Malls Bet on MindSmack's FastMall App to Draw Shoppers Back
Foot traffic at U.S. malls has dropped each of the past three holiday seasons, according to retail intelligence firm ShopperTrak. Reason: People are doing more shopping online. To bolster mall sales, a new group of mobile startups, such as New York’s MindSmack, are developing indoor-mapping applications to entice shoppers.
President and Chief Executive Sam Feuer founded MindSmack in 1999 as an online advertising designer. In January, the 40-employee company launched its first iPhone application, called FastMall, which offers turn-by-turn navigation to any store, restroom, or eatery in nearly 900 malls in 24 countries. The free app has been downloaded more than 500,000 times, and MindSmack recently launched a version for Android phones.
With the number of downloads growing 25 percent each month, the 33-year-old Feuer plans to launch an advertising platform underneath FastMall’s maps early this year. The technology will let retailers display promotions on the maps to drive shoppers to stores. In addition, the application will bundle data on which stores users visit with demographic information they enter when they register, including their ages, genders, and zip codes. MindSmack plans to sell the aggregate data to mall owners, retailers, and potential advertisers.
Feuer is forecasting revenue to increase to $5.5 million in 2011, from $3.7 million in 2010, driven largely by advertising on FastMall. Feuer spoke recently with Bloomberg.com contributor Antone Gonsalves about his plans to meld advertising with indoor mapping and how he will satisfy clients’ information needs while also protecting user privacy. Edited excerpts of their conversation follow.
Antone Gonsalves: Indoor-mapping services on mobile phones are so new that everyone in the market is a pioneer. What do you see as potential moneymakers?
Sam Feuer: Our thing is this advertising platform, which is really where we believe stores, retailers, [and] brands will pay to offer deals, coupons, [and] information on the maps themselves. Not only stores in the mall but outside as well. We’re working on mapping Rodeo Drive [in Beverly Hills], the Las Vegas Strip, Newbury Street in Boston, the Santa Monica [Calif.] Pier.
The user will open up the map and see a logo for X store. It could be the Gap logo, for example. And then next to the Gap’s logo they’ll see a deal icon that, when tapped, will showcase a deal or information or coupon code that can be shown to a cashier. There’s a huge amount of metrics that we’re capturing here that’s never been captured before. We know what routes people take at a given mall, so we can send this data to the mall owner, to the retailer, to the advertiser.
Q: Are you concerned that Google could one day expand its mapping service into the inside of malls and put you out of business?
A: We’ve led the pack. There’s always got to be a leader and then followers. Still, Google is Google, and if Google wants to build what we’ve built, then I’m sure they can do so. But they haven’t yet, and I have the patents on navigating the way that we’ve done it, without a signal, without Wi-Fi, without GPS. We’ve patented the entire process.
Q: If indoor mapping becomes a lucrative market, do you see yourself as a takeover target?
A: I definitely do. We’ve already been contacted by many companies about data, just to use the data that we have, and we’re debating what to do with it. I’m not sure if I want to license the data to different companies or not. We’re sort of working out those details.
Q: So after spending $1.5 million of your own money over the past two years, you believe it’s time to bring in investors?
A: It’s a no-brainer. I don’t have the world working for me, and we can continue to hire, and we are, but this is something that could live on and should live on everyone’s device.
Q: Mobile applications like yours raise serious privacy issues, since you will be tracking people’s activities and sending the data to advertisers, retailers, and other third-party companies. How do you plan to address these issues?
A: We’re selling that information to the retailer to enhance everyone’s experience that’s involved. The user will have to opt in. Once we get to that point that we’re offering deals on the map, we’re going to be asking users to sign up, so they get not only a deal, but a deal that means something to them. That’s the winner, and people will sign up in droves.
Q: Do you support the U.S. Federal Trade Commission’s recommendation for a do-not- track option for everyone using the Web?
A: I haven’t thought that much about it, but whatever the government decides is legal, then we’re going to go along with it, obviously. If I’m mobile and I choose that it’s O.K. [to be tracked], then why can’t I track [that] person? Really, people want to be tracked. Anyone who’s using these applications, they actually want to be tracked in some way. They want to see information that means something to them. We have to have a defined structure of seeing ads we care about, and I think that’s going to make everybody’s life better, not worse. But it still needs to be handled in a professional way.
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