Now more than ever, geography is destiny. New software lets you map everything from demographic trends to choice store locations
A satellite orbits the earth at four miles a second, outfitted with digital cameras so sharp that they can pick out individual towels on a beach. It overflies the designated area a number of times, looking straight down on one pass, forward on the next, backward on the third. The angling produces a third dimension, a height that can be analyzed through special 3-D glasses. The sequences of images beamed back will be processed into high-resolution maps, archiving the spatial coordinates of entire cities and plotting topography with mind-boggling precision.
If that sounds like something out of a spy thriller you would read on one of those beach towels, guess again. That satellite-imaging system isn't the CIA's latest surveillance device; it's just one example of how space-age technology is putting an entirely new spin on the marketing efforts of growing businesses.
Popularly portrayed as the stuff of espionage and rocket science, geographic information systems (GISs) have come down to earth. The new generation of GIS software is designed and packaged for the desktop, with applications that allow growing companies to use fantastically detailed geographic databases in virtually every facet of their operations. From real estate firms that take their clients on virtual tours of available properties, to retail chains that pinpoint prime spots for new outlets, to direct-mail houses that fine-tune their promotional campaigns with "geocoded" demographics, to manufacturers that track the distribution of inventory and the pattern of sales, today's GIS products are giving smaller businesses access to powerful tools that until recently were restricted to the mainframes of major corporations.
The commercial applications for GIS technology were first explored in the early 1960s. Back then, mainframe computers were used to identify arable soil and predict crop yields. For any given land mass, various densities of Xs and Os on transparent plastic overlays indicated the topography. A quaint relic of the predigital age, to be sure. But even as PC technology started to revolutionize business and industry in the 1980s, research and development of practical and affordable GIS software lagged behind. Few businesses had an inkling of how to use "spatially referenced data." And if they did, the costs of maintaining complex databases were well beyond the reach of most budgets. Until just a few years ago, GIS setups were customized applications that could cost more than $100,000 to install.
How quickly things change. Today business-oriented GIS product development is a rapidly growing industry, expected to reach $3.8 billion in sales by 1999, turning out low-cost, off-the-shelf PC programs that are as powerful as the mainframe applications of a decade ago. Almost overnight, GISs have become a crowded field, abounding with entrepreneurial enterprises like Space Imaging, which will be marketing high-resolution photographs -- thanks to 3-D technology -- for around $100 a square mile, or Geospan, a vendor of visual data gathered by satellite. Entrenched high-tech companies are jumping in as well. Any notions that GISs might prove a fad were laid to rest last year when Microsoft Corp. added a GIS function to Excel, the world's most popular spreadsheet program.
What's driving the boom in the new GIS trade? On the most basic level, good business sense. Experts say that most of the business information keyed into conventional database fields has something to do with place -- store locations, sales territories, inventory sites, clients' addresses. A GIS program enables a business to enter all of those data as a point or an area on a map -- with a degree of descriptiveness that far exceeds the natural capacity of conventional alphanumerics. Even more significant, GISs make it possible to integrate those data into meaningful patterns and profiles.
Think of a GIS as a series of computer-generated "acetates," clear plastic sheets, each showing different data drawn from the same area, layered on top of one another to reveal associations that can't be seen in a column of numbers or a list of addresses. The more information plugged into a database -- customers' buying patterns, say, or residential property values -- the more multi-dimensional and detailed those graphic associations. With a GIS, a company's PC turns into a powerful business tool, capable of depicting data in ways that make bar graphs and pie charts look downright primitive.* * *
For John Antenucci, a GIS management consultant and founder of PlanGraphics Inc., in Frankfort, Ky., GISs represent the new frontier of what he calls "economic intelligence." "High-resolution satellite imagery is going to change my business," he predicts, and offers the following scenario: "Say I'm a dealer in coal, and I know there's a coal strike coming. I'll be able to assess the coal inventories that utilities in the country have stockpiled because I can look at pictures to see how big the piles are."
For many companies, however, "economic intelligence" simply means a clearer picture of what their own business looks like when plotted with sophisticated geographic variables. Take the case of Raymond V. Walsh, founder of Market Results Inc., a six-person business-to-business market-management firm in Burlington, Vt., who stumbled on the benefits of GISs back in 1994. "All we wanted to do was learn about our clients' geographic distribution," Walsh recalls. "And the quickest way to do that seemed to be to map the database. Like graphs of financials, we figured the pictures might show us something extra." Walsh wound up springing for $30 for a superannuated version of MapLinx Corp.'s MapLinx for Windows that he had seen in a surplus-software catalog. The program converted information in the zip-code fields of conventional records into latitude-longitude locations -- a process called "geocoding" -- and placed them in approximate position on crude maps.
