Prepared by Tug ltd.
Sabrina Testoni, Social Media Account Executive
GPS-technology has permitted the development of location-based services, these
“integrate a mobile device’s location or position with other information so as to provide value to a user” as defined by Jochen Schiller.
Companies and brands are able to deliver rich content directly to their customers’ mobile device based on their location, provided there is a good wireless network connection.
What is location-based marketing?
Location-based marketing is a method that adapts to the customers’ location; and can provide them with:
1. Advertising based on their location,
2. Messages about offers, deals or incentives for location-based activities delivered directly to their mobile devices.
3. The opportunity to share their location via social networks (e.g. Foursquare).
How does location-based marketing work?
There are two key mechanisms that allow the collection of a large amount of data: tailored Apps & Social Media Networks sign-ups.
Through owned apps, businesses are able to collect information on customers, such as the exact location of a user as long as the GPS is enabled on their mobile.
In addition, social media sign-ups provide information such as age, gender, likes, and check-ins are available on Foursquare, Facebook, Instagram & Google+. They allow users to post their exact location, as well as pictures and reviews about the place/business (e.g. Foursquare users can leave comments & tips to share their location with friends). This is extremely valuable for businesses as they have a direct access to their customer’s opinions and activity when they visit their locations.
These two options facilitate brands and marketers’ efforts to understand their target audience, knowing where customers go and at what times of day can be incredibly useful when creating targeted campaigns.
Push or pull?
Three different strategies are commonly used to devise a marketing or communications strategy: a push or a pull strategy, as well as using both strategies simultaneously.
In the context of location-based advertising, a push marketing strategy would send a direct message to users; it is defined by the Mobile Marketing Association as “any content sent by or on behalf of advertisers and marketers to a wireless mobile device at a time other than when the subscriber requests it”.
On the contrary, a pull marketing strategy would deliver advertising “specific to the location of the consumer, only when it is explicitly requested.”
A consumer going to a shopping mall who will search online for promotions located within that area will receive this information.
Depending on the campaign objectives (e.g. brand awareness, in-store footfall, and conversion), one strategy or a combination of both can be employed.
Why is location-based marketing relevant?
The mobile generation:
The growth and adoption of smartphones by mobile phone users has been unexpectedly fast.
EMarketer estimated that; the number of smartphone users in 2013 will be 30 million, representing 60% of all UK mobile phone users. Therefore, mobile marketing and advertising represents a great opportunity for marketers & brands, particularly for B2C marketing that is location-specific such as large scale events.
What do users think about mobile location-enabled marketing?
In a recent survey, it was found that 80% of consumers would share their mobile location data with a business/brand if it meant that they would receive useful messages, such as offers, coupons or information requested. More interestingly, 80% of respondents would be open to receiving location-based messages from a brand if they had downloaded an app specific to that brand. Nowadays users of apps expect these types of messages, and generally have a neutral or positive feeling about receiving messaging this way as long as it is relevant to them. However, these messages can sometimes be viewed as spam and are very disruptive when they don't comply with the preferences of users.
Location-based marketing now and what’s in store
Geo-fencing is a recent location-based technology that takes its origin from the US military. It is now utilised by some companies to define advertising territories. It allows businesses to set-up a virtual perimeter around a location and to target the customers within, if they have opted-in to receive messages or push notification on the business’s app.
The US army, to advertise to and recruit students who were walking on campus has used this technique.
US army banner and mobile site:
Credit photo: http://prezi.com/m7g4cy5uytco/geo-fencing-presentation/
Lemon is a company adept at delivering these types of services (targeted and location-based in-app push messaging). A good example is the campaign they created during the New York marathon for its sponsor Subway. The users of the Marathon’s app receive a notification with an offer as soon as they get into the ‘geo-fence’, which means the users are in a location nearby a Subway store.
Indoor mapping is the new emerging technology. It will be a great option for digital marketers and brands, and will create opportunities around navigation, local search and advertising. Indoor Google Maps is already available for spaces such as airports, shopping malls and large retail stores. Google is not the only one to improve its mapping services, Nokia’s mapping services called “Here” cover 49,000 buildings in 45 countries so far, it locates ATMs, stores, escalators, etc. Here provides a new feature, with 3D maps available. These technological improvements definitely represent an opportunity for different industries, and particularly for retailers who will be able to localise their customers even inside a venue, such as at a mall or an airport. Location-based services combined with customer data, such as behaviour, age or gender are used to build targeted marketing campaigns. If brands know what their customers like and where they are located, they will be able to design valuable content for them.
What are the challenges with using location-based marketing?
Privacy & Intrusion
The biggest issue is undoubtedly the privacy. The technology can be considered intrusive, particularly when automatic messages are sent by businesses to customers that haven’t ‘opted-in’, but have to ‘opt-out’ to stop receiving messaging from the service. Brands must make sure there is an option to ‘opt-in’ for the push messages on their app.
For marketers and brands, their biggest challenge is to be relevant to their customers; to deliver a message which has a value for your target market is key. That’s also where your data analytics need to be used appropriately in order to be efficient and ensure your brand speaks the same language as your customers.
Do brands and marketers use location-based marketing?
A report by Econsultancy illustrates the state of the use of mobile advertising in 2013, which increased positively for the past year, particularly for the mobile display advertising. However it also highlights the fact that ‘targeted mobile display advertising based on location’ is still only used by a small amount of companies (17%), with no change since last year.
A recent research revealed that the UK is the European leader for m-commerce, with 10% of UK consumers using their phone as main method of shopping. Considering the ever increasing number of Smartphone users and the quite positive welcome by mobile users to apps and their opt-in services, it wouldn’t be surprising to see location-based marketing become adopted more frequently by both brands and marketing agencies in 2014 and beyond.
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Published on: 11:40AM on 21st November 2013