LAS VEGAS – The next frontier in social-media marketing is location-based marketing, which tracks users’ daily activities, revealing not just their physical location but also what their interests are, says Eric Miltsch, Internet director-Auction Direct dealership group.

“Location-based marketing is the hottest segment in social media,” he says at the Driving Sales Executive Summit presented with WardsAuto here. “It’s something that in the auto industry has yet to truly take root, but I think it’s about to.”

One of the more popular location-based applications is Foursquare, but others have been popping up, including Gowalla and Facebook Places.

Location-based-service users voluntarily “check in” at a designated site using a mobile device and input where they are. Users then are tracked via the global positioning system on their smart phones or other mobile devices. Because the service is voluntarily, it is not an invasion of privacy.

In addition to tracking a user’s whereabouts and activities, location services also rewards those who visit certain retail outlets with points, “badges” or “stamps” (different apps use different terms) that can be used to find business locations suggested by others that may be of interest to them.

Marketers have been quick to leverage the rising popularity of location-based apps by offering coupons to be used at their brick-and-mortar establishments.

The coupons, or other types of rewards, are triggered when a user comes within proximity of the retail store, making it more likely he will go inside. The coupons immediately are sent electronically to the app-user's mobile device.

Miltsch says his dealership group has been using location-based services with great success. Within a week of launching their strategy, a “mayor” was elected, he says, noting the term refers to the individual who has “checked in” or visited a particular retail location the most.

The mayor, he says, receives special awards, or freebies, such as a deal on vehicle service.

“The mayor in our New York store referred several customers this year, and a week ago we delivered a vehicle to someone he referred,” Miltsch says. “We’ve seen at least one or two additional sales.”

Other location-app users can receive rewards, as well, depending on their number of visits to the dealership. Once they enter the store to collect their reward, they generally check their location-based app again, he says.

“(It) creates an instant (digital) word-of-mouth channel,” Miltsch says. “When they are there, all their friends and followers know they are there.”

While not yet as popular as Twitter or Facebook, location-based apps are growing at an astronomical rate, he says, noting the number of users is expected to jump from 96 million today to 526 million by 2012.

Perhaps more importantly is the audience driving the popularity of such apps, Miltsch says, citing research that indicates 80% are males, 70% are 19-35 years of age and 70% are college grads.

Location-based marketing provide “messages consumers choose to get delivered to them, and that’s the most powerful thing,” he adds.

bpope@wardsauto.com