Location based mobile marketing: Review

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Location based mobile marketing and advertising provides huge opportunities for businesses, as well as benefits for consumers. Yet despite the fact that mobile marketing clearly works, most marketers today have not yet seized upon the opportunities.

Nobody resists mobile today

Location based marketing allows brands to adapt their marketing message based on where consumers are geographically. By knowing where consumers are, brands are able to tap into daily habits and also encourage consumers with relevant offers and messages based on their location.

According to Greg Stuart, CEO of the Mobile Marketing Association, “Nobody resists mobile today. There are inflection points where you can create great change. Mobile is part of that today,” noting that Uber and similar companies who optimise for mobile customers are growing rapidly and disrupting their respective markets.

According to Cisco, 61% of application users have a better opinion of a brand when it provides a good mobile experience, with the highest impact when used with location based cues. For example, one shopping mall reported over a million WiFi connections with 500,000 unique customers, and an impressive 60% opt-in for promotions, after having installed an app with location-based features.

Cisco also stated recently that almost 40% of shoppers use WiFi in-store to view a retailer’s website while physically shopping in the store, and nearly half (46%) then go on to buy products in the store after they’ve conducted online research on their mobiles. The figure is even higher for the younger generation.

“Retail knows what you respond to. Stores want to know when you go to different areas, your primary means of interaction and the money spent per customer,” said Brendan O’Brien, Cisco director of global marketing and sales.

In a Cisco survey, 46 percent of respondents said they wanted personalised promotions delivered via a smartphone, while 38% said they wanted personalized product offers. Another 30% wanted personalised shopping lists, with personalised service mentioned by another 30 percent.

Location-based advertising and marketing will represent 7% of digital advertising, or 2 percent of the total global ad spend for all media, according to a Berg Insight report. The total value of the global mobile location-based advertising and marketing market will grow from $1.66 billion in 2013 at a compound annual growth rate (CAGR) of 54 percent to $14.8 billion in 2018, according to a research report from the firm. This will then correspond to 38.6 percent of all mobile advertising and marketing. Location-based advertising and marketing will thus represent around 7 percent of digital advertising, or 2 percent of the total global ad spend for all media, the report projected.

Mobile Marketing’s Business Benefits

Visitors to Las Vegas’ Bellagio hotel can download an app to help them navigate the enormous facility and also purchase tickets to shows. Depending on the user’s location, the app will deliver information about the nearest restaurants, services, bars and lounges.

Besides customers receiving relevant offers and information, companies can use tracking data to find the number of people in different venues and locations, and to discover common traffic patterns to learn where people spend their time. For example, a theme park could use this information to direct people to the nearby food stand or restaurant, and also to determine which venues need more staff at particular times to create better traffic flows. Hospitality venues can use this type of ‘customer flow’ data to determine the optimal cleaning schedules for rest rooms and other areas.

Proximity marketing

Proximity marketing is the latest arena for brands to engage with customers at the point of purchase. The ability to combine mobile connectivity and in-store experiences through proximity marketing opens up a key new opportunity for brands to engage with customers. But even though there has been a decline in spending around in-store promotions and advertising recently, various reports claim that more than 40% of advertisers intend to use SMS in their campaigns in the coming year.

Store proximity is considered the new battleground to influence point of purchase, mainly due to increased acceptance among consumers to share their location with apps, and to allow push notification on their smartphone. However, there are questions around who owns the data generated in a retail environment. Right now, it’s typically the retailer who owns and distributes the data being collected at the point of purchase.

Technology

There several ways that technology can be employed to track a consumer’s location. Below are the three traditional methods currently available and commonly used for location based advertising.

Network-based

This uses the service providers’ (mobile network operators) infrastructure to determine the location of a mobile device. This method is used by network operators without requiring any software on the device.

Handset-based

This requires the installation of software on the phone to determine location. The location is then found by using the device’s cell identification. And if the device also has GPS, a more precise location information can then be calculated. New technologies such as iBeacons and other sensor-based approach use radio technologies such as Bluetooth to detect where the user is, for example in a retail store.

Hybrid

This uses a combination of network and handset-based technologies to identify a user’s location. An example would be some modes of Assisted GPS, which uses GPS and network information to calculate location.

Starbucks and Asda in the UK

This Christmas, Starbucks and Asda rolled out location-based mobile ad campaigns to drive footfall to local stores. Both retailers have ran campaigns with geotargeting network xAd, and claim to have seen an increase in store visits.

xAd tracks consumers’ device IDs and locations, using the information to deliver targeted advertising. The company also offers analytics for brands to track the efficiency of campaigns in driving footfall.

Instead of measuring click-through rates on mobile banner ads, xAd measures “store visitation lift” – i.e. whether more customers came through the doors. The company claims retailers experienced a lift in excess of 60% on average instore visits after running campaigns.

Ian Cranna, Starbucks’ EMEA marketing chief, said: “Historically reliant on click-through rates, the mobile industry has struggled to showcase the full impact and potential of the mobile channel.

“Starbucks prides itself on being a mobile innovator and we strongly believe in the use of the channel to engage potential and existing customers.”

Chris Chalmers, head of digital marketing at Asda, said: “The trial has shown us the true potential for location-based campaigns.

“Early results show a real lift in store visits and we can see the impact of specific promotions which is critical in the run-up to Christmas.”

Asda is also apparently trialling beacon technology in an attempt to gauge consumer interest in highly targeted ads.

Final words

Location based mobile marketing clearly has a lot of potential for companies aiming to explore new ways to reach customers. As more consumers embrace mobile, creating experiences that attract them to a brand is becoming easier and more powerful, with new ways to deliver relevant, targeted information and then analyse the effects on increased sales, footfall or brand awareness.

New technologies such as Bluetooth-based beacons (such as Apple’s iBeacons) will also become increasingly important; indeed, many retail outlets and entertainment venues have already started to use them – something that will only increase in future.