I’m going to kick this off by painting a scenario for you (I was pretty terrible at art class in school so I'm not sure I’ve earned the right to say that). You’re part of a marketing team and want to run a new campaign to increase customer turnout and loyalty at your stores. As much as gaudy neon signs and “SALE” posters have worked, it’s not enough. With the average human spending 14 hours a day glued to a 3 by 6 inch screen, mobile advertising is your best bet. It sounds dystopian, but I have no time for the whole “we’re being enslaved by technology”, “open your eyes”, “sheeple” thing right now. I’m just saying, when we get a notification, we look at our phones, ok George Orwell? Anyway, you can’t just send random notifications to customers that have your app. That’s called spam, and no, not the cooked canned pork version. Users will likely get annoyed and remove the app or disable notifications. You have to choose your moments. Luckily, location-based marketing can help you choose those moments. It’s a marketing strategy that can change the way you reach customers.
How does location-based marketing work?
A “guide” blog should begin with getting the reader familiar with important definitions. So we'll get started with that.
Location-Based marketing
Location-based marketing is a marketing strategy that utilizes current and past location data to deliver relevant content and advertising to users. It’s used to send targeted marketing messages and promotions to users based on their current location. The privacy-compliant data is collected, analyzed, and eventually used by marketers to understand their customer's behavior and interests to create personalized campaigns. Location data like this gives insight into user behavior such as how frequently they visit shopping centers and how many times they enter a certain genre of stores. This might sound invasive from the consumer point of view, but as we’ll explain later, location-based marketing should be on an opt-in basis. This means, unless you as the consumer agree to it, you won’t be bothered by any location specific notifications.
Geolocation
To understand geotargeting and geofencing, you need to know this first. Geolocation is the process of determining a geographical location of a user or device on the web through various data collection points such as an IP address or an internal GPS of a device.
Geofencing
Those familiar with our blogs and website have read a lot about geofencing. That being said, a geofence is a virtual boundary or fence around a real-world geographical area. When a user enters or exits a geofence, it triggers a response that can be used to send alerts in the form of app notifications to their device. Notifications can range from advertisements to promotions that encourage users to visit your store locations. You may be familiar with the word geofence marketing campaigns. Location-based marketing campaigns can often be referred to as geofence marketing campaigns because of how predominantly popular geofencing is within the context of location-based marketing.
Geotargeting
Geotargeting is an advertising and marketing strategy for delivering different content to users on their devices based on their geolocation. The location data determine what advertising content the user will receive. So, marketers will create campaigns most relevant to the geolocation of their users. By knowing their geolocation they can put a label on the type of user they have. An example would be identifying a group of users that frequently go to coffee shops, including their favorite spots. Based on that info, a campaign around that user group at those specific and frequently visited locations can be made.
Benefits of location-based marketing
Location-based marketing isn’t suitable for every use case. It’s industry-dependent. So think about whether it’s right for your business first. For instance, the fast food world loves it. Burger King pulled off a viral location-based marketing campaign back in 2018. They awarded a Whopper for $.01 whenever a customer with their app was within 600 feet of a McDonald’s location. Customers could claim the order and go pick it up at any nearby Burger King store.
We’ve seen effective uses of location-based marketing in various sectors such as hospitality, retail, and transportation. The three main benefits of using location-based marketing are; increased user engagement, better targeting of marketing messages, and high conversion rates.
Best practices for location-based marketing
Location-based marketing can also be understood as putting geofencing, geolocation, and geotargeting together to deliver content and relevant advertising to your users. Let’s break down how all three can be used in practice.
Hospitality and Geolocation
If you’re like Manny from Modern Family, some of this information is going to put a smile on your face. Geolocation technology can be a valuable tool for hospitality businesses to create location-based marketing campaigns.
Many hotels and resorts are offering mobile apps that can be used by guests to access exclusive deals and promotions based on their location. And here’s where Manny, and actually Cam too, will smile. These offers can include discounts on spa treatments, restaurants, or activities in the surrounding area. Not that your guests should be glued on their phones all day, since they’re on holiday you’d hope they are actively vacationing, but should they be on their phones, take advantage of it. Send push notifications to guests with offers or information about nearby attractions, events, or restaurants. For example, a hotel can send a push notification to a guest who has just checked-in, offering a discount for a nearby restaurant.
Retail and Geofences
Let’s go back to those coffee drinkers we talked about earlier on with geotargeting. You want to use location-based marketing to create a campaign that attracts coffee drinkers away from your competitors that have stores near your own. You draw up a promotion campaign based on the location data you’ve received through geotargeting. Let’s say this is a really good deal for customers that are near one or more of your store locations. I have no clue what kind of 2-for-1-jumbo-combo-50%-off-promo-code-COFFEE deal you’re going to draw up here, but it has to be Burger-King-like-good so that a user considers visiting one of your stores instead of your competitors.
Let’s say you’ve handled that, but now you're faced with this question: How am I going to get this mobile marketing campaign across? Remember, we don’t want to send random spam-like notifications. I know I said timing matters but more importantly, location matters. You can start by setting up geofences at locations of your competitor. That way, when a user enters that geofence, it will trigger a notification of your promotion.
On top of that, keep your geofences small. You don't want to send notifications to users that are too far from your store. They'll likely not bother making the effort to go.
Ok, you've got your geofences sorted, what happens now? Well, upon receiving your promotion, the customer is faced with a choice. They’re thinking:
"I'm closer to this place, but that deal is really good and they aren't too far away".
Will you win everyone over? Realistically of course not, but I can guarantee it will improve your customer turnout. Set up geofences at your own stores and at multiple locations near your stores to boost your turnout. If done right, you'll have a flock of caffeine deprived and excited customers lining up outside your coffee places.
