, well thought-out delivery of coupons not only increases footfall into bricks and mortar stores, but can also drive customer retention by leveraging data collected from beacon interactions to ‘listen’ and learn about consumers’ behaviors, needs and wants,” Worley added.

Perhaps the biggest thing to watch as beacons continue their rise is the way Google’s and Apple’s use of mobile deep linking will help expand the possibilities.

Worley points to Eddystone allowing URLs to be accessed directly from a beacon interaction, which removes the requirement for a user having to download an app — a particular source of friction that has surely impeded further growth of beacons.

It’s worth noting that Apple’s use of deep linking to as part of the iPhone’s Spotlight search function will also help bridge the gap between the mobile web and the apps in its entire library. With deep linking in Apple’s iOS 9, a search will pull info from all apps whether they’ve been downloaded to an iPhone user’s device.

“This will lead to many more experiences being deployed across a range of sectors,” Worley said.