Location Based Service Advertisement M Commerce Computer Science Essay

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Abstract: Location based advertising is one of the needs of the day in growing field of mobile business (m-commerce) and this advertisement is based on proximity of user from that location/business and the best equivalent of information requested and that delivered. This paper tries to explain how location based services can be used in advertising products/locations and how business can be increased using such services of cellular operator, location based advertisement service provider and of the business providing products/services (e.g. banks, Teller machines, shopping malls, garment shops, supermarkets, restaurants, hospitals etc.)

It has been observed that many people face difficulty while searching for a location or area of their interest e.g. a person when he visit a new city usually find it difficult or has to ask people about a location such as a bank or ATM or restaurant, this service will help such people in finding that location with much ease through his/her cell phone using location based advertisement.


Location based services (LBS), is considered as one of the major branches of m-commerce these days can be defined as the applications and tools that with the combination of geographical coordinates and services provide a state of the art value added service to the users. History of LBS dates back to 1970's when the US DoD (Department of Defense) started using GPS (NAVSTAR) to locate objects and/or people for military purposes, later on in 1980s; it was then made publicly available to industry, which encouraged deployment in existing services (Xiaotao). With the advancements in the field of wireless communication, mobile positioning and geographic information systems (GIS) has open doors for new class of location based services and applications, such services deliver geographic information to mobile users in accordance with their location of interest, LBS are specialized, multi-tiered services which can be published, located and invoked across the wireless/wired web as well (Dragan 2003). During its motion a mobile user with the feature of LBS enabled can query information related to stationary objects such as hotels, restaurants, banks etc. as well as location of mobile objects such as car's, passengers, etc. also in addition to this a mobile user can also share object of interest with other mobile user in same or even if in different area. To provide useful services to the mobile and stationary users based on their locations of surrounded objects, LBS requires a database that can store the information of a those locations (e.g. hotels, restaurants, banks, etc.) that have paid the service provider to advertise their location (as LBS acts as Location based advertisement for business parties) and integrates with network of cellular operator to provide real time information to the queries of the user.

LBS are subject to several developments which can create new potential for Pakistan's cellular market within next 1 -2 years, the most favorable conditions for LBS are:

Emergence of GPS- capable mobile phones

Introduction of 3G technology

Growth of mobile phone users

These developments can provide a platform on which LBS can flourish, (Gartner 2008) in his document 'Hype cycle for consumer mobile applications 2008' document classifies LBS as one of the high benefits mobile business out of 40(Boonstra 2008).

As will be discussed later in this paper, LBS offer a range of service opportunities that are likely to be based on different location techniques, but just for the brief introduction here as a information to the consumer/user and as a advertisement channel for business party as for some people it is one of the difficult task to reach a particular location easily thus such services of providing required information on a click can be of immense value. A broad range of aspects and variables are involved in determining the relevance and context of a mobile advertisement distance to the user, interest of the user (implicit or explicit), uniqueness, time and delivery of the information/advertisement.

Also a lot of business organizations are involved as new business models are emerging, these developments should accelerate massive uptake of LBS in near future.

History of M-Commerce in Pakistan:

History of m-commerce is not very old in Pakistan, the first mobile commerce conference was held in Karachi on April 2, 2008, the event was a start-studded, this conference was attended by PTA chief and representatives of all 05 mobile operators in Pakistan, including several business personalities as well. To start with Telenor came up with an innovative idea of 'Easy Paisa' that facilitated payments of bills, sending/receiving money within Pakistan, and receiving money from abroad. The other service worth mentioning introduced by Mobilink with the name of 'Gennie' a solution powered by inov8, this service was also related to service of utility bill payment, in 2008 on mother's day TCS and mobilink launched a innovative service the theme of this service was to send gifts to loved ones by using the network of Mobilink as a carrier. The user can select the gift items for their loved ones via GPRS and Caller helpline. The payment is to be deducted from the users Mobilink Connection. Also Mobilink and Ufone offered secured mobile transactions of paying of mobile bills through credit cards. Another worth mentioning service introduced by Warid was purchasing of internet hours in a new way (i.e. through SMS).

