In reality, the service is only a game for people to play and compete in. However, if you are interested in creating revenue, influence and other business related benefits, a new term must be invented. And that’s LBM a.k.a. Location Based Marketing.

What is LBM?
LBM is a hybrid of retail marketing+event marketing+online marketing and occurs in the overlapping physical/cyber world, and in that space only. LBM is also time-dependent, as its main benefit occurs when the two spaces overlap, e.g. on consumers’ cell phones.

Who are the Major LBM Platforms in China?
LBM lives on the platforms created for LBS such as LBS monsters Foursquare and Gowalla. In China, the equivalent services are currently, Jiepang, play4f, Kaikai among others. Just like most other social media services from overseas, Foursquare and Gowalla are blocked, leaving time for the local players to mature.

On the other hand, these Chinese new-born LBS companies are learning from their foreign counterparts, which means a much faster growth curve. Jiepang, for example, is already testing out collaborative campaigns with events and brands only six months after launching, while Foursquare has only recently begun tapping into this lucrative area.

The number of users is the biggest asset for a LBS platform. This is especially true in the China market where the first player to establish market awareness can ultimately become the market leader. Most of the Chinese LBS companies are still in their very infant stage in terms of user adoption, yet Jiepang and play4f seems to be the ones leading the pack, with one of our sources indicating currently is adding users at a 30% increase every week.

How is LBM executed?
A better question to ask ourselves is, how SHOULD LBM be executed? Because LBM is such a new concept with very few case studies to speak of. However, it is such an exciting new space, ripe for experimentation.

Since it is location based, retail should be the industry most excited about this right? Retail is all about locations. In the United States, Starbucks and Domino’s rewarded the “mayor” of their store free coffee and pizzas. That’s awesome!

How about some other types of stores, like fashion? Diesel recently collaborated with Foursquare to launch the “Faces of Stupid” campaign where customers are handed a “be stupid” sticker in diesel stores, and supposed to take a picture and upload it to foursquare to win exotic prizes such as shark diving in South Africa. This whole campaign was done in a very “Diesel stupid” way and brings out the company’s message that encourages people to do something stupid.

Events is another large untapped source for LBM benefit. Large-scale events such as concerts, music festivals, and parties are great for LBM as well. In China, Jiepang recently collaborated with Mao Livehouse, a prominent concert venue with locations in both Beijing and Shanghai, to promote their service together with several recent concerts. Last week, jiepang also helped another early adopter, Nike to promote a concert/product launch party in Beijing.

More complicated formats of LBM include a game composite of multiple locations, like the Wall Street Journal game, asking users to explore NYC and unlock special badges.

Since the concept of LBS is essentially a game, game players of course need incentives, either virtual or physical. Virtual incentives include badges, such as the title of “mayor,” or simply recognition for hanging out in cool places. Physical incentives are more often used by brands to drive sales or encourage participation. They range from free products or discounts, to bigger and more lucrative prizes like shark diving.

So will LBM work in China?
The barrier of growth in China includes smartphone penetration (or more like smartphone OS adoption such as Android and iOS) and user adoption. The requirement and barrier to interact with LBS like Jiepang is quite high right now, as only Android and iOS are supported with custom apps. Although other smartphone users can check in with the web app, it is so painful to open a webpage, almost guaranteeing failure.

User adoption is another question: are Chinese youth keen on having their friends know where they are and where they go? Judging from the current usage it seems like the most frequent places people check in are restaurants. That means people do feel an urge to share where they dine out. Jiepang, is actually doing a good job using cool promotions in conjunction with retailers and venues to drive user adoption. They have about 60,000 registered users in China and growing rapidly.

One thing marketers need to understand is that no matter how much hype has been associated with LBS, it will always remain a niche marketing tool. Mainly because not everybody has the persistence to keep checking in on the app wherever they go. It is usually fun for a while and then you sort of lose interest (from my brief experience of using Foursquare). UNLESS… the app would become so much better that it checks in itself! (There’s an app for that too: Future Checkin!)

But that’s a whole other story involving privacy and check-in requirements…too many things to think about!

Cell phone novels (手机小说, Shou Ji Xiao Shuo) have increased in popularity over the years owing to the rise of smart phones, mp3/4 players, PSPs, etc. Their cultural roots lay in Japan, where the phenomenon has already led to popular cell phone novels being turned into major films and tv dramas.

Although establishing itself as a heavyweight in the realm of online gaming, Shanda entertainment also holds claim to 80% of China’s burgeoning e-literature market. The combined daily page views for its sites, Jinjiang, Hongxiu, and Qidian are estimated to be around 500million; plus authors are uploading thousands of books worth of content every day.

Shanda’s business model has encouraged a legion of support from budding authors and readers alike. Their system offers the reader free access to the first half of the novel. Then, to read the rest, the reader pays 3 cents per thousand words. The sum is then split between both, the author and Shanda. This platform, thus far, has been working well. Nevertheless, readers are finding ways to access books freely.

Authors such as Blood Red (Xie Hong) are already estimated to make annual earnings of over RMB1million, and popular titles such as Ghost blow out light are being commissioned for the screen by big name HK directors such as Jonnie To. The Shanda umbrella also hosts a wide range of media cross-over oppurtunities for authors. Some  have been able to get into TV and online games, while others have been able to get their digital books published on paper.

As 3G devices become more commonplace, we expect to see even more people glued to their iphone/psp/etc.