Location-Based Marketing, Hyperlocal Advertising, Geotargeting, and Geofencing 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 customer 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 smartphone. 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.
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Why Is Location-Based Marketing Happening 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 upon 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 the 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.
What Are Examples Of Real-Time Location-Based Marketing, Or Geofencing?
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 by drawing a 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 while 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 a store navigation and product-finding app once someone enters a store.
What Are Examples Of Geotargeting, Or Location-Based Marketing Based Upon Previous Locations?
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 of 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”.
What 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.
The retail industry provides an optimal fit for location-based marketing. Marketers build audiences based around 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.
- Convenience Stores
- Shopping Malls
- Hardware Stores
- Big Box Retailers
- Mattress Stores
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, their 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, in order 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 in order 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 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 into 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. There are many companies that make the process of finding, building, and reaching the audience straightforward. We’ve listed out many below in the “Major Types of Location-Based Marketing Service Providers” section.
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.
In order 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.
Who Provides Geotargeted Audiences?
Mobile Audience Marketplaces
Mobile audience marketplaces have platforms you can login 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:
- Kochava Collective
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*
- Gravy Analytics
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 times import their target audience from another provider. Some DSPs also have an audience builder that 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:
- Sito Mobile
* 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 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.
Technology & Privacy
What Data Is Used and How Is It 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 in order 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, in order to create audience segments. Many companies also use the IP address that your phone connects to, as well as the WiFi network, in order to determine location. As is the case with all data, a person must grant permission to an app to share this information.
Working with location data requires a consistent and thoughtful approach to privacy and data security across many levels.
Privacy for Consumers
“Anonymizing” data means not collecting personal details, such as name, email, 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 in order 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 email@example.com.
Following Industry Regulations and Best Practices
There are numerous trade groups that 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.
For more information on the wide range of use, case, analysis, and other information on on location-based marketing and custom audiences check out the Reveal Mobile Resources page.
To get started with location-based marketing, contact us.