How Brands Use Location-Based Advertising

28.05.2018 08:57

On May 23, we held our IQ mobile Business Breakfast "Location-Based Advertising – All roads lead to the customer". Iris Handlsberger, our Business Operations Manager, presented exciting insights on this topic and highlighted opportunities for hyper local targeting. You can find more from this article >>

Afterwards, we had many interesting discussions about the possibilities and applications that location-based advertising (LBA) offers. You can get an overview of our knowledge and experiences of the last years from this blog.

Pros & cons of location-based advertising

Let’s start with the positives...

  • Personal touch: Personalised news attracts more attention and commitment compared to generic advertising. Location plays a crucial role in this. Communicating "personally" not only adds relevance to your ads, but also helps track actual demand.
  • Perfect timing: One of the biggest advantages of LBA is the ability to perfectly manage the timing of ads. Because the location data is provided in real time, brands have the ability to reach people nearby at specific times.
  • Target group: As more people become more familiar with their smartphones, it has become imperative for advertisers to engage with consumers using these devices. If ads are well targeted to the audience, they are less likely to be blocked. Local ads are a great way to target because people in different geographic locations behave differently. 

There are some drawbacks to LBA to consider...

  • Data protection: The main problem that is repeatedly highlighted when discussing drawbacks of LBA is potential privacy issues. One thing is clear: Mobile marketers must inform their customers in an open and transparent manner about why they need their data and what is being done with it. In our view this provision of information holds benefits, allowing brands to highlight the benefits of data collection for consumers prominently and transparently – not hidden in paragraph 13 of a complicated privacy policy. 
  • User Competence: Having many smartphone functions does not necessarily mean that you can actually use them all. As a result, marketers must ensure comprehensibility and ease of use for the average smartphone user, taking these aspects into consideration as early as the conception phase. Users need to be able to understand functions without extra effort. 

Location-based applications

Proximity marketing enables a business to focus its sales efforts on a consumer who is already in a buying mind-set. It works by connecting with consumers via mobile app, allowing companies to optimally address consumers in the right place and at the right time. A great "side effect": Experience shows that this leads to significantly higher sales potential. For example, a consumer walking through a shopping mall around 18:00 is a better audience for a restaurant advert than a consumer watching TV at home. It’s simply a question of proximity and context. If a potential customer is already nearby a location where an item/service is being promoted, they are more likely to engage with that product. This brings us much closer to the purchase decision process. :-)

Let’s take a look at some successful campaigns:

  • Bacardi Mojito Moments. The #MojitoMoments campaign by Bacardi Australia is a great example. Using an out-of-home ad campaign, it targeted Instagram users in predetermined locations throughout Australia, such as clubs, pubs, and concert venues.

During the campaign, about 60 Instagram influencers took pictures of Bacardi cocktails and tagged them with #MojitoMoments. These influencers provided content that presented the drinks in specific locations and sparked enthusiasm for the brand. The campaign saw around 50,000 engagements at participating locations.

While 50,000 engagements for an international brand may not sound impressive, it is important to consider that these campaigns were explicitly targeted at locations in Australia. The brand calibrated its ideal audience to a specific area that offers greater conversion potential. These local consumers had access to the product at the time they received the ad.

This micro-targeting solution allowed Bacardi to engage users and draw attention to the product in a moment when consumers could actually make a purchase. Customers who like to use apps "on the go" are prime targets for location-based advertising. Attracting attention to a brand or product while offering greater sales potential works well if you further provide an incentive for customer retention. For example, many brands have used apps (and increased sales) by creating events, turning everyday tasks into games, and providing rich user interfaces. 

  • Gamification in apps: We all know that retail shelf placement plays a big role in the shopping experience. It becomes less important when apps are used as a navigation tool while shopping, however. Apps can be used in the retail setting to direct customer traffic to less visible or less frequented areas in a store. This combines two key components of a mobile app marketing campaign: gamification and rewards. Gamification, where an app works like a game, promotes interaction with an app. Rewards, on the other hand, increase the usage of the app, thus promoting a "playful" commitment to the brand. Gamified apps can increase both traffic and revenue, here's an example via Shopkick.

When the app is open, the consumer receives a notification that he can earn Reward Points – called kicks – by visiting a retail location. Once in the store, the app displays products that offer kicks. Users/consumers are thus encouraged to look for something they may not have considered otherwise.

Finding the product in the store and picking it up to scan it with the smartphone's camera will automatically increase the likelihood that the product will be purchased.As a side effect, this improves the awareness of the product. The shopping spree turns into a fun digital scavenger hunt and makes an everyday experience more entertaining.

  • App with location-based function. An innovative app does not always have to offer a completely new idea. A useful combination of existing functions can be enough to spark interest. This is seen in the popular retailer app My Starbucks Rewards (MSR). The app currently has 14.9 million members and the numbers are constantly growing. One of the most important drivers for participation is the continuous addition of appealing features, such as:
  1. Mobile payment: Consumers are increasingly using mobile payment methods. For example, mobile payments already account for 12% of Starbucks sales in the US.
  2. Pre-orders: Consumers can order their favourite product (favourite coffee) before they reach a location, thus avoiding being stuck in a queue. This makes a lot of sense and at the same time optimises turnaround in the store.
  3. Rewards: Starbucks constantly offers consumers small goodies that they can redeem later for free or discounted products.
  4. Event notifications: One of the company's plans for the future is to provide consumers with more personalised events that introduce them to new products and time-limited offers based on their order history and preferences. 

Our take at IQ mobile

Innovative programmes such as the combination of location-based features, gamification and social engagement, can bring added value to companies. Proximity and location-based marketing strategies that use apps enable brands and retailers to connect with on-the-go consumers, gaining their attention when the potential for a sale is highest.

These examples of the innovative use of apps in location-based marketing strategies optimally address the wishes and needs of consumers. They are informed about events and possibilities, receive rewards, and enjoy the convenience of being able to easily use all of an app’s functions.

Here is an example of a location-based campaign for a financial service provider created by IQ mobile and >> (German only)

If you want to know more about location-based services, check out our whitepaper, which already has over 200 downloads, here >>

You can view images from our Business Breakfast via the photo gallery >>


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