The rise of virtual beacons and their future in retail marketing

The retail sector has always innovated and found new ways of connecting with new types of shoppers. Today it’s no different and the connected shopper, who uses their smartphone all day is the target for most marketers. As a result mobile marketing is set to continue to grow and with that growth comes innovation.

The group of connected shoppers that the majority of businesses most want to target in the next few years are millennials and virtual beacons look set to play a big part in targeting and communicating with this very influential group. With 56% of millennials saying they would be happy to share their personal data in exchange for relevant coupons or promotional deals, companies need to be able to target these consumers using their preferred method of communication – their phones.

Beacons are an unbelievably powerful tool for reaching the modern shopper’s phone, especially for retailers, because they allow marketers to send highly relevant and targeted messages while they were walking around their stores. They also allow marketers to track their customer’s movements and dwell times. They do this by using Bluetooth technology to send push notification messages to opted-in users who downloaded an app on their phones. But beacons are not without their issues.

At a recent round-table at Mobile World Congress in Barcelona, a number of brands expressed concerns about proximity marketing using beacons. The main issues included how the technology can work with both iOS and Android devices, the cost vs the return and the resulting customer engagement. Because we have been working in the proximity space for over three years, these issues are familiar to us, and as a result we now only work with a proprietary virtual beacon that has all of the benefits of the micro-location technology with none of the drawbacks.

Battery – Existing indoor proximity systems using beacons are impractical and expensive mainly due to the number required and the battery life. It’s often claimed that batteries have two years of life, but we have seen many beacons from a variety of providers run dead in less than one month. As a result, campaigns fail and a marketer might not even know this has happened if the proximity CMS is not configured correctly. This can mean the proximity program incurs significant survey and maintenance costs that begin to outweigh the benefits. With virtual beacons there are no maintenance costs – only a floorplan and the sensors that already exist in a phone are needed.

Infrastructure – Beacons can be moved around and repositioned as needed within a retail space. However, it is a logistical nightmare when individual beacons across stores need to be moved regularly due to floorplan changes or other reasons. Using virtual beacons, there is zero infrastructure and therefore no physical hardware to move around.

Power-hungry – Beacons rely on communication with a server for computation and on continuous power-consuming radio (via WiFi / Bluetooth) for positioning. Virtual beacons require far less power – by utilizing all the sensors in a phone and having no physical beacons, proximity programs become a far less power intensive exercise.

Inaccuracy/interference – Beacons are often inaccurate at distances less than 3 metres and interference can also be a problem – for example if a pillar is between a beacon signal and a phone. Inertial methods are not robust to device, user and environment variations. Accuracy is vastly improved using virtual beacons plus they have no interference issues, hence they offer a stable proximity marketing solution.

Compatibly across operating systems – Removing beacons and ibeacons and replacing them with virtual indoor sensors means that your proximity tool works across both iOS and Android devices, while being much more cost effective.

For beacon technology to really grow it will have to be accepted and implemented by numerous different industries, not only the retail sector. This is obviously made more difficult when beacons have issues and the hardware gets in the way of delivering a great experience for customers.

With virtual beacons, a solution presents itself that can easily be setup without hardware, so soon we should see banks, hotels, restaurants, hospitals, events and many more industries all signing up to using the technology to better connect with a digitally savvy customer base.

Virtual beacons are able to track actual individual customer journeys and offer navigation in-store. This adds extra contextualisation to a proximity programme, which further enhances the customer experience and results in increased ROI for a business.

Az Ahmed

Az Ahmed


Az Ahmed is a Senior Marketing Consultant at SmartFocus.