What is location-based marketing?

Location-Based Marketing, Geofencing, Geotargeting, and Geoconquesting Explained

Location-based marketing is a direct marketing strategy that serves advertising or content based upon someone’s current or previous location. This allows marketers to make meaningful contact with their intended customers and improve the customer experience. Location-based marketing also goes by many names, such as hyperlocal advertising, geotargeting, geofencing, and location-based advertising. We’ll explain the differences below.

Location-based marketing works when people opt in to share their location with mobile apps on their smartphones. This location data is either used in real-time to serve an ad, location-based content, or push notification, or it must be matched to a real-world point of interest to create a historical audience segment for advertising at a later time.

Let’s dive deeper into location-based marketing!

Why Is Location-Based Marketing So Popular Right Now?

There are two primary reasons that location-based marketing has grown rapidly in popularity for advertisers. The first is how much time people spend looking at their mobile phones and browsing mobile apps. Advertisers like to reach people where they spend their time.

The second reason is that the “cookie,” which advertising companies use to build audience segments when browsing online, doesn’t work in mobile apps. Therefore, companies use current or historical location data of audiences to create behavioral segments, with location data functioning as the “cookie” for advertising in mobile apps.

History of Modern Location-Based Marketing

Location-based marketing has been around since companies began sending different messages to different mailboxes based on home addresses. With the rapid proliferation of cell phones and then smartphones, the ability to deliver advertising based upon someone’s current location, or geofencing, became the next marketing tactic embraced.

As technology has advanced, so has the impact of location-based advertising. Today, the ability to understand where an audience is, where they’ve been, and predict where they may go has drastically improved the ability to reach the right audience. This has become increasingly important for converting them into customers and repeat customers.

Types of Location-Based Marketing

Geofencing

Geofencing refers to serving advertising or content to a consumer based on their real-time location.

When a person opts in to share their location to a brand’s app and enters the designated geofenced area, they may receive a push notification from an app, a text message, or see location-based content and advertising while using an app in that location. To achieve this, brands use one of many existing technologies to set parameters around the locations consumers will receive notifications, ads or content.

The two most prominent companies providing this type of targeting are Facebook (and its sister company Instagram), and Google. Snapchat also provides location-specific geofilters, which brands can use to promote their location, an event they’re supporting or hosting, or raise awareness of their company at an event. Most push notification providers, such as Airship, also provide tools to support location-based alerts.

Geofencing Examples

The marketing tactic of geofencing refers to serving advertising or content to someone when they enter a specific location. Behind the scenes, marketers define the space that they’re interested in, whether it be a radius around a location, or a custom virtual fence around a unique business or building footprint.

When a person enters that area, they may receive a push notification from an app or a text message, assuming they’ve opted-in to receive them. They may also see location-based content and advertising while using an app in that location.

Examples of campaigns include:

Buying mobile advertising that will deliver to audiences within the desired proximity to a location, such as showing the nearest Starbucks to a current location.
Prompting someone to use a mobile payment method as they approach a cash register.
Changing the user interface of a mobile app from an e-commerce experience to store navigation and product-finding app once someone enters a store.

Geotargeting

Geotargeting refers to serving advertising and content to audiences that visited specific locations in the past. By using historical data, marketers can build campaigns that will reach much more relevant audiences, with location data serving as an indicator of an audience’s real-world preferences.

An example of this approach is a shopping mall that looked to increase their foot traffic this past Black Friday. They built a campaign to reach the audience that visited their location over 90 days to drive return visits. The campaign ran across the mobile advertising ecosystem and was successful enough that they’re adding geotargeting as an ongoing campaign strategy.

Automotive dealers can also make great use of geotargeting but should refine their approach. Instead of building audiences over longer periods, their most relevant audiences are seen on their lots within a narrower time frame. The reason: Once someone shows up at a dealer’s physical location, they’re typically in the final stages of their buying cycle. Marketers shorten their look-back window for building car shopping audiences, looking back two weeks, one week, and sometimes less..

In contrast, a ski resort wouldn’t want a geotargeted audience over such a short time frame. One of their most relevant audiences is last season’s visitors. The takeaway is that it’s crucial for brands and marketers to adapt their location-based marketing strategy to fit their business and their customers.