That's about as bare bones as GISs get, but it did the trick for Walsh. The maps gave him "something extra" that he wouldn't have come up with otherwise: dramatic, visual proof that many of his clients were running ineffective operations. One distributor of high-end garden implements, for example, had saturated the market in certain affluent areas while barely establishing a presence in others. Armed with his geocoded profile of the distributor's blotchy sales territory, Walsh met with the CEO and put it to him bluntly: "This is a perspective of your business. Is there some reason you're overlapping in these dense territories and not covering these others at all? More penetration in concentrated areas is expensive. Everyone's seeing your product everywhere; it's cannibalizing itself."
The CEO was impressed. And Walsh had secured himself a major trouble-shooting project. Here again the system worked to his advantage. To develop a sharper picture of the most promising territories, Walsh took out space ads for the distributor's product line in the Wall Street Journal and the New Yorker. Then he cataloged the places where responses came from and matched them against areas the dealer wasn't serving. From there it was quick GIS work to set up dealerships in areas with the right population mix.
Using a GIS as a standard part of its consulting service has enhanced Market Results' own market results considerably, says Walsh, who has gone on to higher-priced software and greater challenges. In its latest project, Market Results is plotting the most efficient routes for a client's salespeople to follow when they call on present and potential customers. Soon they'll be able to turn on their laptops and look at a representation of the landmarks they should be seeing out the window. No more getting lost and blowing an afternoon.
Craig Heard knows a thing or two about landmarks, and he's big on GISs, too. In 1991 the president of $16-million Gateway Outdoor Advertising Inc., in Somerset, N.J., was among the first in his field to use a system to find the best places to put up specific ads. Today all 7,000 of the firm's billboard sites are geocoded. To target the best locations for ads for a retailer of children's athletic shoes, for example, the computer is asked for the proximity of potential sites to schools and playgrounds. For tobacco or alcohol advertisers -- wary of community opposition -- Gateway's maps zoom in on sites at a respectable distance from churches, schools, and hospitals.
New and improved geocoding helped Gateway earn record revenues in 1995, even as the company was adapting to changing times. Commissions from smoke and drink ads -- once the bread and butter of the billboard industry -- have dropped sharply in recent years, says vice-president of marketing June Petroff, and Gateway has had to vigorously diversify its customer base. "The mapping system allowed us to do that by showing advertisers how well we can target their market," she notes. To further its move into public-transport advertising, for example, Gateway uses GIS graphics produced by MapInfo software to superimpose billboard and sign locations onto bus routes. "That convinces a customer that we can blanket the landscape with its message," Petroff explains. "It's much more compelling visually than the alternative -- laying a plastic sheet over a transit map."
The new generation of GIS software has also worked wonders for Archadeck, headquartered in Richmond, Va., a fast-growing $25-million home-add-on franchiser with nearly 80 offices in 24 states. In 1994 the company began managing its direct-contact marketing campaigns with GeoWizard, a GIS "prospect-finder" produced by GeoDemX Corp. Before, says director of marketing Shannon Schiedel, Archadeck would try to drum up business the old-fashioned way -- hanging brochures on doors, putting up placards at construction sites, even making cold calls on homes that looked as if they could use work. Now Schiedel logs up to 120 new projects a week into a GIS database, draws a circle with a two-tenths-of-a-mile radius around each one, and "asks" GeoWizard to pull out the names, addresses, and telephone numbers of the surrounding homeowners.
Once he's fixed his coordinates, with a list of prospects in hand, Schiedel sets to work on a direct-contact campaign, using a method he calls "geoneighboring." Before construction on a project gets under way, a number of "high-profile, highly probable prospects" in the immediate vicinity are sent a soft-sell notice encouraging them to give Archadeck a call if there's too much noise. A second postcard sent shortly after construction begins is more suggestive: We're adding a new deck to 100 Chestnut Street, a couple of doors down. Why not come over and have a look?
With established mapping "engines" like ArcView, from Environmental Systems Research Institute (ESRI), and MapInfo Professional at their programmable core (relatively comprehensible developer's kits are offered with several desktop programs), value-added resellers like GeoDemX often honor individual requests for modifications. For Schiedel's geoneighboring program, GeoDemX outfitted GeoWizard so that Archadeck could line up addresses by absolute-value distance away from a central project, sorting them by mileage. A prospect's proximity has proved so critical to Archadeck's direct-contact sales that even in a dense community, where the two-tenths-of-a-mile limit could encompass 50 or more homes, Schiedel might opt to pursue only the closest 10.
