Public Wi-Fi: a new engagement tool for brands?

Public Wi-Fi is no longer a Cinderella technology, says GfK’s Colin Strong, but one which is now seen to confer strategic advantage and an increasingly important means for brands to engage with consumers.

Some of us will recall that one of the earliest mobile phone services in the UK was Rabbit. It was a ‘telepoint’ service which meant that subscribers could carry their DECT Rabbit home phone handsets with them and make outgoing calls whenever they were within 100 metres of a Rabbit transmitter.

Unfortunately the service suffered an inglorious fate closing after just 20 months with just 2,000 subscribers. The introduction of GSM meant that mobile phones became significantly cheaper, had the benefit of being able to receive calls when out and about and users were not constrained to being within 100 metres of a base station.

I sometimes think of the fate of Rabbit when contemplating the future of Wi-Fi. At one point it seemed like a somewhat anachronistic technology until the boom in mobile devices, since when it has been an essential means of connectivity not only in home but also in public locations.

And today it has a feel that it can become an increasingly important new channel for brands to engage consumers. Many cafes and bars now use free Wi-Fi as a means to attract customers, hoping they visit more frequently and linger longer as they check their emails and use their apps, buying more coffees in the process.

The Wi-Fi in these locations is typically provided by third parties, thus meaning the café chain does not have to negotiate the technical and regulatory requirements.

UK fixed line carriers Sky and BT have been making major investments in public Wi-Fi as a complement to their broadband infrastructure. Sky bought public Wi-Fi provider The Cloud in 2011 and has been rolling out the service ever since.

BT has taken a somewhat different approach, combining public hotspots but broadening their coverage through an association with Fon. With five million members worldwide, Fon is an interesting company, offering consumers connectivity through an arrangement where they provide public access through their router in exchange for access to reciprocal users routers.

Virgin Media has also announced their intention to build a metro Wi-Fi network in major cities. Clearly fixed broadband operators see Wi-Fi as a way of maintaining customer loyalty and reducing churn without investing in a full-blown mobile network proposition.

Network operators have tended to be less enthusiastic about public Wi-Fi for the obvious reason that it has the potential to cannibalise their revenues.

However, mobile device manufacturers, most notably Apple, have led the way in promoting Wi-Fi as a key means of connectivity to the extent that some apps are only designed to work over Wi-Fi.

But network operators are undoubtedly looking more closely at Wi-Fi as a means of off-loading data from its networks because the increase in the volume of data traffic means there is a danger that performance will start to degrade in busy locations.

Whilst 4G will go some way to correct this it’s by no means a panacea. Further, many devices, particularly tablets, only have a Wi-Fi connection so network operators need a solution to avoid being marginalised.

US operator AT&T Mobility, for example, has over 32,000 hotspots in the US, although at present it is unclear to what extent these are used by mobile device owners instead of the cellular network. Nevertheless it is a clear example of the growing interest and investment in Wi-Fi but for very different reasons to fixed line providers.

Against this backdrop enter Facebook which, in collaboration with Cisco, is offering retailers the capability to provide free in-store Wi-Fi to their customers. The benefit to retailers is that they will receive detailed metrics on their customers’ habits and hobbies based on their public Facebook profiles. This is provided to the retailer by those visitors that agree to share their details in return for Wi-Fi access.

Of course this generates huge opportunities for retailers who can create marketing deals for users on the fly based on location, shopping preferences, likes and dislikes and so on. The retailer also gets a rich understanding of the demographic and lifestyle preferences of their footfall. And Facebook is able to collect more data on the shopping habits of their users, ‘datafying’ the ‘bricks and mortar’ shopping activity, something that was previously hidden to the massive database held on our personal activity.

In another related development, researchers in Italy have been exploring the amount of personal data that can be identified through ‘Wi-Fi sniffing’. To explain, all Wi-Fi enabled devices use digital probes to ‘sniff’ for base stations to connect to.

These probes contain information about the device itself as well as details of which networks have been connected to previously and the language used in the probe can also be identified.

From this range of ‘metadata’ variables it is possible to infer a surprising amount of information such as socioeconomic status (based on handset models), nationality, and indeed the social connections in the crowd based on their history of network connections. And last but by no means least it is possible to get a read of footfall based on the sheer volume of devices that are passing.

So again, there is a clear opportunity to generate a rich data set from something that would previously have been impossible to collect at scale. It is therefore perhaps not too surprising that some enterprises are seeing the opportunities involved in obtaining this sort of information.

One such well known example is Renew, a start-up company that had installed a dozen ‘smart’ recycling bins in the City of London. The bins were smart as they were able to pick-up the MAC addresses of Wi-Fi signals from passing mobile phones (although they would have no more information other than a unique Wi-Fi identifier). This would allow Renew to identify if the person walking by is the same one from yesterday, including their route down the street and how fast they are walking.

Renew’s pilot was pulled after pressure groups complained, a media outcry ensued and the City of London Authority reported the matter to the Information Commissioners Office. This clearly demonstrates the sensitivity of information being collected in this way and highlights the importance of transparency for the consumer.

Local public connectivity has come a long way since the days of Rabbit. Public Wi-Fi is no longer a Cinderella technology but one which is now seen to confer strategic advantage and an increasingly important means for brands to engage with consumers.

The competitive advantage has historically been about the way in which provision of connectivity is an attractive feature which attracts and retains consumers. Whilst Rabbit got this wrong the business models employed by the likes of BT, Sky and Virgin Media are seeing how this can work effectively.

But it is likely that real competitive advantage is likely to shift from provision of connectivity to how Wi-Fi can be used to collect and use data about the users of these hotspots.

However, it’s worth noting that the Renew example demonstrates the way that where personal data is involved public sensitivity is increasingly moving to a position where there needs to be a clear and demonstrable value exchange that works for both consumers and brands alike.

Colin Strong is managing director at GfK NOP business & technology.