Free cheesecake?Check your text messages for a coupon, then show your phone to the waiter.
By Steve Alexander, Star Tribune
Last update: August 29, 2007 - 8:42 PMJulian Reytel would like to send advertising to your cell phone -- but only if you ask him to. Reytel is CEO of New Idea Technologies of Mendota Heights, a new entrant in what are called "location-based services," the holy grail of local marketing.
Location-based services offer consumers something they want based on where they are. Reytel's start-up company sends free electronic coupons he calls "Sudden Deals" to the cell phones of people who sign up to receive them. Coupons are delivered based on where in the city consumers plan to be that day. (His service can't track their actual locations, though that's coming soon from a competitor.)
Consumers can redeem a coupon, which is really a text message, by showing the merchant the coupon on the cell phone's display screen.
"It's a way for merchants to directly communicate with shoppers who are interested," Reytel said. "It happens in real time and it will be something you asked for."
Since Sudden Deals went live in June, Reytel has persuaded about 20 consumers -- through local ads on Google and Yahoo -- to receive coupons, which so far come from just two restaurants, the Malt Shop in Minneapolis and the Glockenspiel in St. Paul. The Glockenspiel is offering a $5 off coupon on some meals. The Malt Shop is offering free cheesecake, worth $4, to people who purchase two meals.
Both restaurants say it's too early to gauge the results, but they think it may be a good way to attract consumers already in the neighborhood.
"This type of advertising is a spur of the moment and instant gratification thing," said Connie Prechel, an administrative assistant for the Glockenspiel. "The nice thing is that you can change the coupon offer at the drop of a hat." The Glockenspiel previously offered coupons only on its website.
"We thought we'd just see if it would work," said Richard Henke, owner of the Malt Shop, which previously had tried only direct-mail coupons. "It will be fun to see if anybody comes in and shows us a message they got on their cell phone."
Today, the most-established location-based services come from the cellular phone companies themselves. Verizon Wireless and Sprint Nextel both offer turn-by-turn navigation services to drivers, which work because the cell phone companies can detect electronically where a cell phone is located. An accessory service gives consumers the ability to find nearby amenities, such as an ATM or a gas station.
Verizon and Sprint also offer location-based services that enable parents to track the location of their children's cell phones for security purposes. In addition, Gearworks of Eagan makes cell phone software that enables corporations to locate and track employees who make deliveries or travel.
Reytel knows of no Twin Cities company doing what he's attempting but points to Cellfire, based in San Jose, Calif., as another company launched expressly to send coupons to consumer cell phones.
But a similar local service may be in the offing. The Minneapolis Wi-Fi network now under construction is expected to offer location-based advertising to local merchants, who could send wireless ads to nearby consumers via their laptop computers or Wi-Fi-equipped cell phones, such as the Apple iPhone.
Reytel hopes to make his business grow by building a trust relationship with consumers recruited through more online ads. He promises to keep their cell phone numbers confidential, and guarantees he won't sell his customer list to other marketers. What's more, he collects little personal information. To sign up, consumers give a phone number, whether they are male or female and an age range. In addition, consumers are promised they won't be bombarded with ads. Every sign-up lasts only one day, and even then consumers can specify the maximum number of coupons they want to receive.
Still, "until we make a name for ourselves, it will be hard to get people to give out their cell phone numbers," he said.
The two-employee company was started in 2004. For now, Reytel, a computer programmer for a local bank, is running Sudden Deals out of his home as a moonlighting project. His business model is to charge businesses for advertising, but a price list is still in the works. During the start-up phase he isn't charging the Malt Shop or the Glockenspiel.
"We're trying to get a sense of how many businesses will do coupon offers and how many consumers will sign up to get them," Reytel said.
