What is Location-Based Marketing?
Location-based marketing allows organizations can target customers at a granular person-level using online and offline messaging based on their geographic location. Marketing teams can reach customers based on location data such as their proximity to a store or events taking place in their area.
The effectiveness of location-based marketing across the customer lifecycle has been proven to be effective, from discovery and purchase, through engagement and retention. If used correctly, location-based marketing can be used to target specific customer segments and offer targeted offers. It also improves the customer experience in a market that values immediate gratification. Location-based marketing, for example, may notify a prospect about a product in stock at a nearby store so they can pick it up immediately.
Different Types of Location-Based Marketing
The growth of connected devices has made location-based marketing possible over the last few years. It seems like everything is connected to the internet today – cars, phones, watches, and many more. These devices often track their owners’ location so there is plenty of spatial and location data. Marketing teams can gain more context from these data to help them reach customers and improve customer experience.
This location data can be channeled in many different ways by marketers:
Geotargeting allows users to be identified by their geolocation-based targeting and then to receive personalized messages based on that location. A consumer may receive push notifications or messages based on their proximity to a store or region if they have opted in to allow an app to access their location.
How it works
Geotargeting relies on IP addresses. Each connected device is assigned a unique IP address, which makes them easily identifiable. It is possible to match IP addresses of devices with zip codes, countries, and so on. To determine the location of users.
Geotargeting has the key advantage of personalized customer experiences. Marketers can target customers based on their specific location needs, such as weather and local news.
Google search results are a popular example of geotargeting. Google uses location data to provide information about coffee shops within a given area if a user searches for “coffee shops” on Google search results.
Geofencing refers to the creation of a boundary within an area. The boundary will be made visible to target audiences and they will then become an active target for the marketing strategy. They might receive offers, content, or other messaging from the brand. A boundary is an area where the company has a shop and it includes a shopping center.
How it works
Geofencing uses GPS technology to establish a border. A notification is sent to the target user when they cross this border.
Geofencing allows marketers the ability to target large areas such as malls and event spaces. This allows marketers to target users within a defined area. Geofencing is less precise than other tactics but can still be useful if you have a large convention to follow or want to drive traffic directly to your store.
Geofencing uses real-time location data. location data-target marketers to either encourage consumers to interact with their products or divert them from competing products.
Geofencing can be used by retailers to reach customers near their shops to encourage them to come in to buy. If a customer reviews a product online, they might be notified that the product is available in stock at a nearby shop.
Beacons connect devices using Bluetooth or WIFI to communicate with pre-defined applications within the range of the beacon. Beacons are a great way to target customers in a narrow geographic area.
How it works
Beacons send a signal through your device to a server that requests content be sent to you. This could be an email, push notification, or other types of signal. Imagine a sports stadium encouraging attendees to download its app for ticketing and concessions. The venue would install beacons that detect when the device has this application installed.
To take advantage of Bluetooth, users must be opted in and have Bluetooth enabled. This medium of location-based targeted communication does however give you more direct communication channels with customers.
Users can be tracked indoors by organizations in a more precise way. This allows marketers to target customers more precisely and gives them a better understanding of customer behavior. These notifications can be received by users who are not connected to the internet.
To send offers to customers browsing the aisles, stores can place beacons. A grocery store might use beacons to detect when customers are in the ice cream aisle and send them offers on ice cream cones.
Mobile targeting is when marketers target consumers via their mobile devices with advertising. Marketers want to avoid advertising and make sure their ads are context-specific. This could be based on location, time, device or device.
How it works
Segments can be created in your location-based mobile marketing platform to define who you are targeting and the qualifications that you will use to target them (when they enter a specific area or are within close proximity to your store).
This allows marketers to target users directly from their devices, allowing for a more personal connection. Marketers often get greater returns when they use a more targeted approach to advertising.
Targeted social media ads that are based on location data may encourage people to visit a nearby store, restaurant, or event.
