Location-Based Marketing 101

With the rise of mobile device usage, location has become one of the biggest factors in marketing. But not everyone knows how to use location-based technology effectively.

This guide will help. It answers key questions about what location-based marketing is, how and why you should use it, and some of the pros and cons of doing so. It will also highlight different types of location-based  advertising and share some location-based marketing case studies.

What is Location-Based Marketing?

Location-based marketing is using data on mobile device users’ current or past locations to display relevant content to them. Other names for location-based marketing are location marketing, geo-targeting marketing, geolocation marketing, proximity-based marketing and hyperlocal marketing.

A common way to use location data is through geofencing or geotargeting. For example, if people visit a real estate office, in the future that office could target a promotion to those users when they’re in the area to encourage them to come in and buy a home, or list their home for sale.

What is the Importance of Location-Based Marketing?

It’s hard to underestimate the effectiveness of location-based marketing. According to MarTech Series, around 83% of marketers say they can run more successful campaigns when they use location data.

They benefit in a number of ways. Not only does this technology help marketers to win business, but it also improves their customer relationships. That’s because marketers who use location-based advertising and marketing strategy have a better understanding of what their customers need and can deliver that to get better customer engagement and more response.

Why Use Location-Based Marketing?

When you look at location-based marketing statistics, the rationale for using location technology in marketing is clear. Recent data from eMarketer shows that more than 225 million American consumers, and 94% of all millennials, now own a smartphone. And they’re using them more and more.

According to eMarketer, consumers now spend more time daily on mobile devices (3 hours and 43 minutes) than watching TV (3 hours and 35 minutes). That’s a big shift in just five years, and the trend suggests that the gap will widen. By 2021, daily mobile time is expected to reach 3 hours and 54 minutes, with TV time declining further, to 3 hours and 22 minutes.

For marketers, there’s little point on focusing all your attention on a platform with declining reach. If you want to grab customers’ eyeballs, you need to market where they’re looking. That’s why using location-based  advertising to target mobile device users is a smart marketing strategy.

What are the Key Types of Location-Based Marketing?

There are several types of location-based marketing you can use to reach your audience. .

One of the simplest ways to get started is with IP address marketing. Every computer or device connected to the Internet has an IP (internet protocol) address. IP address marketing lets you use that location information to target your marketing.

Then there’s GPS marketing. Practically every modern mobile device uses GPS location technology. This determines location based on distance from a network of global positioning satellites. GPS marketing lets you target promotions based on this location information.

Slightly more complex, geofencing marketing involves setting up a virtual location or radius so that you can market to people with in that area. Related to that, proximity marketing lets you target advertising and marketing campaigns to people who are within range of a geofence you have previously setup.

Beacon marketing or beacon advertising allows you to use physical devices called beacons within the premises of a business to target marketing to people who are within range of that beacon.

Finally, there’s Blueprints location-based marketing. This is one of the most sophisticated forms of geolocation marketing, and it’s a GroundTruth specialty. Blueprints create geographical boundaries around points of interest and locations. When combined with location and behavior data, they allow marketers to fine tune audience targeting for even better results.

How to Use Location-Based-Marketing?

Now that you know the types, you’re probably wondering how to do location based marketing. Here are some geolocation marketing examples to get you started.

Proximity targeting lets you reach your desired customers in real time in or near locations you have previously geofenced. For example, in real estate marketing, you could target leasing offices to get the attention of those in the market for rentals.

Weather targeting lets you use prevailing or upcoming weather conditions to target ads and marketing promotions. It’s just like your local corner shop puts umbrellas outside when rain is coming, in order to make more sales.

Geoconquesting is about using location data to win business from your competitors. All you do is use location-based marketing to reach people near your competitors’ premises and entice them to the locations you’d like them to visit.

Audience targeting lets you market to people based on location, online and offline behavior, demographics, interests, and more.

You can also combine a range of location technologies to boost in-store traffic and increase brand awareness.

Benefits & Disadvantages of Location-Based Marketing

So, does location-based marketing always make sense for your business? Here are some of the key advantages and disadvantages of location-based marketing.

Location-Based Marketing Benefits

Some of the key benefits of location-based marketing include location targeting, data offerings, enhanced targeting and using a cost per visit performance model.

