If you have recently joined an agency or have been given the responsibility to handle a campaign that you have never dealt with before, and your client wants to target both their own and their competitors’ audience who visit their physical locations, you are now entering the realm of geotargeting and location-based marketing. However, since you are new to this concept, this is where you should begin.
What Is Location-Based Marketing?
First, let’s review some terminology before we delve into location-based marketing. This marketing strategy involves matching privacy-compliance location data obtained from smartphones, with points of interest like restaurants, grocery stores, and shopping malls, as per the preferences of users. The data collected is then utilized by marketers to generate location-based audiences and conduct analytics. This enables marketers to effectively target their desired audiences and provide them with more pertinent advertising and content.
Location-Based Marketing Terms
Geofencing, geotargeting, and geoconquesting are the three primary elements of location-based marketing.
Geofencing is the act of creating a designated area around a location or locations where individuals visit, in order to deliver ads and content to them in real-time. There are two methods for accomplishing this: radii and polygons. Radii involves creating a circular area around a specific spot and assuming that when a mobile device is present there, the user is visiting the location. However, this approach may inadvertently include people who are just passing by instead of actual visitors. On the other hand, polygons entail drawing shapes that accurately match the building’s shape and parking area, making them more precise in outlining the physical structure of the location of interest.
Geotargeting involves the formation of audiences by considering past visits to physical locations and points of interest. Marketers devise audiences and provide advertising and content based on the locations that are most pertinent to their campaigns. For instance, audiences observed at coffee shops are classified as coffee consumers, while audiences seen at car dealerships are recognized as potential car buyers.
Geoconquesting refers to the strategy employed by marketers to target individuals who visit rival locations, so as to convert them into their own customers. To illustrate, let’s consider the case of a marketer from Moe’s who aims to attract customers who also frequent Chipotle. They will construct a geoconquesting audience, potentially including a coupon or similar incentive, in order to persuade these individuals to choose their brand instead.
The main advantage of location-based marketing is that it allows marketers to understand their customers and their competitors’ customers by analyzing their real-world interests. This is different from traditional targeting methods that rely on demographics or online, cookie-based marketing. Instead of creating audiences based on assumed interests from website visits, likes, or social media follows, marketers who use location-based audiences have a greater level of confidence in the relevance of their audiences because these shoppers have actually visited the stores, eaten at the restaurants, or attended the events. Location-based analytics also provide information on the recency and frequency of the audiences, enabling marketers to take action to improve or maintain customer loyalty. Lastly, marketers can track if their campaigns have affected the increase or decrease in foot traffic, allowing them to make more informed decisions regarding their campaigns and content based on the analysis.
Reasons to Use Location-Based Marketing
There are numerous advantages that location-based marketing can provide to both consumers and marketers.
By strategizing step by step, marketers have the ability to provide more precise communication that enhances awareness and cultivates connections with both customers and potential clients. Additionally, the focused nature of these advertisements frequently leads to reduced unnecessary expenses. With consumers becoming more discerning about the branded messages they engage with, they receive customized offers during convenient moments, thereby enhancing their overall satisfaction.
One of the main reasons marketers are utilizing location-based tactics is that they provide several benefits.
Increase Immediate Foot Traffic
- Location-based marketing can drive foot traffic for local businesses such as retail stores or food service, by informing users in their market of proximity and enticing them with an offer.
Deliver more relevant ads
- Marketers can use real-time location data to create more relevant, personalized ads.This is not necessarily restricted to where a person is physically. Location data can also inform timing and messaging. For example, analysis may show that a consumer is more likely to engage with an ad when they are on the train or commuting, helping marketers determine when to serve an ad. Location data may also inform copy and creative. For example, marketing teams may choose to use images of the city the target consumer lives in, rather than generic imagery. Context and relevance have become crucial components of messaging that is engaged with, rather than ignored. Using these real-time insights ensures these criteria are met.