Geo-conquesting is a method that uses location data to divert prospects from competitors. A car dealership might set a boundary around the lot of a competitor. If a target customer crosses that boundary, they’ll be sent an email encouraging them to visit the other dealer.
How it works
Geo-conquesting uses GPS technology in order to target users within your vicinity.
Companies can increase market share and attract new customers by encouraging those who are already looking for products in the area to buy from them instead of a competitor.
Burger King used geo-conquesting to great success to divert potential Mcdonald’s customers to their restaurants. The Burger King app was encouraged to be downloaded by consumers. The Burger King app sent out a promotion for a 1 Cent Whopper to customers who came within 600 feet of McDonald’s. It also directed them to the closest location.
Why Use Location-Based Marketing
Both marketers and consumers can reap the benefits of location-based marketing.
Marketers can create more targeted messaging to increase awareness and foster relationships with prospects and customers. These ads are often less expensive because they are targeted. Because consumers are becoming more particular about the brand messaging they receive, they get personalized offers at convenient times. This improves their overall experience.
Some of the reasons that marketers use location-based marketing strategies are:
Increase Immediate Foot Traffic
Local businesses can increase foot traffic by using location-based marketing. This involves informing people in the area and offering them a deal.
Deliver More Relevant Ads
To create personalized, more relevant ads, marketers can use real-time data from the location. It is not limited to the physical location of a person. Data about location can be used to inform timing and messaging. Analysis may reveal that consumers are more likely to interact with ads when they’re on the train or commute, which can help marketers decide when to place an ad. Copy and creativity may also be informed by location data.
Marketing teams might choose to use imagery that is specific to the location of the target consumer, instead of generic imagery. Relevance and context are crucial elements of messaging that is understood, not ignored. These criteria can be met by using real-time insights.
Get Consumers to Leave the Competition
Marketers can target users who are heading to a competitor’s store to encourage customers to stop by their store, thereby gaining market share.
Improve the User Experience
You can offer a better customer experience by targeting customers when they most likely will need your services.
Marketers must consider the location of their customers and their own location to be successful in location-based marketing. Businesses located on streets with low foot traffic might not be interested in investing in location strategies. Stores that aren’t located on the street, such as apartments or hotels, need to be sure to target only those who visit the building to shop. Regular alerts can be annoying and may damage brand reputation.
Before making any ad spend, it is important to evaluate your customer base and other factors that have an impact on ROI.
Latest Trends in Location-Based Marketing
Marketers are now able to harness these trends and go beyond what is expected of them in terms of location-based marketing.
The augmented location allows brands more than just to send notifications. Marketers can create experiences that are based on the current location of the user.
Think of Pokemon Go as an example. This app uses the camera function on their mobile devices to track a user’s position and place a digital creature in that user’s space.
Yelp and other brands are taking advantage of this trend by allowing users to point their cameras at their surroundings and view listings for nearby restaurants.
Another trend is location-based advertising. Many retailers across the country are now looking to expand their location-based marketing efforts. Nearly 60% of retailers said they would spend more money here in 2019. However, marketers who use location-based marketing strategies are mindful of user privacy.
Beacon Technology/Proximity Marketing
Beacon technology uses Bluetooth to share information between user phones, as previously mentioned. Marketers are increasingly leveraging beacons in proximity marketing, and other location-based activities as they become more sophisticated. To deliver highly targeted messages to users within a narrow range, proximity marketing uses beacons.
Apple with its iBeacon and Google with Eddystone EID and Project Beacon are two of the most prominent beacon technology developments.
Hyperlocal marketing strategies use location data and time-sensitive insights to engage customers. Hyperlocal marketing allows marketers to target a small number of customers in a specific area or block. This allows for campaigns to be more personal and easy to measure. Hyperlocal campaigns can be tailored to specific audiences, which is a plus considering personalization plays such an important part in marketing today.
