You’ve just joined an agency or have been tasked with running a type of campaign you’ve never encountered before. Your client wants to reach the audiences that visit their own locations, as well as competitive locations. You’ve now found yourself inside the world of geotargeting and location-based marketing, but it’s new to you. Here is where to start.
Location-based marketing is the strategy that matches opted-in, privacy-compliance location data received from smartphones to points of interest such as restaurants, grocery stores, and shopping malls. Marketers then use this data to create location-based audiences and analytics. Marketers create and reach their desired audiences in order to serve them more relevant advertising and content. Let’s first review some terminology.
Location-Based Marketing Terms
The three main components to location-based marketing are geofencing, geotargeting and geoconquesting.
• Geofencing refers to drawing an area around a location, or locations, where an audience visits in order to serve them real-time ads and content. There are two approaches for how to achieve this: radii and polygons. A radius creates a circle around a point of interest and assumes that when a mobile device is found there, they are visiting the location. The trouble with this is that it may pick up passersby rather than actual visitors to a location. Polygons, or drawing shapes that conform to the building’s footprint and/or parking, are more precise because they outline the physical structure of the point of interest.
• Geotargeting refers to creating audiences based upon matched historical visits to real-world locations and points of interest. Marketers create audiences and deliver ads and content based upon the locations most relevant to their campaigns. As examples, audiences seen at coffee shops are identified as coffee drinkers or audiences seen at auto dealerships are identified as car shoppers.
• Geoconquesting is when marketers create audiences from visitors of competitive locations with the purpose of converting those customers into their own. A quick example: A Moe’s marketer wants to win over audiences that also visit Chipotle. They’ll build a geoconquesting audience perhaps containing a coupon or other offer to win over these audiences.
The biggest benefit of location-based marketing is that markers can understand their customers and their competitors’ customers based on their real-world interests. This differs from typical targeting based on demographics or online, cookie-based marketing. Rather than creating audiences from inferred interests due to website visits, likes or follows on social media, marketers using location-based audiences have a higher degree of confidence in the relevancy of their audiences since these shoppers have actually been to the stores, ate at those restaurants or attended the events. Location-based analytics also shows marketers recency and frequency of their audiences, empowering them to take action to improve or maintain customer loyalty. Finally, marketers can track if their campaigns attributed to their increase, or decrease, in foot traffic and then make more informed campaign and content decisions based on the analysis.
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.
When Location-Based Marketing Is Or Isn’t A Great Fit
Location-based marketing 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 marketers create an audience based on their previous actual visitors, they entice those customers to return and to increase customer loyalty.
While location-based marketing is a great fit for most, there are limitations. Location-based marketing 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.
When a marketer is ready to start testing location-based marketing, they can easily begin with the geotargeting tools that both Google and Facebook provide. Their products make the process fairly simple and will deliver ads in real time to audiences visiting certain locations or geographic areas. When their needs get more sophisticated, they move to more advanced options. These provide more customization when creating geotargeted audiences, the ability to create audiences from historical visitation, such as visitors to their own locations or competitors’ locations, and more options for delivering those campaigns across the digital ecosystem.
The key with location-based marketing, just like any targeting approach, is to test, measure and refine. While it can seem daunting at first, with a little practice and some basic education, any marketer can quickly create and execute successful geotargeting campaigns.