Walk near a Puma store and a coupon for 20 percent off a pair of shoes flashes on your smart phone. Snap a picture of the Golden Gate Bridge and information instantly pops up about the landmark. Point your handset camera at the street ahead and see which watering holes serve Stella Artois.
Welcome to the local online world.
After a long detour, the Internet has arrived in our everyday reality, bringing its transformative power to the physical world in which we spend most our time.
It's still a relatively small market, but a convergence of technological trends has set the stage for local online applications - and, of course, the advertising that goes with them - to burst forth in 2010. Key among the trends is the mass adoption of smart phones with fast Internet connections and navigational tools like GPS.
New applications for those phones promise to deliver information at the precise moment you most want it, when you're out and about looking for friends, restaurants, bars, stores or just something to do. The opportunity for advertisers could prove as revolutionary as online search, allowing businesses to contact people at the time and place they're most likely to make a purchase at a real life cash register, where spending still dwarfs e-commerce.
"It knows where you are, what you're interested in and all sorts of things," said Ken Dulaney, mobile analyst at Gartner Research. "It portends a radical change in the way the Internet is used."
That change, however, is as worrisome to privacy advocates as it is tantalizing to marketers.
"You're talking about commercial surveillance systems without proper safeguards that allow marketers and government to potentially know not only what your interests are, what you're searching, but where you actually are, who you may be with and the locations you tend to frequent," said Jeff Chester, executive director of the Center for Digital Democracy. "These are major problems and alarm bells should be ringing."
For now, however, the sound is more of a building buzz, as smart phone applications based on recognizing the user's whereabouts keep growing in popularity.
Augmented-reality software essentially adds a layer of visual information to the images on your phone. By noting your location and connecting to the Internet, the applications can attach icons to nearby locations that are visible through your phone's video camera. By tapping on the icons, you can pull up addresses, reviews, directions and more.
Stella's Le Bar app is a prime example, as is the tool created by San Francisco review site Yelp that allows users to see ratings and commentary for nearby businesses. The advanced augmented-reality apps typically work only with phones running on Google Inc.'s Android operating system or Apple's iPhone 3GS, both of which include the necessary video camera and compass.
It's not difficult to imagine similar icons floating above the images of people, showing, say, their Facebook or Twitter accounts as they stroll down the street or hobnob at bars. Neither company has indicated plans to do this, but there are signs both are adding features to their services. Twitter, the San Francisco microblogging company, recently bought Mixer Labs, which creates location-based tools, and rolled out a feature that can track where tweets are made.
Google of Mountain View is pursuing the local opportunity on a number of fronts, including its Google Goggles app. It allows smart phone users to take pictures of stores, landmarks and more and pull up additional information about them, by matching them to images in its vast archive.
It also bid $750 million to buy AdMob, a mobile advertising company, and until recently was in talks to purchase Yelp.
The company's Mountain View neighbor, Loopt Inc., began as a tool for friends to broadcast their location, but recently added a search service, Pulse, designed to help users find things to do. It includes recommendations based on the places they or their friends have visited before, and reviews of restaurants and bars from partners such as Zagatand Citysearch.
"We want to use location to bridge the gap between the virtual and real world," said Sam Altman, CEO of Loopt. "That's where we think the technology is the most powerful."
As of last week, Loopt users could begin posting Twitter-like Tips, providing real-time reviews of concerts or clubs, for example, rating the crowd or drink specials.
Companies including Best Buy Inc., Jack in the Box and Puma are already advertising on Loopt, serving up coupons or banners when people near their stores. Altman says the company is careful to deliver ads in a way that's not invasive, limited to a small sliver across the top of the screen and only when the application is open.
But it remains to be seen how people respond to this sort of advertising. A perfectly relevant ad may come across as completely invasive to a mobile customer, especially if it's based on queries related to personal matters like health care, finances or children, Chester warned.
The Center for Digital Democracy and U.S. Public Interest Research Group filed a complaint with the Federal Trade Commission last January, arguing that people should be asked for their consent before their information can be collected and used for mobile advertising. The Center for Digital Democracy and Consumer Watchdog have urged the FTC to reject Google's acquisition of AdMob, citing both competitive and privacy concerns.
The FTC is scrutinizing the deal, issuing a rare second request for information as part of its review.
"Google has a track record of providing strong privacy protections and tools ... for users to take control or opt out of data collection, and it will apply the same approach to privacy following this acquisition," Google spokesman Adam Kovacevich said in a statement.
E-mail James Temple at [email protected].