All of these services mentioned above shows that m-commerce is not new to the mobile customers of Pakistan so it will not be difficult to introduce a Location based m-commerce that will be an information service to customers but will act as advertisement service for business parties.(COMSAT 2005)

Review of Literature:

Location based service is a concept in which mobile telecommunication based on location information not only allows users to track(such as automatic vehicle location, fleet management, tourist services, transport management traffic control etc) but also allows to control behavior of communication and set off necessary actions (Dragan 2003, Xiaotao) but also provides service to find out where they are, where they can find products & services of their needs and how they can reach to a specific destination. LBS also provides many new business opportunities keeping this in view many business parties establish a partnership with content providers and mobile networks to advertise their products through this service (Boonstra 2008) the idea behind is that to provide relevant advertisements to the user, relevance could be measured in terms of proximity of user to the product and match of product and interest of user (Kolmel 2002). From business perspective in a recent study carried out in coordination with trade & commerce people worldwide it is found that LBS is one of the high revenue providing business(both for advertiser & service provider).

Currently (in Pakistan) no such service to find the information about a service or location exists the only way is the directory system introduced by one operator is to manually enter the point A and Point B and it will guide the way.

There are several ways in which location based services could be implemented some of which are listed below. [1-5]

SIP based internet telephony infrastructure and SIP user agent called SIP-C.(Xiaotao)

Using Operator Cell-ID

Using cell ID & sector and timing advance calculation.

Using GPS enabled handsets that calculate location using GPS technology.

Hybrid technology that uses both cellular operator cell id as well as GPS information to calculate a location of consumer and the location/service of interest.

Despite of the fact which technology is being used to develop LBS, all such services require development of a database that is required to be integrated with cellular operators network to get this service implemented. (Dragan 2003)

Location based advertisement can play a vital role in marketing in era of 1980's & 90's there was a revolution in target marketing, such as telemarketing, direct mail and email that made selection of target customers much easier than ever and this superseded the concept of mass marketing but it also congested customers mail boxes, the final analysis lead to the conclusion that this type of target market is ineffective as it was irritating customer in long run (Kolmel 2002).

With the emergence of mobile business and localization technologies, a new type of marketing communication is possible i.e. mobile advertisement with localization of the users.

Push channel: Although some pilot projects are running (e.g. SMS alerts) using capability of cell broadcasting there are no significant use of push channels seen in market which make use of location of handset but it is expected from present players to enrich their offering by making use of localization of the user, as location information is one of the most important parameter in one to one advertisement.

Pull channel: In most of the m-commerce market all around the world pull channel has an edge over push channel. Most of the advertisements e.g. finding a shop, hotel/restaurant, bank/ ATM, hospital or clinic are perceived as information rather than advertisement.

Location Based Advertisement

Pull Channel

Push Channel

Marketing model for location based advertisement.

A lot has already been done in field of LBS/LBA and this paper would be extension of previous work but it will open new ways and provide new ideas of conducting business and providing information to customers using LBS technology in countries where it is not yet applied such as Pakistan.

Although it would be discussed in respective sections of this paper the technology we are opting for location based service but as a link to above discussion it would cell-based using operator cell id with cell sector and as well time advance feature to calculate location along with pull channel marketing, the reason why these options are selected are discussed later in paper.

The Location based service will answer following questions:

Where is the user located?

Where is the desired site or service located?

What different modes of transport could be used to reach there?

Location of friends, customers etc.


The system is proposed to be built on multi-tier architecture with multiple servers (application level). The system will integrate with cellular operator's network, web & to a main database server, keeping in view critical nature of data, the system will be secured both physically & logically(using some encryption techniques). The main role of this multi-tier system is to provide straight forward method for deployment of location based services. Following are the main components and features of the system (Kolmel 2002):

Access Control: Access control manages the access of applications to network resources & subscriber information using policy based authorization mechanisms.

Privacy Management: Part of a system that ensures that subscriber location and data is concealed from other applications and subscribers.

Billing: System used to generate and collect CDR's (Call Data Records) of the actual use of service or applications, based on this server user is charged for using the service and revenue is shared between operator and LBS service provider.

Provisioning: System used for provisioning and registration of application and service to the user, this system is required to be integrated with cellular operators provisioning system.

Network Management & Resource Management: Monitors & guards usage of operators resources (GMLC, SMSC, MMSC etc.) by different LBS applications.

Location Detector: Location detector with the help of various positioning techniques allows applications to obtain the location of user; techniques that could be used are cell-id, cell-id with sector information, Timing Advance (TA), GMLC, GPS etc. depending on availability with cellular operator.

