Location is big and data based on location is even bigger. With the knowledge of location, marketers can target customers based on their positioning. It is about targeting users when they are about to make a purchase decision or researching about it.
Location based marketing (LBM) is all about sending right message to right audience at right time.
LBM is about targeting people in a certain location or area to promote products or services and to provoke impulse buying at the right time when they are near to your business location. Smartphones are the best source for LBM.
With advance technologies, marketers able to identify users within a certain location or area to show offers via mobile ads, notifications or SMS.
Marketers are using location data smartly. For example, a restaurant marketer will use LBM to target people nearby restaurant via time based notification or SMS.
At the time of lunch, they can send offer on lunch to customers who are nearby.
Smartphones opened vast opportunities for marketers to target people. People carry smartphones all the time and transmitting their location signals which marketers identify and use to send marketing messages.
There are various techniques available to identify location and send messages. Let’s discuss them in details.
Local search ads
This is a very basic form of location based marketing. Marketers can create ads to publish on search networks to target people from specific locations. Once someone search of your product or service in the specific location you are targeting, you ad appears and serve the purpose.
For example- Bob’s car service company based in Orlando, FL can set ads location preference to Orlando, FL. When somebody search for car service company in Orlando, Bob’s car service ads show up to them.
Geo-fencing is a technique to target mobile users within a certain area. To use this technique, first you need to create a virtual perimeter or fence on map around the area you want to target.
You can use google map to draw this virtual fence. This fence can be as big as a city or as narrow as a small room. It depends on your target. Once geo-fence is created, it will trigger you enter and exit events of mobile phones.
These events are triggered from GPS, WI-FI or cellular signals. You can use this info to send message to mobiles via SMS, push notification and you can display ads on apps and mobile sites.
Since user is in a particular location, he would better connect with your message.
For example- During a trade show, a company created a geo-fence around the convention center and they are showing mobile ads to visit their booth to people who are entering the geo-fence.
This way they are increasing the traffic to their booth and getting maximum exposure from visitors.
Geo-targeting is more specific and target oriented technique to reach people in a location. When you use age, gender, income level along with location information to target people, it is called geo-targeting. It is more specific and target oriented then geo-fencing.
For example- A store in a mall sells fashionable handbags which are costly and trendy. It targets women of age 25 to 45 and economically affluent.
So with geo-targeting they display mobile ads to the women of age 25-45, who are demographically affluent and nearby mall.
If you want to reach specific target group of customer go for geo-targeting. It will reduce the number of ads publish on mobiles.
Beacon is a Bluetooth low energy small device which can connect via Bluetooth with specific apps installed on mobile phones.
Retailers can use this to connect users and show them offers within stores, on entrance and exit and aisle by aisle. It is for high accuracy targeting.
For example- A restaurant placed beacons within the restaurant premise to connect with users. Once a user is connected with the beacon he is able to receive your message, offer or deal.
Location based marketing is the future but at this point of time there are many challenges and downsides of these technologies.
We are sure as the technology improves, we will see better products and use of these technologies. Few of the challenges are as following.
These technologies are threats to privacy of people as they track user’s proximity and store it in database of retailer. This information can be used for unwanted purposes too.
Geo-fencing and beacons both consume high battery power. Because for geo-fence GPS should be enabled and for beacon Bluetooth should be enabled which drains battery very fast if it comes in continuous use.
Unwanted messages and notifications create annoyance. It disturbs people who are not looking for your offer and deals.
Native app requirement
Geo-fencing and beacons both technologies require native apps, without apps they don’t work. It is a bigger challenge for marketers to let people download apps.
Lack of data
As these technologies are in nascent stage, we don’t have much data about the user behavior with these technologies. It takes more time to accumulate data of user reaction towards location based marketing.
Despite the challenges, future is bright for location based marketing and advertising. As per one study, 70% people find location based push notifications to be useful.
Several other studies also suggest that in coming times, these technologies will be widely accepted.
According to MediaPost, in 2015, 46% US retailers used beacon technology (up from 15% in 2014). And about 71% of them were able to understand customers’ buying patterns.
Business Insider has also estimated that in 2016 beacon based technologies drove about $44 billion worth of sales for big retailers in the US alone, 10 times higher than in 2015.
Apart from these numbers, the growing trend of the internet of things (IoT) and the idea of gadget speaking to gadgets will also work in favor of these location based marketing technologies.
Companies are utilizing location data to better understand their customers and their buying behavior. Mixture of location with other key information about a customer is the future of marketing.