Location-Based Marketing 101
This blog has been refreshed in 2022 with updated content.
Mobile devices are here to stay. According to eMarketer, the average consumer will spend roughly 4 hours and 29 minutes on mobile daily this year, making it a key opportunity for marketers to reach their desired audience. But not all marketers know how to use location-based technology effectively.
Have no fear — a GroundTruth 101 post is here! Our guide will help answer the who, what, when, why, and how of location-based marketing. From insightful case studies to a pros and cons overview, this guide has everything you need to understand the benefits of implementing a location-based marketing strategy.
What is Location-Based Marketing?
Location-based marketing is using data from 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, that company could target an ad to those in the area to encourage them to come in and buy a home or list their house for sale.
What is the Importance of Location-Based Marketing?
It’s hard to underestimate the effectiveness of location-based marketing. According to a Factual report, 9 in 10 marketers stated location-based advertising generated higher sales.
Not only does location-based marketing technology help marketers win business, but it also improves their customer relationships. Marketers who incorporate location-based advertising into their marketing strategy better understand customer needs, allowing them to deliver those needs and boost customer engagement.
Why Use Location-Based Marketing?
When you look at location-based marketing statistics, the rationale for using location technology in marketing is clear. eMarketer details that over 94% of US millennials will own smartphones in 2022.
eMarketer also calculated daily mobile device usage reached 3 hours and 54 minutes in 2021, while TV usage only reached 3 hours and 22 minutes in the same year, representing a widening gap between TV and mobile time.
For marketers, there’s little point in 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 5 main types of location-based marketing you can use to reach your audience.
IP Address Marketing
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 within that area. Related to that, proximity marketing allows you to target consumers within range of a geofence you have previously established for your advertising campaign.
Beacon marketing, also known as beacon advertising, allows you to use physical devices called “beacons” on the premises of a business to communicate marketing efforts to people within range of that beacon.
Blueprints Location-Based Marketing
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, this technology allows 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 use location-based marketing. Here are some location 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 cafe setting up umbrellas outside when a rainstorm is coming, as it offers shelter from the rain, ultimately generating more sales.
Geo-conquesting 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 numerous location technologies to boost in-store traffic and increase brand awareness.
Benefits & Disadvantages of Location-Based Marketing
So, does location-based marketing make sense for your business? Here are some of the key advantages and disadvantages of location-based marketing.
Location-Based Marketing Benefits
Some key benefits of location-based marketing include location targeting, data offerings, enhanced targeting and the cost per visit performance model.
Location targeting can help businesses increase in-store visits because you can use some of the previously-mentioned technologies to target ads to customers when they’re within range of a selected organization.
With visitation, audience, and trade area data, marketers can use ad campaign results to get deep insights into their customers’ shopping behavior. This combined data can help marketers further flesh out customer personas to enhance future advertising efforts.
Precision leads to better marketing. GroundTruth can help you fine-tune and segment ads to target potential customers based on location, time of day, shopping patterns, weather, and more. Enhanced targeting allows you to personalize your ads in even more depth, increasing the likelihood of boosting conversion rates and improving return on investment.
What if you only paid for results? 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
While the benefits of location-based marketing make it a favorable choice for marketers, there are still disadvantages. These disadvantages include opt-in requirements, non-smartphone users, inappropriate targeting, and ineffective location data.
Place-based advertising only works when users use the location technology on their phones AND give verified apps access to that data. However, many people don’t do this because of privacy concerns. Without their participation, there’s no way to use location targeting with this group of users.
There are still plenty of people who don’t have smartphones worldwide. 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 continuing to fall, this is becoming less of an issue.
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.
Ineffective Location Data
The effectiveness of location-based marketing relies on accurate location data. For example, if a mobile device user has a VPN permanently reporting a different location to the actual one, that can impact the user’s location data accuracy. Without accurate location data, the targeting will be inappropriate, and your campaign efforts 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?
Are you wondering if you should use location-based marketing? The truth is that any business with a physical footprint looking 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. How so? Let’s say you are running a popular music festival. Before a major performance kicks off, you could utilize location-based marketing to push a discount promotion to those nearby the venue, ultimately boosting audience numbers. You can also use audience data to let attendees know about future festivals.
Location-based marketing is also a great way to bring together all your customer data to encourage desired consumer behavior. For example, you could place 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 location-based marketing examples and case studies, our clients have 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 — a big win for any company.
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 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. 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, especially among the growing demographic of mobile device users. Contact GroundTruth to see how you can reach your audience more effectively.