Subscriber Profiles: A database that holds mobile subscriber preferences & personal information. This information allows applications to tailor the services they provide to specific needs and preferences of mobile subscribers, tailoring is based on profiling functionality, utilizing usage patterns for provisioning of advanced services.

Integration of LBS in STK (SIM Tool Kit): Integration of LBS menu in STK menu of SIM, features may include dynamic menu downloading, cell-id location retrieval etc. (details of menu discussed later in paper).

Application Programming Interface (API): Defines a programming language that is to be used JAVA, HTML or XML for the development and integration of location based services with operator's network.

Middleware Adapters (Middle Managers): Its function is to provide interface for integration with host network resources (physically or logically) e.g. location servers, WAP gateway, SMSC/MMSC, Billing and provisioning system & NMS.

Reliability, Redundancy & Security: Multi-tier system is designed to be highly available and redundant for uninterrupted service, fault tolerance, load balancing and optimal performance along with fully secured system.

Functionality of System:

Location based service is supposed to work in the following flow:

Those users who have subscribed to this service will be able to see LBS option in their STK menu.

Check for 'Find Location' option in LBS menu.

The find location option provides opportunity to the user to avail the service through SMS or MMS by selecting any of the available categories of service.

Following categories are observed to be major point of interest:






Service Station


On selection of any one of the above category a SMS is sent back to user with nearest point of interest user has requested in for.

If required the user can ask for detailed address of the nearest POI(Point of Interest) from the location he/she is, either through text( via SMS) or through MAP( via MMS).

Each time the user sends message/request for service a particular charge will be applied.

This service will be available for both Prepaid & Postpaid subscribers.

Location of user and corresponding reply with respect to point of interest is calculated in following way.

As user selects the particular category of interest, the request arrives at the LBS server through cellular network.

As the request lands on the server, the server immediately requests the cellular network system for provision of required data.

The network system provides the data such as cell-id, cell-sector and timing advance data (a tool to calculate the distance of user from BTS (base transmitting station) through which it is being served.

As in normal practice a cell-phone can receives signals and provides response to more than one BTS but is hooked-up with only one cell at a time, but for LBS purpose(to get more accurate location) this information could also be used(usually discarded).

As soon this data is provided back to LBS server, the server matches the location with the point of interest of user in that location and response back.

As this service also serves the purpose of advertisement for different business, the response to user is sent with the service at the top (that has paid the most).

Data Analysis:

A survey was conducted based on a questionnaire to check the general perception of the service, overall response was good specially from the office workers and business men and we expect it to grow more as service gets implemented and commercially launched.

The graph below depicts interest in service in different class of people (students, office workers & businessmen). The concept of service doesn't appear to be very much popular within students as most of them has the perception that they don't travel much or don't have such activities that can have use of this service, on the other hand the response from office workers and business-men was quite good and idea was appreciated.

Also below graph shows interest of each category of surveyed people in each of provided services.

Revenue Models:

The viable revenue model is a necessary prerequisite for successful, commercial, location based services and advertisement (Boonstra 2008).

There are essentially three parties involved in this business:

The advertiser

The service provider

The cellular operator

As location based services are in early stages of business development, it is not very yet clear what will be the revenue model, however there are many ways to recover investments in location based services business for both the cellular operator and for the LBS service provider as well, apart from direct revenue models e.g. charging per location request or charging a fixed fee there could be many other models that could considered while developing the revenue model for LBS.

Cost per sale: Cost per sale or lead is basically cost per service request, the user is charged a particular fee each time he/she request for the service, e.g. of such service include 'cost per digital lead', cost per physical lead(couponing), cost per digital sale.

Display Advertising: Display advertising is basically showing ad's to you customers using push channel marketing, in this model the user has subscribed for the service of a particular product and whenever the user passes by the outlet of the product the advertisement is displayed to him/her.


This paper shows a general model for location based services and advertisement and its importance especially in Pakistan's marker where this medium has still not being used for advertisements or to provide services to the user. As this paper is written keeping in view the available technology (with service providers) and availability of cells phones that are in range of an average user. More advance technologies could be used such as use of 3-G/ GPS along with cell-id information to get more accurate data and based on this data user can be guided more precisely. From business perspective LBS &A provides a win-win situation in which operator gets to increase it revenue with each request(SMS/ MMS hit), the advertiser increase revenue as people easily reaches it and the LBS service provider shares certain percentage of revenue from both cellular operator and advertiser.