Brands come in all sizes and in a multitude of categories, but all brand marketers have something in common: They want their marketing messages to reach customers and prospects at times and in places where they will be most effective. With the widespread and growing availability of location-targeted mobile ad technology, they're now able to do that as never before.
Marketers spent just over $17 billion on location-targeted mobile advertising last year, according to a study by BIA/Kelsey. It projects that to more than double, to almost $39 billion, in 2022. In a separate study, conducted by 451 Research, 98 percent of respondents said they were aware of the availability of location-targeted data for marketing purposes, 82 percent said they planned to increase their use of such data within two years, and 74 percent agreed that location data is the key to understanding why and how customers interact with businesses.
"Like a lot of marketers, our goal in the overall consumer journey is to get as close as possible to the inflection point where the consumer is making a purchase or a purchase decision and to provide a marketing message that is contextually relevant to that particular moment," says Brad Feinberg, VP of media and consumer engagement at MillerCoors. "With place-based marketing, we look for opportunities where we can geo-fence or create specific purchasing occasions to influence the purchase decision when those moments are most important."
The advantages of location-targeted mobile advertising to marketers.
On its face, location-targeted advertising sounds like it would offer tremendous advantages over other types of advertising, and there's growing evidence to support that conclusion.
Capturing consumers on their mobile devices is the best route for brands to drive online or in-store traffic, says Marissa Tarleton, CMO at RetailMeNot, which enables data-driven promotions for brands and retailers. "We know that mobile influences 70 percent of all purchase decisions. Location data, coupled with personalized signals that consumers have shared with RetailMeNot, such as their favorite stores, results in a great in-store experience when they're out shopping," she says. "We've seen retailers drive an average 12-time return on advertising spend (ROAS) when leveraging personalized, contextualized digital campaigns to drive customers into their stores."
To measure results of place-based ads in the pre-shop space (the critical period before a consumer with an intent to buy has finalized a purchase decision), MillerCoors uses standardized regression analysis-based marketing mix modeling in addition to multitouch attribution modeling tools and other analytics. "What we've seen across the board is that, for the most part, pre-shop media is a really effective form of marketing for our brands," Feinberg says. "We've seen pretty substantive lifts in ROI as well as contributions to the overall business when we run these ads."
Feinberg points out that MillerCoors is still in the early stages of this journey, and the messaging it's using is not as targeted as they'd like it to be. "We're buying the right environments, but we're still working with the brand teams to determine whether we can run content we're using widely in other media or if we need to run very specific messages," he says. "But even without having messaging that is specific to individual moments, pre-shop is still returning lifts of 20 to 30 percent versus media that is not location-targeted."
The Real-Time Advantage
Location-targeted mobile advertising promises a long list of benefits to marketers. Those embracing it can expect to see improvement in every facet of their digital campaigns, from growth in customer bases and higher response rates to better audience engagement and improved campaign ROI, says Ocean Fine, VP of agencies and strategic partnerships at Factual, a location data company.
Location data also makes it possible to close the loop on digital marketing campaigns by integrating in-store visitation data into campaign performance metrics and connecting online marketing efforts with off-line results, which is a critical measure of success for any brand with a physical storefront.
"Perhaps one of the biggest benefits of location data is that it happens in real time," Fine says. "Because our phones are nearly always with us, there's no lag time while data is aggregated or gathered, which occurs with other online data. This means that marketers can use location data to make real-time decisions about targeting based on the context of a location and what a person is doing, and then customize the content accordingly." She adds that marketers can also see footfall results in real time during a campaign, enabling them to make smarter in-flight media decisions.
For MillerCoors, a big upside of location-based advertising is its potential to help the company break through the clutter in a category where there are multiple brands all going after the same consumer. "Our category is incredibly fragmented," Feinberg says. "This kind of advertising wins a higher share of attention and provides greater relevancy to the consumer than mass marketing does. Companies like Amazon and Netflix have conditioned consumers to expect relevance and customization from the brands they engage with. I think place-based is really another articulation of that phenomenon."
Location-targeted mobile ads can help marketers and advertisers learn more about the behaviors and needs of their consumers, says Negeen Ghaisar, head of digital strategy at Bigbuzz Marketing Group. "Understanding who they're segmenting will give them beneficial insights to market and sell more effectively," she adds.