Geotargeting Examples

Geotargeting refers to serving advertising and content to audiences that visited specific locations in the past.

Examples of campaigns include:

Locating the audience that recently visited auto dealer lots, as they’re likely in the market for a new car.
Identifying the audience that visits Dunkin’ Donuts, but hasn’t been back in 30 days, and reaching that segment to win them back.
Finding visitors to competitive locations, also known as geoconquesting.
Reaching the audiences for seasonal or time-specific events, such as state fairs, renaissance fairs, and conferences.
E-commerce companies finding shoppers that visit their competitors’ brick & mortar locations to encourage them to purchase online.
Similarly, a consumer packaged goods (CPG) company with products on the shelves at very specific retailers can use location-based marketing to find and reach shoppers of those retail locations.

LOOKING FOR MORE INFO? DOWNLOAD “UNDERSTANDING & SELLING LOCATION BASED MARKETING”.

Geoconquesting

Brands use the geoconquesting tactic to reach audiences that visit their competitive locations. For example, Burger King utilized geoconquesting to run a campaign offering the one-cent whopper to audiences that had their app open when they visited a McDonald’s location.

This tactic can be used when an audience is nearby at the moment, but also works very well when applied to reach historical audiences.

We have a great example of how Moe’s Southwest Grill used this tactic to increase conversions by 67%!

Which Industries Are The Best Fit For Location-Based Marketing?

The businesses that make the best fit for location-based marketing campaigns typically have physical locations or care about audiences that visit those locations, as mentioned in the e-commerce and CPG examples above.

Retail

The retail industry provides an optimal fit for location-based marketing. Marketers build audiences based on both real-time and historical location data. The timeframe they look back can vary based upon the type of retail that it is. For example, mattress stores may only want location-based audiences that have visited in the last 7 days. Higher selling price items are purchased less frequently, with much research done online and ahead of time, requiring marketers to act fast.

On the other hand, clothing retailers may know that their target audience comes shopping every 90 days, so they’ll look back over a 3 month period to build their location-based audience. While there are dozens of niches within retail, here are a few that we see using location-based marketing most frequently.

Clothing
Electronics
Grocery
Convenience Stores
Shopping Malls
Hardware Stores
Big Box Retailers
Mattress Stores

Automotive

Car dealers have also become skilled at location-based marketing, prepped by a long history of trying to ensure their campaigns reach their local market. There are two primary audiences in automotive: those in the market for a new car and those that need their car serviced.

Similar to the retail example with high average selling prices, automotive marketers know that once someone shows up on the lot to purchase a new car, they’re buying cycle is almost complete. For this reason, marketers use both real-time geofencing as well as geotargeting by looking back over a five to seven-day period. This shorter time window ensures they’re reaching people not only while their on the lot, but while they’re still considering their purchase.

The use case for driving service visits with location-based marketing is also straightforward. Dealers build location-based audiences that visit the major oil change chains, like Jiffy Lube, to win the business of those customers.

Food & Dining

The marketing techniques of geotargeting, geofencing, and geoconquesting are also a natural fit for food and dining establishments, with one caveat. Location-based audiences built for single-location restaurants or establishments are typically never large enough to create a meaningful campaign for their own location.

For this reason, quick-service restaurants with a national or regional presence, as well as some local chains with 10+ locations usually have the most success with geotargeting.

However, a local coffee shop could easily run campaigns to Starbucks and Dunkin’ audiences to win their business.

E-commerce Retailers and Brands

For brands with both physical locations and e-commerce channels, location-based marketing works well. Pure-play ecommerce retailers and brands can also take advantage of these strategies, although the use case is different, and primarily focused on geoconquesting.

For example, Zulily, which sells a wide variety of products, may decide they wish to bolster their shoe business. As one component of their marketing strategy, they would run location-based marketing campaigns to audiences that have visited their retail competitors: DSW, Rack Room, Shoe Carnival, Famous Footwear, etc.

Consumer Packaged Goods (CPG) Brands

Location-based marketing can also work for companies that have products on the shelves at specific retailers. Said another way, if the product can be found just about anywhere, then location-based marketing isn’t the best strategy, but can work if it’s a unique product at select locations.

