Advertisers will spend $35.5B on location-based marketing by the end of the year in the US alone, EMarketer predicts. By 2021 it will account for 45% of total ad spend. How can advertisers still leverage it during worldwide lockdowns?
Location-based marketing (LBM) has been a hot topic in mobile marketing for years. In fact, this practice dates back to the “pre-smartphone era” when companies sent personalized letters based on the recipient’s postal code. With the global smartphone penetration rate projected to reach 44% in 2020 the targeting capabilities have altered, although the aim to deliver a personalized and valuable message to the customer has remained unchanged.
How to Benefit from Location-Based Targeting
Large retailers and hotels were its early adopters, but location-based marketing has lent itself to much broader use cases. The advantage lies in the combination of mobile technology and location data that can identify consumers’ movement patterns over time.
App marketers can personalize products or services to their customers based on their historic traffic patterns or deliver custom-made creatives reflecting users’ real-time whereabouts. According to Verve there a few different tactics to employ, for example:
- Behavioral targeting – Targeting that is based on behavioral patterns of a user, e.g., yoga studio attendee receives an ad for a yoga app.
- Radius and geo-targeting – The ad is shown to consumers who are near the given location, e.g., a brand’s app sends a push notification informing local customers about a new store opening.
- Geofencing – Specific ads are shown to mobile users when in a defined proximity to a store or if they cross a digital boundary, e.g., a recipe app sends a dinner suggestion of a CGP branded product to their users while they visit the grocery store.
Location Data in the Age of Enhanced Privacy Concerns
Consumers are now aware more than ever of potential privacy risks. Their concerns are reflected in government legislation (think GDPR and CCPA) and mobile OS developers alike. Android announced its users will be able to grant temporary “one-time” permission to location data by the end of 2020. iPhones already have this option in place.
Privacy regulations’ aim to keep personal data private should be at the forefront of targeting strategies. In advertising, location data is used to segment users, to target them based on their location, and to determine attribution. One of the most promising solutions is moving data processing to the user’s device (as an integral part of the SDK). Users need to allow access to location data, and only then can that data, in anonymized form, be used for targeting purposes, making it user-friendly and GDPR compliant.
Respect for consumers’ privacy ultimately leads to high-quality data and improved customer engagement. 60% of U.S. mobile users are fine with sharing location data, 79% want to include a geotag when posting on social media, which reveals users are happy to share location data when they receive something valuable in return. A privacy-first mindset can help collect the right type of data and convert them into intelligence.
As tech and privacy regulations constantly evolve, advertisers should pay close attention to developments in this field and confirm that the mobile advertising platform they use for location-based marketing tactics is privacy compliant and brand-safe.
What’s the Use of LMB During a Worldwide Lockdown?
Does the effect of the novel coronavirus make location-based marketing only valuable for contact-tracing apps? Not at all. While most of the world is effectively spending more time at home, location data allows advertisers to understand their customers’ historical behavior and see how it changes in different locations over time.
For instance, since gyms may be part of the later-phase reopening, a gym chain can inform regular gym-goers to download their fitness app for online classes while gyms are closed; shops and restaurants can let passers-by know they offer delivery and take-away, and so on.
And it goes beyond branding. When location data is used in the right context, it increases app engagement and retention rates and helps businesses gain a competitive edge with personalized experiences for their customers.
Location is the key to marketing’s main purpose: getting your message in front of the right people at the right time. Smartphone users who feel in control and perceive value in location sharing will continue to do so, making hyper-local ads a reality.
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