Location-based marketing is a direct marketing strategy that uses a mobile device’s location to target users. Based on their current or previously visited sites, such as a city, a store, or a particular aisle in a store, you can alert the device’s owner about an offering from a nearby business.
Typically, location-based alerts are delivered to smartphones through SMS text messages. An alert may include information about a local business’ deal of the day or add a purchasing incentive, such as a discount coupon code.
Location-based marketing requires the end user to opt-in. The opt-in process usually takes place when the end-user downloads a mobile app and allows the app to use the device’s current location. Depending on the provider, location-based marketing relies on geo-targeting, geofencing, or beacons. Geo-targeting traditionally uses IP addresses to figure out where users are to send out messages to all users in that specific area instantly. But since geo-targeting is not real-time, you can’t use it to collect info about users’ whereabouts, foot traffic, or send real-time notifications. However, on the other hand, Geofencing can detect where the users are in real-time since it uses a triangulation of location services (cellular, WIFI towers). The technology behind location-based marketing that utilizes geofencing, a software feature that uses triggers to send alerts when a device crosses a pre-defined geographic boundary. Geofences are used to target app users as they enter, leave or stay within a geofenced area. It’s more useful for broad range outdoors targeting. Beacons rely on Bluetooth technology. A beacon is a hardware that is installed at a place that transmits Bluetooth signal. Beacons can detect an app user that can then be targeted accordingly. Beacons are more useful for small range, highly granular targeting, for example, in an aisle of a store or front of a check-in point.
Interacting with users based on location leads to double the mobile engagement of regular mobile marketing messages, as the messages are more relevant because they are more adapted to users’ context and, therefore, more useful to them.
In a survey in May 2019, mobile marketers in the United States shared the leading benefits of using location-based marketing, and 89 percent of them pointed to increased sales as the top advantage of location data used in advertising. Growth in customer base and their higher engagement were also benefits of location-based marketing.
According to a study by the Location Based Marketing Association, 25% of marketing budgets are spent on location-based marketing, and over 50% of brands are using location data to target customers. Location is an increasingly critical element of digital marketing for brands and enterprises.
According to BIA Advisory Services, marketers will spend over $31 billion in 2020 on geo-targeted campaigns.
This specialized marketing technique is an excellent fit for most, but not all.
What makes for successful location-based marketing—and a few things you need to avoid
Brands with physical locations are the best fit for location-based marketing, which seems obvious. These types of businesses are the best fit for geo-targeting campaigns because location-based marketing and analytics companies can identify geofence locations to capture the audiences visiting their locations. Marketers create audiences based on real-world visits, rather than a like and a follow on social media, for their geo-targeted campaigns. Using this method, marketers ensure they are reaching the right audience at the right time and delivering relevant messaging. Contrary to popular belief, sending notifications when a user is at a specific place is not what location-based marketing is all about, it’s just the tip of the iceberg.
Location-based notifications are the most known and popular way to use location-based marketing. It involves sending notifications to app users when they enter, leave, or stay in a particular area. Location-based notifications allow businesses to attract the user’s attention, encourage him to visit the app, and hopefully get him to complete a specific action of conversion, for example, redeem a coupon, rate a product or make a purchase. This technique can be used to upsell when a customer enters a specific area promoting a particular service. It can also be used to collect valuable customer feedback in real-time. A use case example includes capturing real-time feedback when customers of a hotel or booking app leave the hotel, by sending them a notification asking to rate their stay.
Location-based marketing aids in gathering location intelligence
The most valuable tool in location-based marketing is data about app users’ behaviors in the real world, such as foot traffic to specific locations, the amount of time spent there, etc. The location data can give insight into building a strategy on where to open a new branch of the store by using heatmaps to measure the distribution of customers across the city, state, or country. Calculating the effectiveness of in-app or email promotions by measuring foot traffic or changes to a shopping mall, and time users spent there (to see if they were passing by or if they stayed there for a while and likely purchased something) is another excellent use case. Location data gives a better understanding of the user’s whereabouts in the real world and it can, for example, show the direct impact of in-app and other marketing communications on app user’s physical behavior. App owners usually use this data to attribute offline conversions to their online efforts and figure out the ROI of their marketing channels.
Location-based marketing can enhance personalization by utilizing location-based user profiles data, which looks at the type of places a user visits. Users can be targeted with more personalized messages to improve user retention and loyalty. The most popular applications of location-based user-profiles understand the vacation preferences of a booking app user, by measuring how often he leaves the country if they travel to premium or budget destinations.
Location-based data such as store visits can be used for location-based retargeting across other marketing channels – in-app, emails, banners, etc. The advantage of location-based retargeting is that it’s more precise and therefore adds more relevance to any marketing channel. For example, showing high-end car advertising to a person recently visited multiple high-end car dealers. You might think, ‘Would a single location-based ad convert to a car sale?’ Most likely not, but it would make marketing messages more relevant and more likely to contribute towards a sale down the road.
While many benefits make location-based marketing a favorable choice for marketers, there are still some disadvantages. Location-based advertising only works when users use the location technology that’s on their phones and give verified apps access to that data. But many people don’t do this because of concern about privacy, and there’s no way to use location targeting with this group of users. The other challenge is finding exact locations and knowing which won’t scale that may be because those areas do not have enough foot traffic. Businesses are tightly clustered together, like in malls, or the events are limited to a few days, which limits the opportunity to collect enough data for analysis. Brands of specific locations can pose another challenge for location-based campaigns, given the sensitive nature of the data. Marketers and data providers will need to adapt and evolve to new federal and state legislation, beginning in 2020 with the California Consumer Privacy Act.
Are you wondering whether you should use location-based marketing?
The truth is that any business with a physical footprint who wants to boost in-store traffic can effectively use location-based marketing. Location-based marketing has become increasingly popular and more affordable — making it a valuable tool for businesses large and small.
Small businesses ought to consider using geo-marketing as it increases activity by getting your business in front of consumers when they are most interested in purchasing your product or service. Moreover, it allows segmentation easier. By segmenting customers based on location and knowing where they are, will enable you to target them more effectively by creating a message tailored to that specific location. Collecting, analyzing, and using location data can help you generate more engagement on your promotions and improve the return on your advertising dollars.
Location-based marketing is also tremendously effective for event marketing. Like if you have an exhibition where you have a stall and if a significant event in a nearby place is to start, you can target promotion to people who are at or near the venue and encourage them to attend, boosting audience numbers.
Location-based marketing is a handy tool for getting the word out about your business. It’s had the most success in boosting in-store traffic and increasing brand awareness. It’s also a relatively cost-effective form of advertising compared with other advertising methods.
As a small business, local SEO can raise the probability of attracting new business. Improve your local SEO by creating location-specific content on your website, encouraging five-star reviews from your customers, and optimizing your Google My Business listing. The more organic traffic generated from your Google my Business listings means spending less in getting paid traffic.
Marketers need to strike while the iron is hot – getting in front of the right people at the right time. Location-based marketing allows you to pinpoint where the target audience is to get your message across just at the right time and place.