Drive consumers away from the competition
- By targeting users heading to a competitor’s business, marketers can encourage customers to visit their store instead, winning market share.
Create a Better User Experience
- By targeting customers when they are likely to need your services most, you can provide them with a better user experience.
In order to succeed in location-based marketing, it is crucial for marketers to take into account both their own location and the location of their customers. For instance, businesses situated on a street where there is limited pedestrian activity may not find it worthwhile to invest in strategies specific to location. Likewise, establishments that are not situated on street level, such as those within apartment buildings or hotels, should be cautious when targeting individuals who are solely visiting the building to shop. Sending regular alerts to those who have no interest in visiting the store may result in irritation and harm the reputation of the brand.
Before committing ad spend, it is important to evaluate your customer base and consider impactful external factors to understand how these tactics will affect ROI, just like with any other marketing investment.
Trends in Location Based Marketing
These trends have enabled marketers to exceed the usual expectations of location-based marketing.
Augmented location provides brands with a broader range of possibilities to utilize location data beyond simply sending notifications. Marketers can now design experiences that are tailored to the user’s current location.
Consider Pokémon Go as an example. This application detects the whereabouts of the user and, with the aid of the mobile device’s camera, inserts a virtual creature into the user’s real environment.
Yelp and similar brands are also participating in this trend by enabling users to use their camera to view nearby restaurant listings.
Location-based marketing is experiencing a surge in usage as retailers nationwide are showing interest in investing in this marketing strategy. Almost 60 percent of retailers have indicated their intention to allocate their budget towards location-based marketing in 2019. However, marketers are being cautious about user privacy as they embrace location-based tactics.
Beacon Technology / Proximity Marketing
Beacon technology, which utilizes Bluetooth to communicate with user phones, is increasingly being utilized by marketers in location-based efforts, specifically in proximity marketing. This enables the delivery of highly-targeted messages to users within a very limited distance.
Apple has made significant advancements in beacon technology with the creation of the iBeacon, while Google has also contributed to this field through the development of Eddystone-EID and Project Beacon.
Hyperlocal marketing tactics utilize location data and real-time insights to effectively reach and interact with customers. By targeting a narrower range of consumers within a particular town or even a specific block, marketers can create more personalized campaigns that are also more easily measurable. Moreover, as personalization plays a crucial role in modern marketing, hyperlocal campaigns provide the flexibility to tailor messages to niche audiences, which is a major advantage over larger national campaigns.
Hyperlocal marketing was a common practice prior to the advent of mass communication methods. However, with the expansion of the internet and television, marketers gained the ability to disseminate messages beyond their immediate vicinity. Nevertheless, marketing teams are now returning to this traditional approach while integrating new digital advancements.
Privacy Concerns in Location Based Marketing
If you have concerns about user privacy during the implementation of location-based marketing, you are not alone. Many businesses are worried about privacy while trying to maximize the benefits of location-based marketing. In fact, 59 percent of companies state that these concerns are hindering them from progressing with such applications.
Using location data to enhance customer experience and not making customers feel intruded upon is a delicate balancing act. Alongside the concern of sharing personal information with your company and employees, customers are also cautious about potential cyberattacks that might expose their data to malicious individuals. These attacks have negative consequences for both customers and businesses, as demonstrated by the fact that 64 percent of consumers would refrain from patronizing a business that had experienced a data breach resulting in stolen information.
In order to address these concerns, marketers need to guarantee that users have the option to participate in location sharing services while using applications and also have the choice to withdraw. The process of anonymizing data can additionally assist in lowering privacy concerns by disconnecting information about behavior and preferences from identifiable names or email addresses. Lastly, organizations must implement cybersecurity solutions and protocols to minimize the likelihood of a successful attack.
In addition to consumer concerns, regulatory bodies have also recognized the use of personalization strategies involving data collection, and have implemented regulations to prevent companies from misusing consumer data.