For example, Jeni’s Splendid Ice Creams is a high-quality, high-priced ice cream that’s primarily found at locations like Whole Foods, Fresh Market, and Earth Fare. Marketers for Jeni’s could use location-based marketing to reach shoppers of those locations to drive brand awareness and purchasing.

Trade shows, Seasonal Events, Travel & Hospitality

Location-based marketing can help reach historical customers from season to season and also help track and paint a picture of what trends may lead to other offerings at other times of the year.

Examples include finding audiences that visited:

Specific sporting events, or audiences over the course of a season
Resort destinations, whether they’re ski and snowboard resorts, amusement parks, or beach communities
State Fairs, Renaissance fairs, haunted houses

Where Does Location-Based Advertising Appear?

Because location-based audiences begin with opted-in data from a mobile phone, the simplest place to run a location-based marketing campaign is on a mobile device. Many companies make the process of finding, building, and reaching the audience straightforward. We’ve listed many in the “Major Types of Location-Based Marketing Service Providers” section later in this blog.

The farther away a marketer moves from the mobile device, the more challenging it becomes, and sometimes more costly, to reach location-based audiences.

The social media channels – Facebook, Instagram, Snapchat, and Twitter – as well as Google, not only provide the ability to reach location-based audiences on their mobile apps but also when people are browsing on mobile web and desktop. They do this by matching the login credentials to the various devices someone may use.

To serve geotargeted ads to audiences while using their desktop computers, marketers must work with companies that perform cross-device matching. While Reveal Mobile does not perform any cross-device matching, the companies that do so enable this by matching mobile devices to desktop computers. This can occur by synchronizing website cookie data to smartphones, or by matching the IP addresses that the various devices connect to.

This same process of cross-device matching can then be used to match mobile audiences to smart TV, or over-the-top (OTT) viewers.

When Location-Based Advertising Is (Or Isn’t) A Great Fit

Location-based advertising is a great fit for any and all retailers, grocery stores, restaurants and any other place people visit. These industries make great use cases because of their physical footprint, which syncs to location data. When advertisers create an audience based on their previous actual visitors, they entice those customers to return and to increase customer loyalty.

While location-based advertising is a great fit for most, there are limitations. Location-based advertising would not be a great fit with products that can be found almost anywhere (e.g., soda, toothpaste, milk). These brands tend to use demographic targeting strategies to reach their customers. Other limits are set by the regulatory organizations that have standards about audiences derived from sensitive locations, such as health care points of interest, and against creating discriminatory audiences.

Who Provides Geotargeted Audiences?

Mobile Audience Marketplaces

Mobile audience marketplaces have platforms you can log in to and audience builders where you can browse and select the audience you need from a wide variety of providers. Most are just searchable directories of audiences, while some do allow for custom audience creation. Examples include:

Pushspring
Kochava Collective
Factual
Adsqaure
Ubimo

Mobile Audience Providers

These firms sell mobile location audiences, but typically have a standard set of audiences. Building and creating custom location-based audiences can be a managed service approach. Examples include:

Reveal Mobile*
Cuebiq
Unacast
Gravy Analytics
Safegraph
X-Mode

Demand Side Platforms (DSP)

The first two categories above provide audiences but you must activate those audiences on a different platform. Demand Side Platforms are what many advertisers and agencies use to place the media buys.

In these DSPs, an agency can specify the parameters for a media buy, and often import their target audience from another provider. Some DSPs also have an audience builder or have a managed service that will target your audience using the DSP’s data, requiring you to activate media on the same platform. Examples include:

Thinknear
Simplifi
Zapp360
Marketron
Sito Mobile
Centro
Choozle
Verve

* What sets Reveal Mobile apart is the ability to not only create custom audiences, reporting, analytics, but also the ability to port those audiences to your most valued channels. Read more about the VISIT platform.

Custom Audiences Versus Pre-Packaged/Out-Of-The Box Audiences

The ability to create custom audiences with location-based marketing refers to building audiences that need flexibility with date ranges and/or locations. Most audience marketplaces, providers, and demand-side platforms provide out-of-the-box audiences with a pre-defined look-back period. A marketer can choose from Macy’s shoppers from the last 30, 60, or 90 days, with no other control or configuration available.

