6. What Is Location-Based Advertising?

How does location-based advertising work and what are some of the most powerful approaches that advertisers can use?

Location-based advertising is a powerful approach to marketing that helps ensure mobile ads effectively stand out in the noisy space of always-on digital creative.

Putting location into an advertiser’s marketing mix empowers their mobile creative to connect with audiences with highly refined relevance and context, which is what mobile consumers demand in exchange for permitting brands and marketers to access their personal mobile data from day to day.

A key question, then, is how does location-based advertising work and what are some of the most powerful approaches that advertisers can use? The following sections cover important location-based basics and break out the details that any advertiser needs to know as they bring this powerful strategy into their marketing plans.

Defining Location-Based Advertising

At its core, location-based advertising combines mobile technology and location data to help identify patterns within a consumer’s movement across geography over time.

By relying on a spectrum of location-identifying signals — from on-device IDs to Wi-Fi, GPS, cell towers, beacons, and more — marketers can send ads to consumer’s mobile devices that closely match the geography and evidenced behaviors of those consumers as they travel, work, and play. Consumers must opt-in for this data to be available, and location-based marketing is fueled in this way by the consumer’s granted permissions.

At the root of the strategy is relevance, always. If a customer dines at a restaurant, she could view an ad on her phone for an ice-cream shop just one block away. If a shopper is often at the Little League field on springtime Saturdays, and data also shows he visits the grocery store on Thursdays, then location data has helped us understand that Tuesday or Wednesday might be the ideal time to offer a special on game-friendly snacks.

Broadly speaking, there are four categories of location-based advertising that power these dynamics.

  • Behavioral targeting — This strategy is based on consumer actions within visited locations. Mobile brands study users’ geographic activity and match their foot traffic with ads tailored to how those movements evidence preferences and patterns. A regular gym-goer might receive ads for exercise equipment and health food, while a frequent business traveler would see more messaging from hotels and airlines. Location-powered behavioral targeting is also useful when seeking competitive advantages; a new business could identify lookalike audience segments that frequent similar local businesses and then conquest those customers with coupons and discounts.
  • Radius and geo-targeting — With the help of location-based marketing, physical retail can serve ads to consumers in the vicinity of a given store, triggering that outreach based on incoming data about device proximity. If a shopping mall hosts a fashion show, for example, clothing stores at the mall could send ads to attendees, incentivizing visits. This approach to targeting not only accounts for real-time location patterns but also specific consumer criteria such as shopping behaviors and interests — as in the example of our ball-field visitor, above.
  • Geofencing — The process of geofencing uses beacon technology to activate a creative experience once a mobile device crosses the boundaries of a geographical location, i.e., a geofence, and the beacons “see” the consumer. These experiences can include app-based push notifications, text messages, and targeted advertisements on apps and even social media. Based on the opt-in data that these visits generate, marketers are further able to adjust their go-forward ad messaging accordingly— making for more relevant in-the-moment experiences across campaigns. According to MarketsandMarkets, geofencing is expected to grow over 27% by 2022, due to “technological advancements in use of spatial data and increasing applications in numerous industry verticals.”
  • Local search advertising — As more mobile-based searches become tied to location, many brands also recognize the advantage inherent to having their businesses pinpointed on the maps that search engines deliver based on user queries. As prices, store hours, user reviews, and website links appear with these map results, local search advertising as a pull-format strategy has also proven beneficial to mobile marketers.

As always, context and relevance are paramount to the permissions-dependent engagements that location-based advertising creates.

As such, any discussion of location data stands to prompt discussions about data privacy as well. Examples of recent and forthcoming legislation in Europe and in the US are specifically designed to define — and defend against — the use of personal data in ways that compromise consumer privacy. Furthermore, marketers must take their own preventive measures to safeguard consumer data and inform their customers about the ways location data are used. The upshot: the benefits of the strategies we’ve just considered bring with them the demand for increasingly responsible marketing best practices. That’s the underlying price for the advantages involved.

However, when advertisers and marketers get location-based marketing right — bringing these approaches into their mix for heightened insights, timeliness, and relevance — they establish increasingly positive relationships with customers, driving awareness, loyalty, and, ultimately, more conversions from every campaign. 

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