Do you know how much many of your conscious decisions are made based on location-based advertising?

Ten years ago, location- based marketing and personal broadcasting seemed like something out of a science-fiction movie. Today, more then 253 leading global brands are leveraging location-based technologies to connect with their customers, and 75% of brand marketers believe location-based marketing is an important element of their business strategy. According to the GeoMarketing notes, it is expected that this space will grow up to $18.2 billion in advertising revenue by 2019.

The ultimate goal of any advertising campaign is to increase a brand’s sale. To accomplish that goal, agencies are using the benefits of today’s smartphone addiction and the user data that is shared within apps. By downloading an application on a mobile device, a user is asked to share data such as contacts, location, photos, etc. All this information is further used as a base for customer profiling and audience targeting in order to determine a cycle of potential service or a product’s consumers. Successful targeting is not only important for the brands and companies but also for advertising agencies, as they get paid only per impression view (CPV).

How does location data affect advertising?

There are two types of data used for location-based advertising:

1.  Current user location used to decide in which moment to send an advertising message
2. User location-based data such as preferences, social behaviour, historical data, etc., which is used for profiling

Although understanding a user’s location and preferences and consuming that information at the right moment are crucial for both brands and advertising agencies, accuracy, precision and consistency of that data are doubtful.

How is a user’s location retrieved? How relevant is user data in customer profiling? And finally, which advertising technique is later used to deliver the ads to the target audience? The answers to all these questions determine the success of delivering impressions.

(In)Accuracy of user location data

As mentioned above, among other information, users are willingly sharing their location through the applications they are using. There are three different ways that this information is collected:

1. Cell Tower Data – Cell tower triangulation determines a user’s location based on the strength of the signal between the device and nearby cell towers. The stronger the signal, the closer the device. This technology depends on the density of cell towers in a given area, which makes location accuracy less reliable in suburban and rural areas.
2. Wi-Fi – Determining user location is based on the strength of Wi-Fi signals from its towers. Although these towers are smaller and more precise than cell towers, the complexity of determining location brings in some latency, which causes further data inaccuracies.
3. GPS – GPS is the most accurate and the ‘gold standard’ in today’s marketplace. Signal is actively collected when the user is in the app, as well as when the app is running in the background (less precisely).

Even when using GPS technology, user location needs to be frequently refreshed otherwise it will be outdated. Although many applications perform frequent data updates, there are some apps that rarely, if ever, update user information after installation.

Location-based advertising techniques

In order to successfully deliver ads to the targeted audience, after getting users’ locations and their profile characteristics, marketers need to choose one of the five types of location-based targeting advertising techniques:

1. Hyper-contextual targeting – Hyper-contextual and location-targeted ads use hyper-local data to deliver contextual messages that are meaningful to the audience. This method is mostly used to increase purchases.
2. Geo-Aware Targeting – It uses real-time location data supplied by the mobile provider. With this, you can display mobile ads to a potential customer who is close to a particular location. For example, you can send a message about your coffee offer to a fan that is in the vicinity of your café.
3. Place-Based Targeting – Place-based mobile advertisements use a certain area or location during a specific time-frame (for example, sports events).
4. Geo-Fencing – Geo-fencing allows you to target users within a predefined area based on latitude and longitude. It is mostly used to drive foot traffic to the store within a shopping mall.
5. Geo-Conquesting – This targeting strategy is used to reach out to and engage target users when they are physically in or around a competitor’s store.

Conclusion

Location-based advertising is becoming an important component for most brands and businesses. Users are sharing location-based information within the apps they are using and that data is used later on for advertising purposes,  customer profiling and audience targeting.  According to the Thinknear research, 54% of location-targeted mobile ads are off by more than half a mile. For instance, this means that users in New York City might be getting advertising messages for a coffee offer in Boston cafés. Would you drive almost 4 hours to get a cup of coffee?

To deliver meaningful ads and to increase impression view rate, marketers need to pay attention to the quality of the location data they are using. By choosing the right technology for determining users’ locations and the appropriate advertising technique to deliver the ads to customers, they are able to improve advertising performance and efficiency.