The ability to create custom audiences for location-based audiences allows a marketer to choose any date range or time frame relevant to them. For example, if a marketer wishes to reach an audience that visited specific NFL football stadiums on game day weekends, they’d need the ability to create customize the locations and the date ranges to build that audience.

Consumer Privacy and Location-Based Marketing Best Practices

Brands and agencies using location-based marketing must understand how these audiences are created, and how consumer privacy is protected. A critical step is ensuring that the location data used, whether it’s derived from GPS or some other signal, is opted-in, and that the consumer knows that they’re opting in to share location to help serve advertising.

Most, if not all, of the location-based marketing companies in this space, follow this practice today and adhere to codes of conduct from various industry groups. The data should always be aggregated and anonymized, to prevent any individual tracking. This is also a common practice as there is no incentive to build a campaign around reaching a single person. Marketers prefer to reach tens to hundreds of thousands within their target market.

Another way to ensure privacy is not using location-based audiences built from “sensitive” locations, such as anything related to healthcare unless the consumer has given explicit consent for this specific use case.

How Data Is Collected

The primary data used to create a location-based audience is GPS data collected by mobile apps. This data takes the form of latitude/longitude coordinates. For example, here are the lat/long coordinates for The Washington Monument in Washington, D.C.: 38.8895° N, 77.0353° W.

Lat/long data received must then be matched to a “point-of-interest” database to create audience segments from that data. Points of interest are business and retail locations, not home addresses.

Reveal Mobile uses GPS data, as well as location data gathered from Bluetooth beacons, to create audience segments. Many companies also use the IP address that your phone connects to, as well as the WiFi network, to determine location. As is the case with all data, a person must grant permission to an app to share this information.

Privacy Policies

Working with location data requires a consistent and thoughtful approach to privacy and data security across many levels. Ensuring the privacy of consumers should be top of mind for all companies in the advertising ecosystem.

With location-based marketing, companies only collect opted-in location data and then aggregate and anonymize the data so that it cannot be directly tied back to any individual. Marketers do not use this information to target individuals, as an audience of one provides little to no value. It is much more effective to reach audiences who share similar behaviors and characteristics, delivering ads to large groups rather than single individuals.

Furthermore, though there is limited federal/state legislation covering what data can and cannot be collected or how it is used, the industry self-regulates through organizations such as the Network Advertising Initiative and the Digital Advertising Alliance. They play a vital role in the industry to create protections for consumers and help inform and educate the industry on upcoming legislation.

Consumer Privacy

“Anonymizing” data means not collecting personal details, such as name, email, and phone, while putting the data collected into aggregated groups, like coffee drinkers and grocery store shoppers. Location-based marketers don’t have any incentive or interest to ever utilize individual details. If someone chooses to opt out of sharing location data with an app or chooses their phone’s settings to limit ad tracking, the data collection stops to honor those choices. There are typically methods of opting out directly. For example, people can also opt-out of data collection from Reveal Mobile at optout@revealmobile.com.

Industry Regulations and Best Practices

Numerous trade groups help companies understand and comply with existing privacy best practices and regulations, and prepare for changes and new legislation. For example, groups like the Mobile Marketing Association, Interactive Advertising Bureau, Digital Advertising Alliance, Future of Privacy Forum, and the Network Advertising Initiative all provide committees, groups, and discussions focused on mobile privacy. Reveal Mobile belongs to many of these and undergoes annual privacy audits through the Network Advertising Initiative.

Any successful campaign will rely on multiple different strategies and tactics to be successful. While data will continue to play an important role, the ad copy and creative can be just as important, if not more so. Location-based marketing allows brands and agencies to leverage new technology to ensure their creativity finds the right audience more frequently, and at the right time.

Additional Location-Based Marketing Resources

If You’re New to Location-Based Marketing

If you’re relatively new to the world of location-based marketing and want to learn more, check out the resources below to give you an overview of what it is and how it can help you.

Take a Deeper Dive into Location-Based Marketing

If you have a solid foundational understanding of location-based marketing, all of the resources above will still be a great refresher. However, the articles, whitepapers, and blog posts below provide a more in-depth look at geotargeting strategies and data analysis.

To get started with location-based marketing, contact us.

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What Is Location-Based Marketing?