Location-based marketing: What works and what doesn’t in a campaign

Marketers continue to invest their digital dollars in mobile advertising with campaigns utilizing location data to improve their relevance and effectiveness. BIA Advisory Services shows that marketers will spend over $26 billion in 2019 on campaigns built from location-based data. However, not all geotargeting campaigns are created equal. Here’s what makes for successful location-based marketing, and pitfalls to avoid.

Creating successful geotargeting campaigns

The optimum fit for location-based marketing campaigns are brands with physical locations. While seemingly obvious, we spend time answering the occasional question about why geotargeting doesn’t work in certain situations. The best fits include any retail locations, food and dining establishments, grocery stores and the list goes on. Auto dealers also benefit from geotargeting and geoconquesting campaigns given their physical presence, high-value price tag and infrequency of purchase. Reaching car shoppers during their final phase of visiting dealers is critical to their success.

Companies and brands with seasonal and specific events also create impactful geotargeting campaigns, when they meet the right criteria. We’ve seen travel and tourism boards create retargeting campaigns based upon audiences that visited the destinations the previous year. A marketer working in Charleston, South Carolina, tourism might want to convince visitors of Savannah, Georgia, to visit their location next summer.

Professional and collegiate sports teams can also use location-based targeting to reach the audiences that visit their venues each season to encourage season ticket purchases.

A trade show that takes place over multiple days at a large venue attracting thousands of attendees is a unique way to capture a business-to-business audience.

Under the right circumstances, marketers at e-commerce companies and consumer packaged goods (CPG) companies can also use location-based marketing. E-commerce brands, whether they have physical retail stores or not, seek audiences that visit competitors that have stores. Similarly, CPG companies that stock products in specific stores can utilize geotargeting. For example, a company with a high-end hair care product found only at salons should use location-based marketing to reach audiences visiting those salons.

What to avoid with geotargeting campaigns

Like any other targeting approach, using location data for this purpose has its limits. These can be both in quality and quantity of data, as well as regulatory- or compliance-driven.

The most common challenge to developing a successful location-driven campaign is choosing locations that don’t have enough scale to create a meaningful audience. This takes a few different forms, from selecting a single location with limited foot traffic to events that may only last a single day or a few hours, or small markets with limited data to begin start. Sometimes marketers find location-based audiences challenging when business are clustered extremely tight together and on top of one another, such as shopping malls.

In contrast to the CPG example, products that are ubiquitous and can be found in a variety of locations – potato chips, toothpaste, dog food – don’t benefit from location derived insights. These marketers employ other targeting methods such as demographics and purchase history more effectively.

Another challenge for location-based campaigns is creating audiences around sensitive locations or discriminatory audiences. The location-based marketing industry self-regulates with the assistance of third-party firms that provide privacy and security audits, such as the Network Advertising Initiative, the Digital Advertising Alliance and TrustArc. These firms have requirements for membership, which stipulate acceptable business practices and how their member companies must handle opt-in permissions. They play a vital role in the absence of comprehensive federal legislation to create protections for consumers.

By adhering to their codes of conduct, responsible companies don’t allow marketers to create audiences around sensitive locations, primarily healthcare-related, nor to engage in any discriminatory practices. These same principles apply to the ability to track or target any person individually. Marketers don’t have any interest or incentive to reach audiences of one, but rather large cohorts of audiences that exhibit similar behaviors or characteristics.

What is next for location-based marketing

The future for location-based marketing contains three fundamental elements: regulation, a proliferation of new data sources and attribution. Marketers and data providers of all kinds will need to adapt and evolve to new federal and state legislation, beginning in 2020 with the California Consumer Privacy Act. The rollout of 5G will create massive sources of highly accurate location data, coupled with billions of new sensors being deployed through the “Internet of Things.” Finally, advertisers will increasingly hold their ad spend accountable, requiring new evidence that their efforts result in new foot traffic and sales.

Regardless of these changes, marketers will continue to invest in location-based marketing because of its effectiveness. Knowing what works and what doesn’t in forming the foundation of any successful campaign.