There’s no doubt that 2010 has been a huge year for location-based services. Although consumer adoption is still relatively low, the growing popularity of apps like Foursquare along with the launch of Facebook Places signals that location services are on track to hit mainstream awareness and usage.

I find these services fascinating because they bridge the digital world with the physical world and are about exploring cities and meeting up with friends. It’s also exciting to see the innovation that’s happening daily in this space and how brands are testing the potential of location marketing. But what’s next and how far can location technology go? Here are four trends to keep an eye on:

Evolution from Check-Ins to Challenges & Experiences

Services likes Foursquare and Gowalla are built around actively ‘checking-in’ to a physical location to notify friends, earn rewards and get tips. Checking-in is valuable as a baseline activity, but it’s a low involvement action as opposed to a more engaging, high-value experience. A new breed of services like SCVNGR are going beyond the check-in and focusing on ways to entertain users by connecting physical places with challenges and treks to earn rewards. Cities, museums, universities and conferences have used SCVNGR to entertain visitors and educate them about their surroundings. I see a huge opportunity for retailers to take advantage of location-based challenges to drive store traffic and sales. SCVNGR recently rolled out a retail rewards program and is the first app to offer integration with Facebook Places, making this a startup to watch out for.

Location-Based Services Converge with Mobile Payments

While still nascent, it’s only a matter of time before mobile devices become virtual wallets and start to replace credit cards as a popular method of payment at retail. Banks, retailers and manufacturers are scrambling to make this happen. The most exciting aspects of mobile payments, though, are the endless possibilities with connecting physical location, social shopping, and transactions into seamless experiences that benefit both the consumer and merchant. The Starbucks Mobile Card (client), Shopkick and AMEX Social Currency apps are excellent examples of where this is all headed.

Location Detection Gets Highly Accurate

Everyone who uses location services on mobile phones knows that the accuracy is mediocre at best. This is particularly apparent in dense locations like cities, malls and airports. Thankfully, GPS satellites are getting a major upgrade over the next few years that will pinpoint a person’s location within an arms length of where they are standing. This presents amazing opportunities for retailers looking to identify and reward customers for visiting specific departments within stores. Shopkick is already planning to make this happen, albeit through a different technology. Check out Robert Scoble’s recent interview with Shopkick’s CEO, Cyriac Roeding for the details:

Private Location Services for Families

Skeptics of location-based services typically cite the personal privacy and security concerns associated with broadcasting a person’s whereabouts. A new service called Neer is answering this concern by enabling families to keep track of one another privately through “geo-fencing” technology. With Neer, users can establish geo-fences (virtual perimeters) for physical locations like work, home, school and the subway station. Upon entering or exiting one of these perimeters, an alert will be sent to the user’s inner circle. Yes, I realize this sounds a bit creepy, but for parents and children this type of service can be useful for coordinating busy family schedules.

This is just the beginning of what’s possible for location-based services. Are you a user of Foursquare or similar apps? How do you envision brands using location marketing in the future?

Image credit: David Armano

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