Geoneighboring is one of three marketing tasks Archadeck assigns to its GIS. A second is creating broad mailing lists from the demographic profiles of people who've responded to the company's ads in the past. The third is what Schiedel calls "freehanding," identifying communities ripe for development. Essentially it works like this: Schiedel chooses a corner of some untried suburb and feeds its coordinates to GeoWizard, which looks up homeowners' ages and other demographic data and then generates a community profile.
Since adopting its GIS, Archadeck has seen its direct-mail postcard return rates triple. And Schiedel has gained so much statistically substantiated confidence that now he "can 'pummel' a neighborhood," as he puts it. The system has already paid for itself. For a recent 50,000-address mailing, Schiedel asked GeoWizard for names matching the demographic profile and landscape the company was targeting through its own market research. The program turned up 45,000 likely prospects, "saving me $4,000 in mailing lists right there." With net gains like those, Schiedel hasn't hesitated to plow back some of the savings into GeoWizard's latest release. GeoDemX refines Archadeck's campaigns into state-by-state demographic profiles of customers, which Schiedel in turn cross-references against his own field surveys. As GeoWizard becomes increasingly sophisticated, Archadeck's narrowing profiles of prospects will just "get hotter and hotter," sums up Schiedel.
Bill Wood, founder of Wood Personnel Service Inc., turned to a GIS for profiles, not of prospects but of employees. Because of the persistently tight labor market around Nashville, Wood Personnel's product -- labor -- sells itself. A no-brainer, admits Wood, except for one complication: finding the right people in sufficient quantities. To keep his eight-year-old company growing, Wood assembled a profile of the roughly 500 temps he'd already staffed out successfully. His plan: to recruit more workers out of the same demographics (age, education, marital status, and the like).
But where to look for them? For Wood, the answer was a GIS program called Maptitude. The software package, from Caliper Corp., comes with updated U.S. census data that can be transferred onto maps in color-coded demographic zones. Another no-brainer except that computer-novice Wood had no idea how to run a GIS database. So he hired one of his own temps and instructed him to "get the people at Caliper on the phone and have them tell you how to find out where I should be recruiting from."
Answers popped onto the screen in the form of zip-code areas, the category Wood selected "because zip codes were something I felt I could get my hands on." Zip-code areas of a certain color indicated a preponderance of the attributes he wanted to match. He booked help-wanted ads in media that served those zones, rented banquet rooms in local hotels to conduct interviews, and recruited from the pool that showed up. A few months later he studied the campaign's effectiveness. "The software increased our applicant flow 25%," he reports. And revenue flow followed "almost exactly."* * *
As the range and selection of affordable GIS software have multiplied, so have the scope and complexity of the raw data businesses can tap. Geographic databases are now readily available by direct mail from a variety of sources -- among them, the U.S. Bureau of the Census and municipal tax-assessment departments -- and can easily be adapted to almost all basic GIS software. And more and more software packages come with the data already in place. Caliper, for example, not only compresses all 7 millionÑplus residential and commercial blocks in the nation onto one $195 Block Centroid Data CD but packs 21 demographic variables -- for example, the number of people younger than 18 or older than 65 -- into the leftover space. Other vendors include niceties like contamination sites, the frequency of hailstorms, newspaper circulation zones, "isochrones" (which geographically delineate driving times -- like the time it takes to travel between, say, a neighborhood area and a shopping center), and the traffic flow on one-way streets.
Thanks to that sort of elaborate information, some small businesses are making moves that they probably would never have thought about otherwise. Cropcast, a subsidiary of Earth Satellite Corp., in Rockville, Md., started out as a purveyor of basic crop-management intelligence for farmers -- weather patterns, pest migrations, and the like. As its GIS input became more complex, its forecasts became more profitable. Today the bulk of Cropcast's customers are Wall Street commodity traders. Seattle's Best Coffee Inc. depends on a GIS to choose storefront sites that challenge its competition. Meanwhile, Minneapolis's Geo-span is doing a brisk business selling its City Tours CD-ROM to real estate firms, which use the GIS footage to take house hunters on armchair tours of available properties.
Although most do, GIS coordinates don't have to relate to positions on the planet Earth. A map could just as easily depict the layout of, say, office space. Click on an individual office, and information about the occupant's job, salary, and benefits appears under his or her picture. Click again, and a second view unfolds, this one of maintenance and lease schedules and the depreciated value of the office computer. A GIS could also map the location of specific displays on a retail floor and assess the effectiveness of point-of-sale merchandising. And while they're at it, retailers could pump demographic variables into the mix, reconfiguring floor plans and product promotions in response to the purchasing patterns of a store's clientele.