Location-targeted advertising can also help marketers achieve higher conversion rates for less spend, provide a more efficient impulse-to-sale runway, and promote deeper and longer-lasting engagements, says Patrick Salyer, general manager at SAP Customer Data Cloud. The ability to reach customers when they are actually receptive to offers gives real meaning to these interactions, he adds.
"You're not just pushing something in their face and hoping they like it. You're fulfilling a real want or need," Salyer says. "You're able to offer true convenience and ease the pain and stress of limitless choices."
First-Party Data Is the Best Choice
However, location-based advertising works best when it's not done anonymously, Salyer adds. As with most marketing strategies, targeting known customers, whose identities, preferences, and histories are well understood, is much more effective and notably less risky in a marketplace more and more focused on privacy.
"Working with location data alone will yield marginal results, at best," Salyer says. "As we've learned over the years with data accuracy, it's the old 'garbage in, garbage out' adage that applies here. So it's best to use this data with all other possible vector points to get the best results."
While location-based advertising creates greater spend efficiencies by improving targeting accuracy and attribution analytics, it's also effective at leveraging correlative data such as language, age, and income. However, marketers should avoid a myopic focus on mobile phones as the only channel for place-based advertising, says Jason Bier, chief data and privacy officer at Engine Group, a data-driven marketing solutions company.
"I see audio as another format where we can run place-based marketing, especially as audio is consumed in mobile environments, even in your car."
— Brad Feinberg, VP of media and consumer engagement at MillerCoors
The data underlying location-targeted mobile ads is best used as a layer for intelligence through the localization of all relevant marketing messaging. It can be used in blended campaigns for digital online purchases and brick-and-mortar stores, and it enables greater use of digital advertising across the entire purchase funnel, Bier says. "Taken a step further, as digital gets more advanced, brands can granularly target specific users with relevant messages across their entire device graph, including out-of-home (OOH) and addressable TV," he adds.
That kind of pan-device capability is a prospect that excites Feinberg, who believes the projections for marketers' impending "big spend" on location-targeted advertising in the years ahead are valid. He expects the trend will move into audio next, especially as that channel becomes more digitally based, and he notes that Pandora is already starting to sell advertising in the programmatic market. Pandora Media has just been acquired by Sirius XM Holdings in a $3.5 billion deal, a development that should greatly expand Pandora's reach in the mobile-audio market.
"I see audio as another format where we can run place-based marketing, especially as audio is consumed in mobile environments, even in your car," he says. "I see out-of-home in this space, too. The majority of OOH is bought in monthly increments, so it's not a flexible medium right now, but we're starting to see more digitization, more video screens. There's a lot more creativity coming to the OOH channel. Eventually, we'll be able to include anything that lives outside the home under the umbrella of place-based marketing."
Challenges to Realizing Full Value
Marketers face challenges in capturing all the potential value location-targeted advertising has to offer. One is figuring out a cost-efficient way to provide the massive amounts of creative needed for hyper-targeting and personalization. Feinberg sees that as the biggest challenge in this area for MillerCoors, which currently has no in-house digital creative optimization resources. "There's value in this particular type of marketing even just using generalized messaging, but the way to really unlock the value is by connecting the message to the environment," he says.
The most sophisticated messaging strategies for location-targeted mobile ad campaigns could require thousands of pieces of copy that have to be created and delivered on-time, a daunting financial prospect for marketers relying on agencies for all their creative. It's an important cost-benefit equation that marketers have to cipher carefully, experts say, and it may spur more brands to consider in-house studios.
There are data privacy issues at play here as well, especially for global marketers subject to the EU's GDPR regulations. Similar legislation, the California Consumer Privacy Act (CCPA), has been passed in that state and is scheduled to take effect in 2020. Location-based attributes have generally been considered anonymous information and not subject to the rules governing personally identifiable information (PII), but that has changed under the GDPR and will also change under the CCPA.
Essentially, any information that can be used to directly or indirectly identify a person, including mobile IDs and any details associated with them, may be considered PII under the GDPR and the CCPA.
"This is another reason why businesses really need to focus on building those direct, digital customer relationships," Salyer advises. "The soft opt-in is really not an option anymore. You need explicit opt-in consent in order to use data for personalization of any kind, and that goes for geocache-based programs, locationally contextual promotions and communications, and any other location-marketing activities that rely on consumers' data for fuel."