The Privacy Triple Play: Digital Giftcards Using Facebook Data And Geolocation

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The challenge of giftcards has always been getting customers to remember them when they're actually near the store where they can be used. With that goal in mind, a giftcard service—working with Gap and Sephora—is trying for a marketing triple play: mobile geolocation on top of Facebook data on top of customized giftcards. When a customer is near a retailer whose giftcard he/she has, it will loudly flag that fact to the customer.

Digital giftcards, by their very nature, address part of that forget-me-a-lot problem by taking giftcards out of the dresser drawer and placing them in the almost-always-ubiquitous smartphone. That's hardly new. But the geolocation opt-in alerts are an interesting twist, especially when a consumer is walking in a city (locally or when traveling) and has no idea that a particular retailer has a store three blocks to the right. Or when that customer enters a mall with more than 100 stores.

Given that these are indeed giftcards, the retail brands may not be familiar to that consumer. As such, it could be a very helpful heads up.

The geolocation feature from Wrapp is planned for later this year, said the vendor's Chief Technical Officer, Andreas Ehn. The comment was made in connection with the Swedish company's move into the U.S., which was announced Monday (April 30). Gap and Sephora are among the initial retail partners.

But the mobile move is on top of a Facebook partnership that might be pushing the privacy line. The Wrapp program enables consumers to give a giftcard to anyone on their Facebook friends list.

After signing up, the customer can choose from a pull-down list of all their Facebook friends. Once a friend is selected, Wrapp displays a list of free giftcards—such as a $20 giftcard for Sephora. But the amount of that giftcard—and whether it is offered at all from that particular retailer—is based on three pieces of information that Facebook shares with Wrapp: the selceted friend's age, gender and location. (Presumably, the name of the friend is already being displayed, along with whatever public data is available.)

Based on all that, Wrapp offers giftcards. Partners can set any rules they want. Gap, for example, might say, "We'll offer 22-year-old women $30 giftcards. A 40-year-old woman will get a $5 giftcard, and a 70-year-old man won't get anything. And if they happen to be in any one of these seven cities where we are opening new stores, double the amount offered."

The gift-giver can then choose to sweeten the amount of the giftcard with a payment card.The gift-giver can then choose to sweeten the amount of the giftcard with a payment card. That card can be posted for all to see, and anyone can add more money to the card. All of that information is saved and can be shared with partners.

Here's a nice touch: The free giftcard expires within 30 days, but if anyone adds anything at all to the card, it can legally no longer expire. A reminder will also be issued for the free cards when the expiration is imminent.

The retail partners "don't pay us a penny until an actual gift has been redeemed," said Greg Spector, Wrapp's head of communications. Once redeemed, retailers pay "a small transaction fee" plus "a percent of the value of the additions to the card," Spector said.

The company is still figuring out exactly how it wants to deploy the geolocation reminders, Ehn said, adding that Wrapp is exploring a variety of GPS, cell tower and Wi-Fi access point combinations. As a practical matter, he said, mall options would likely do little more than flag that the store exists somewhere in the mall the customer has just entered, as opposed to directing the customer to the store using Wi-Fi and a mall map.

The privacy issues are real, though. Consumers may not realize—and some may not have intended to consent to—Facebook is giving away private information directly tied to their names. But a vague $25 giftcard—given by a Facebook friend—may not, on its own, set off any privacy alarms. The consumer would likely have no way of knowing that the amount was triggered by their age, gender or location.

Gender is probably the least privacy problematic, because it's often obvious by either a first name or a Facebook photo. Location is one level up—privacy-invasion-wise—although that, too, is often (but not always) indicated on a public Facebook page. Age, though, is definitely a potential landmine.

This might also lend itself to lots of gifts to friends who would otherwise never receive them. For example, someone with a very large number of "Facebook friends" (many of whom they hardly know) might opt to send the free version of the giftcards to everyone on their list. (Why not, as long as others are paying for it.)

That could make the benefit cited by some—Karl-Johan Persson, CEO of the 2,500-store H&M apparel chain, for example, issued a statement that quoted him saying, "One of the things we like best is that with Wrapp, H&M is being recommended to you by your friends.”—much less meaningful.

Still, this combo of mobile-housed digital giftcards, geolocation and Facebook data is certainly giving the giftcard its best chance for 2012 relevance.