It's all worlds away from the Xs and Os that were used to indicate topography in the first commercial application of GISs -- and if the predictions of some industry analysts prove correct, geocoding will eventually become such a basic feature of the business landscape that no one will think twice about it. "At some point, people are going to stop calling GIS 'GIS," says Brian Webster, director of marketing com-munications for Space Imaging. "GIS functionality will be widely incorporated in products, and people will become GIS aware as they become computer aware. When you open a spreadsheet to run a linear 'what if,' you'll instinctively run a spatial 'what if' as well."* * *
Kazumi Tanaka writes pseudonymously on business and technology.
High Trails, a retailer of hiking and other outdoor clothes and equipment, is looking for the most promising storefront of three available in downtown Des Moines. The owner has done her homework. She knows that her average customer is 18 to 60 years old and earns more than $50,000 a year. U.S. census data covering those and other categories are available in inexpensive list form, but High Trails' owner, a hiker herself, feels that a map showing the geographic relationships of demographic and other pertinent data would be more helpful in making the space decision.
The map on the left was created with Caliper Corp.'s Maptitude 3.0. Notice the three circles (one for each site) superimposed on top of a simple plot of the city, each circumscribing a four-mile radius. The background areas are census "tracts," an arbitrary unit for displaying demographic values; here the tints represent median household income. In every tract the software creates a pie chart whose size represents the total population and whose wedges indicate age distribution. At the left of the screen, two sites are shown in larger scale. Most GIS programs can zoom in on a single block; some go farther, delineating buildings in precise shape and position. A single map could accommodate any number of layers -- digitized "acetates" -- revealing information like bus lines, college campuses, fastest routes between points, real estate values, and for the sake of employee-benefit planning, locations of health-care providers. For alphanumeric contrast, typical demographic statistics in conventional rows and columns are displayed across the bottom of the map.
Direct-marketer Archadeck (see text) searches for new customers through GIS depictions of unexplored territory like this map of Greater Cincinnati. As designed by marketing specialist GeoDemX, the quest begins with a rudimentary rendering that compares income and other household data (called HH) taken from updated U.S. census information with a profile of the ideal candidate as defined by Archadeck's experience. The census tracts shown in yellow most closely match the ideal. From here it's a simple GIS procedure to zoom in and compile the names and addresses of promising prospects.
For more information on specific off-the-shelf GIS packages -- all of which come with basic maps and databases -- you can contact the applications developers. Here are some of the leading players and their products:
Company: Caliper; Newton, MA; 617-527-4700; firstname.lastname@example.org; http://www.caliper.com
Basic Product: Maptitude 3.0; $395
Company: Environmental Systems Research Institute (ESRI); Redlands, CA; 800-447-9778; email@example.com; http://www.esri.com
Basic Product: ArcView 2.1 (also available for the Mac); $995
Company: GeoDemX; Southfield, MI; 800-711-LIST; firstname.lastname@example.org
Basic Product: GeoWizard 2.2; price varies
Company: Geospan; Minneapolis; 800-436-7726; email@example.com
Basic Product: City Tours software/CD-ROM; price varies
Company: Intergraph; Huntsville, AL; 800-345-4856; http://www.intergraph.com
Basic Product: Mapping Office four-module software bundle; price varies
Company: MapInfo; Troy, NY; 800-327-8627; firstname.lastname@example.org; http://www.mapinfo.com
Basic Products: Mapinfo Desktop, $349; Mapinfo Professional, $1,295
Company: MapLinx; Dallas; 800-352-3414; http://www.maplinx.com
Basic Products: MapLinx 3.0 (also available for the Mac), $99.95; $179.95 bundled with zip-code boundaries; $99.95 for zip-code boundary add-on utility only
Company: PlanGraphics; Frankfort, KY; 502-223-1501; email@example.com
Basic Product: Custom GIS applications; price varies
Company: Space Imaging; Thornton, CO; 800-425-2997; firstname.lastname@example.org; http://www.spaceimage.com
Basic Product: High-resolution digital satellite imagery on CD-ROM; price varies
There are dozens of suppliers of customized products to beef up the database, mapmaking, and vertical-application capabilities of off-the-shelf GIS packages. For a comprehensive list, see the Buyer's Guide published each October by Business Geographics (155 East Boardwalk Dr., #250, Fort Collins, CO 80525-9945). Subscriptions are free to qualified individuals and include the guide. Call 970-223-4848 for a form, or fill out one on the Web at http://www.gisworld.com. The Buyer's Guide can be purchased separately for $11.95.