Transportation and Geotargeting
There are a couple of ways transportation and geotargeting go hand-in-hand in location-based marketing.
Transportation providers can use mobile apps to display real-time ads for nearby attractions or events. Let’s say you’re using a ride-sharing app in a bustling down-town area of a city. The ride-sharing app can display ads for restaurants or tourist attractions based on the user's current location. Using their location to recommend places nearby can be useful for the user who might be trying to find something to do in the area they are visiting.
Geotargeted push-notifications also have a use in the public transport sector. Public transportation providers can use geo-targeted push notifications to inform passengers about delays, schedule changes, or promotions related to nearby stores or restaurants. Delays and schedule changes don’t have much to do with location-based marketing campaigns though, so let me focus on the latter here (the promotions). Public transportation providers can offer loyalty programs that provide rewards or discounts based on the user's location or travel behavior. Frequent commuters can be rewarded with discounts on their daily commute or discounts on nearby restaurants or shops. There are a lot of morning commuting coffee drinkers who will definitely love a discount for the nearby coffee store at their train station. And depending where you live, a discount on fares as a reward for being frequent commuters is a gesture/nod of appreciation for using public transportation to go from their home and work.
Examples of successful location-based marketing campaigns
There have been a number of successful real-world location-based marketing campaigns over the years. I made sure to list companies that are known to just about everyone except a few isolated Amazonian tribes, and the Sentinelese from North Sentinel Island.
Lululemon:
Athletic apparel retailer, Lululemon, has an app that uses geolocation technology to provide customers with information about local events and classes (not like theoretical physics classes by the way, I’m talking workout related stuff). This information is tailored to the customer's location, making it easy for them to find and participate in activities in their area.
Uber:
Uber uses location-based marketing to provide riders with relevant promotions and deals based on their pickup and dropoff locations. For example, riders may be offered discounts on local restaurants or entertainment venues based on their destination.
Nike:
The up and coming small out-of-their-parents-garage retail startup from Oregon uses geolocation technology to personalize the shopping experience for customers. When a customer enters a Nike store, they can use the Nike app to access exclusive content and promotions based on their location.
McDonald’s:
Instead of trying to lure Burger King customers to their stores, McDonald's used geofencing technology to target customers with mobile ads for its McDelivery service. The ads were targeted to customers within a certain distance from a McDonald's location, making it easy for them to order food for delivery.
Challenges and limitations of location-based marketing
It’s not all sunshine and rainbows though. There are challenges and limitations to location-based marketing that we need to outline
Limited Accuracy
With location-based marketing being most effective when marketing messages are being sent at the right place and the right time, one of the biggest challenges is the accuracy of location data. GPS technology can be inaccurate, especially in densely populated areas where signals can be disrupted. Inaccurate location data can result in ineffective or irrelevant marketing messages. Users may be discouraged to use your app if this should happen.
Data quality and integration
A way to battle inaccurate GPS technology is making sure location data is collected from a variety of sources, such as WiFi and beacons. Ensuring that this data is accurate and integrated with other marketing data can be a challenge, especially for businesses that lack the technical expertise to manage large data sets.
Battery Drainage
Location-based marketing requires sensors from the user's phone in order to operate effectively. That will consume battery if your app is not set up properly. If you rely on location-based marketing to reach your audience, severe battery drainage can lead to reduced user engagement.
Privacy and ethics
We know location data is a sensitive matter when it comes to privacy for users. Like I said, it can come across as invasive. People will always be skeptical about the way a business handles personal data, so privacy will always matter.
Businesses need to ensure that they are transparent about their data collection and usage practices, and that they are using this data in a responsible and ethical manner. Thankfully, the EU has the General Data Protection Regulation (GDPR) to ease those nerves. Regulations like GDPR are there to keep companies in check, and to help users understand how they’re data is collected and what it’s used for.
Roam’s Marketing Campaign Feature
At Roam, we understand the challenges and limitations companies might face with location-based marketing. And we offer solutions for all 4 “weak” areas of location-based marketing. As a third-party provider, we’re focused on data quality and integration to ensure that location data is collected from a variety of sources, and to fight GPS drifting and inaccuracy. We’ve got the expertise to manage those large data sets, manage battery drainage, and of course, comply with GDPR. The screenshot below shows a sneak peek of our dashboard, and our marketing campaign feature that you can use to build your location-aware app.
The future of location-based marketing
Looking at 2023 and beyond location-based marketing is likely to be shaped by a number of emerging trends and technologies.
Because it’s all the talk in town right now, AI can help businesses to better analyze and understand location data, allowing them to provide more personalized and targeted marketing messages. It can also help to optimize marketing campaigns in real-time, improving their effectiveness.
Any fans of Ready Player One? Augmented Reality (AR) technology can be used to provide customers with interactive and immersive location-based experiences. For example, a retailer could use AR to create a virtual dressing room, allowing customers to try on clothes and accessories without physically being in the store.
Wearable devices like fitbits and smart watches are becoming more common. As they continue to do so, businesses will be able to gather more data on customers' movements and behavior. This data can be used to deliver even more targeted and relevant marketing messages.
Privacy and data security will continue to be an ongoing topic and development for the future of location-based marketing. Development of privacy laws and company reputations will affect the way data is collected and used. Transparency will continue to be the word we’ll be hearing with regards to data privacy.
Want to know what we do at Roam?
At Roam, we specialize in providing a precise location SDK that allows for accurate geo-tracking and other needs such as geofencing. Our solutions are designed to help businesses improve their location accuracy and ultimately drive their geofencing marketing efforts. If you're interested in learning more about what we do at Roam, visit our website or contact us directly. We'd be happy to answer any questions you have and show you how our technology can benefit your business.