Location-based advertising: Does your mobile marketing strategy need it?

Location-based advertising: Does your mobile marketing strategy need it?

Location-based advertising has become the quintessential complement to mobile marketing tactics. This post tells you how you can decide if your business needs it.

Location based advertising has been in existence as an option in the mobile marketing space for a while. It has, however, only become better and more popular in time like good wine. Recent research from Berg Insight demonstrated that that the real-time location-based advertising industry is expected to grow at a compound annual rate of 65% to $8.5 billion in 2017. This amount would constitute around one-third of total mobile advertising spend.

There are two forms of location based advertising, so to speak. The first form utilizes static data collected from user profiles. The second, and more effective form, called real-time location based advertising gathers data of consumers’ current location using technologies such as GPS (global positioning system), Cell ID, Wi-fi positioning and so on. GPS data is by far the most accurate and, therefore, the most preferred source of data for marketers. With real-time location based advertising, what advertisers is send promotional messages to prospective consumers within reasonable distance of the physical store.

McDonald’s location based advertising on the annual Foursquare Day increased its traffic significantly. Outlets across US rewarded customers who checked-in on Foursquare at their locations with gift cards. This saw a rise in check-ins by 33% and major increase in foot traffic as well. What’s more, the check-ins continued to remain high the following week with a 40% increase. Overall, the campaign earned the brand 600,000 new fans and followers and 99% positive feedback.

It’s not too difficult to see why real-time location based advertising is gaining popularity. Consider the following:

  • Quite simply put, consumers now prefer such forms of personalized promotional messages.
  • Location based advertising demonstrates higher performance than any other form of mobile promotions with improved CTR and ECPM.
  • Location data combined with behavioral and contextual data has proved extremely effective in targeting prospective consumers.

All things considered, this fairly nascent form of advertising isn’t really devoid of drawbacks. There still are some wrinkles that need to be ironed out and are holding marketers back from adopting the concept:

  • The limited reach troubles advertisers who are usually keener on targeting larger groups of prospective consumers.
  • What marketers need to watch out for is ensuring privacy. Mobile devices inherently deal with a lot of data of personal nature. This means that customers would want to engage with people who understand and respect their privacy.
  • The market, unfortunately, is inundated with bad location data at present.
  • Sizing the optimal geofence is really a matter of good judgment and trial. Sub-optimal geofences can bring unsatisfactory returns.
  • Mobile ad targeting remains somewhat inaccurate, eventually causing marketers a whole lot of frustration.
  • Merely telling prospective customers that your store is around the corner is not encouraging enough for them to want to take the time to visit the store. The message invariably has to feature some sort of discount, offer, gift coupons or so on.

Here’s how things really unfold with location based advertising. At a technological level, what happens is the GPS chips in consumers’ smartphones interpret signals from GPS satellites in space to figure out exact locations at a given time. To hasten the entire procedure, a process called cell phone tower triangulation interprets the signals in seconds. At a functional level, when a prospective customer enters a business’ geofence (or the perimeter around the store specified by the advertiser), he/she gets a relevant promotional message from the business. The message could feature a coupon or discount to encourage the customer to visit the store and make a purchase.

So should you adopt location based advertising in your mobile marketing strategy? As long as your business stands to benefit from it and there are enough resources (financial and otherwise), there’s no reason why you should lose out on the race.



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