The discount component, however, is more interesting because it really brings a new dimension to the Waze service, letting people not just navigate to the lowest priced option but actually find places that have offers only for Waze users. And it also demonstrates how Waze will make revenue off the free app. The company will be building a revenue model from location-based advertising, allowing certain advertisers to reach its growing base of 19 million users with relevant offers for things along their route.
With the gas program, users will be alerted to nearby discounts on their Waze map. When they go in, they will need to present a coupon generated by the app to the employees inside. That ensures that users will have their coupon visually inspected but it also encourages them to buy something else, which is another benefit for participating gas stations. Waze is not disclosing the exact business details of its advertising deals.
Waze has struck relationships with individually-owned gas stations and regional retailers who own a lot of stations. Vitners, which owns more than a 100 Shell stations in California; Kum & Go, which has more than 400 stations in the midwest; and Hess, which has 1,300 stations on the east coast, are some of the partners. Five states, including New Jersey, actually prohibit discounts on gasoline, so Waze is looking at offering coupons on food or other items to users in those states.
Waze has been set on not charging its users, which is fitting since users contribute to the service by providing anonymous location data. But as it grows, Waze is turning into a very appealing location-based platform for advertisers. It has a big dedicated user base who can be reached by local offers that are presented in the context of their regular drives.
Waze is hoping that it can turn its ability to lead more users into stores into a significant revenue source. During a promotion for the Nintendo 3DS last year, Waze ran a mini-game that awarded people points and entered them in a drawing when they drove to nearby stores that offered the portable gaming system. Waze said 6.3 percent of its users participated in the program and drove to a store.
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Updated: Forecast: global mobile subscribers, 2010–2015
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