Hyperlocal marketing was the norm before mass commutations. Marketers could reach people far beyond their immediate vicinity with the help of television and the internet. Marketers are returning to this strategy while also incorporating digital advances.
Privacy Concerns in Location Based Marketing
You are not the only one concerned about privacy in location-based marketing. Businesses that want to make the most of location-based marketing are concerned about privacy. 59 percent of companies say that these concerns prevent them from using these types of applications.
It is important to distinguish between using location data to enhance customer experience and appearing intrusive to customers. Customers are wary of cyberattacks that could expose their private information to wider, potentially malicious, audiences. These cyberattacks can be detrimental to both customers and businesses. In fact, 64 percent of consumers said they wouldn’t shop with a business whose data was stolen.
Marketers must make sure that users are able to opt into location-sharing services through apps. Privacy concerns can be reduced by anonymizing data. This is because information about behavior and preferences is not linked to any specific email addresses or names. To reduce the chance of an attack succeeding, organizations should ensure that cybersecurity protocols and solutions are in place.
Many regulating bodies are aware of the personalization techniques through data collection and have established rules to protect consumers.
GDPR is one of the most stringent regulations. It applies to all businesses that do business in the European Union. GDPR prohibits companies from targeting users without explicit opt in and contains strict guidelines about the use and storage EU citizen data. To better understand what your company can do with its marketing efforts, consult your legal team.
Before launching a location-based marketing campaign, organizations must comply with local privacy laws.
Beyond Privacy Concerns
Many consumers will share their information if they are assured that privacy and data protection are being handled securely. These are some statistics to consider:
- Nearly 100 percent of consumers would be willing to share their data in exchange for cash rewards
- Nearly 90% would share this information for discounts based on location
- 66% would share data about loyalty points/programs
Your company can provide a better user experience, which can help you build relationships with prospects and customers.
Get Started With Location-Based Marketing
To make sure your location-based marketing efforts are effective and don’t negatively impact your marketing ROI. Before you start:
Discuss privacy concerns with your legal department: This is the first step. Discuss your options with your legal team in order to determine who you can target and whether the tactics you are using are compatible with local laws.
Set goals: It is essential to establish clear goals and KPIs to determine what success looks like. What is the campaign’s goal? Do you want to alert people in your store, or steer them away from a rival?
Select a targeting technique: Using the goals, select a location target marketing such as beaconing, geo-conquesting, or geofencing (see the first section). The targeting method chosen should be compatible with your goal. Geotargeting, for example, could be a great way of driving former customers to your store. Geofencing might be a good way of attracting new business to a restaurant during lunch hours.
Analyze the Results: Take a look at the data and see which tactics were successful for your business. To get a better understanding of conversions, combine geo-zone analytics with marketing attribution analytics.
Examples of Brands that use Location-Based Marketing
- Adidas: Adidas used location extensions in search ads to encourage customers to shop at their closest store. A 680% increase was seen in the ROI when one out of five people who visited the page actually went to a physical shop.
- Whole Foods: Whole Foods used geofencing as well as geo-conquesting strategies to increase market share and convert more customers. To encourage shoppers to shop at Whole Foods, the supermarket offered special discounts to customers who were already shopping nearby. Special offers were also offered to shoppers who already planned on visiting Whole Foods or simply passing by. This created a better experience for existing customers and attracted new customers. The 4.69% conversion rate for this campaign was higher than the national average of 1.43 percent.
Combining Location Data with other Data Points
It is useful to understand the customer’s behavior and offer more tailored offerings. It is only one data point. Marketing teams need to combine location data with other insights in order to create customer experiences that are exceptional.
To gain a better understanding of your customer, location data should be compared to attribution models like unified marketing measurement (UMM). This way, data can be centralized to illuminate marketing strategies based on location. But creative preferences, the type, and device of the consumer’s user, when they shop, as well as the historical date they purchased the item.
Location marketing strategy efforts should not be separated from other marketing strategies. Instead, they should be used to inform wider strategies and create a better view of your customers.