1. Location Targeting

Location targeting can help businesses increase in-store visits because you can use some of the technologies mentioned earlier to target ads to customers when they’re within range of a particular business or competitor.

2. Data Offerings

With visitation, audience, and trade area data, marketers can use ad campaign results to get deep insights into their customers’ shopping behavior. This can help flesh out customer personas for even more relevant and effective marketing later on.

3. Enhanced Targeting

Precision leads to smarter marketing. GroundTruth can help you fine-tune and segment ads to target potential customers based not just on location, but on time of day, shopping patterns, weather, and more. This allows you to personalize ads more, making conversion more likely and improving return on ad spend.

4. Cost Per Visit Performance Model

What if you only paid for results? Using location-based advertising gives marketers new performance models, such as cost per visit (CPV) advertising. That means you only pay when customers make an in-store visit. Again, that improves your return on ad spend.

Location-Based Marketing Disadvantages

Whilst the many benefits make location-based marketing a favorable choice for marketers, there are still some disadvantages. These include:

1. Opt-In Requirements

Location-based advertising only works when users actually 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 use location targeting with this group of users.

2. Non-Smartphone Users

Worldwide, there are still plenty of people who don’t have smartphones. That means they don’t have phones with location technology built in, and you can’t target them with location-based marketing. Of course, with the price of smartphones falling, this is becoming less of an issue.

3. Inappropriate Targeting

Location-based marketing only works if you do it right. Most marketers like the idea of having a potentially large audience within a specific geographical area, but that doesn’t guarantee results. It’s essential to segment your audience properly to get conversions.

4. Ineffective Location Data

The effectiveness of geolocation marketing relies on accurate location data. If it’s not, (for example if a mobile device user has a VPN permanently on and reporting a different location to the actual one), then targeting will be inappropriate, and will have the opposite effect on users.

How Effective is Location-Based Marketing?

Location-based marketing is an extremely effective 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.

Who Uses Location-Based Marketing?

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. If you’re running a cafe on a hot summer’s day, showing ads for coupons on ice-cold drinks is sure to entice more people to walk through the door.

Location-based marketing is also tremendously effective for event marketing. For example, if you’re running a festival and a major event is about to start, you can target a promotion to people who are at or near the venue and encourage them to attend, boosting audience numbers. And you can also use audience data to let people know about similar events in the future.

Plus location-based marketing is a great way to bring together all the data you have on customers to encourage the behavior that you want. For example, you could put ads for running shoes to target joggers running past your store.

Location-Based Marketing Examples & Case Studies

GroundTruth’s customers have had amazing results with location-based marketing. As you’ll see from the following geolocation marketing case studies they’ve been able to use mobile location analytics to connect more deeply with specific customers, and persuade more of them to visit stores. More store visits equals more sales, which is a big win for the companies.

Location Marketing Example #1: Coach

Coach had a goal of driving 20,000 in-store visits. The company drove 76% of those visits through location targeting, with 5% of visits coming from people who saw ads while in the vicinity. Coach also used audience targeting to reach past visitors and those whose behavior suggested they might become customers, driving the rest of the visits. And the company used the CPV model to pay only for verified visits. In the end, the campaign drove 31,000 visits, and engineered a 16% increase in engagement. Learn more about location-based marketing by Coach.

Location Marketing Example #2: Toyota

Toyota combined the CPV model with audience and location targeting, in a bid to increase visits to certain dealerships by visitors likely to buy. Within a month, the campaign resulted in 1,200 visits to the specified dealerships in the Tri-state area, plus visits to other dealerships as well. Learn more about Toyota’s geolocation marketing.

Location Marketing Example #3: No Kid Hungry

No Kid Hungry runs a year-round campaign to end childhood hunger, raising funds through participating restaurants. The restaurants targeted ads to those in the vicinity, encouraging them to dine and donate. The use of location and audience targeting resulted in 129,000 visits and $1 million raised. Learn more about location marketing and No Kid Hungry.

As you can see, location-based marketing has great potential to make your marketing even more effective, among the growing demographic of mobile device users. Contact GroundTruth to see how you can reach your audience more effectively.

Nicole Genchur
Director of Marketing Research & Insights, GroundTruth