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66% of marketers believe location-based advertising is the ‘most exciting’ mobile opportunity for 2016, according to a recent IAB UK study I quoted in our digital marketing stats round-up.
This is a huge endorsement from the marketing community, but how many people really use this channel to its full potential?
For those still relatively new to the term, or for anyone wanting to refresh their knowledge, I’ve created this location-based advertising guide for you.
What is location-based advertising?
Location-based advertising hinges around the fact that wherever we go these days we always carry a mobile with us. And most of us quite happily share our location data with the various apps we use.
This presents an opportunity for advertisers to personalise their messages to people based on their current location. In real time.
Using a person’s location data, gleaned from their mobile device, advertisers can send different messages to people depending on where they are.
Imagine you’re walking through a fishing village somewhere in the West Country. You’re browsing on your phone and you see an ad for 30% off pants at H&M. Great. There isn’t an H&M within a hundred miles of where you are. Ignored.
But imagine you see the same message while walking down Oxford Street, and imagine the ad is specific to the Oxford Street branch. Suddenly you’re much more likely to pay attention.
This is a very simplified explanation, and there are plenty of opportunities for brands to get much more creative than that, but the basic principle is there.
Why is it so effective?
Part of it has to do with changing attitudes. As I mentioned above, consumers are becoming more relaxed about their data. But there are a number of other reasons why this channel is proving so effective.
Let's take a look at those reasons in greater detail.
1. It’s personalised
We already know from various studies that personalised messages enjoy greater engagement than their generic counterparts, and location-based personalisation is no different.
By personalising ads to people based on their location, you are much more likely to show them something relevant.
I’m reminded of walking down Petaling Street in Kuala Lumpur several years ago. I couldn’t move for people trying to sell me sunglasses. Nothing odd about that in itself, except for the fact I was quite clearly already wearing a pair on my face.
There is simply no point making blanket offers to people in the hope they might want what you’ve got.
Finding out what they’re interested in and then personalising your message is a much more sensible approach.
Location data enables you to do that. You can make offers based on where people are.
You can speak to them in a way that is relevant to where they live (people in Yorkshire use different language and have different ‘quirks’ to those in Cornwall, for example).
2. It’s timely
One of the key strengths of location-based ads is that they are timely. Because location data is served in real time, there is an opportunity for brands to target people at precise moments.
Store beacons, for example, tell shops when you walk through their door. Creepy to some, perhaps, but for retail brands it means they can send people offers that are completely relevant to them in that particular moment.
Regent Street launched its own app in 2014, enabling shoppers to download it and get real-time offers from shops as they get near.
The scheme proved a success for retailers because people are more likely to enter a shop if they see a particular offer in a specific store, but also because it gives consumers better visibility of relevant deals in the moment they’re looking for them and ready to buy.
3. It’s targeted
Long gone are the days of generic display ads. With the amount of data available for marketers there is no excuse for not targeting your messages.
46% of people say they use ad blockers because ads are ‘often irrelevant’, according to an IAB UK study carried out last year.
If ads are properly targeted, they are almost certain to be more relevant and therefore much less likely to be blocked or ignored.
Localised ads provide a natural opportunity for targeting because people in different geographical locations behave differently, or at least have their own unique quirks.
Or on a more specific scale, whether someone is on a high street or a beach resort, whether they’re out shopping on a Saturday afternoon or out with friends on a Friday night, will determine what type of ad they would be more inclined to pay attention to.
Better ad targeting means less time and money wasted on sending your message to people who literally couldn’t care less about it.
Last year, alcohol brand Campari America targeted drinkers aged 21-34 while they were in areas with lots of bars and restaurants, offering them a $5 discount with ride-sharing service Lyft when they ‘checked in’ at a venue.
Starbucks experimented with location-based ads at the tail end of 2014. It tracked users’ device ID and location and then served them targeted ads based on that information.
Rather than measuring success based on click-through rates, the metric was how many people walked into a Starbucks branch after seeing the ad.
According to Starbucks, the likelihood of a person entering a store increased by 100% after seeing a location-based ad.
I mentioned the Regent Street app above so I might as well go into more detail. All you have to do is input your likes and dislikes and the app then displays relevant shops on the map.
By typing in 'H&M' I can immediately see where that store is in relation to me. When I go back into the main section of the app I’m now shown an ad for H&M Regent Street.
The app also sends you push notifications of offers when you’re near a specific store, but only if you’ve expressed an interest in that particular brand.
Have you tried location-based ads?
I’d be really interested to know if any of you have experimented with this channel, and if so what level of success you’ve had with it?
Let me know in the comments below.