Proximity Targeting: What Is It, and How Does It Work For Your Business?

Proximity targeting has been there for a long time now. Over the past few decades, marketers have increasingly started to recognize the power of “right place, right time” e-marketing strategies. 

Understanding the importance of targeting customers at critical “decision-making” moments has been linked to positive consumer response. 

A report from Google indicates that searches typed without “near me” or other geographical hints (like city name, street, etc.) have grown 150% faster than the “near me” ones. 

Now, this is a clear indication that most users naturally expect Google to serve them location-based results without them having to ask for it. 

Source: Think With Google

The figures indicate a serious change in user attitudes towards location-based targeting. It also represents the fact that consumers expect brands and sellers to use proximity data to generate more relevant and accurate results for search queries. 

A growing number of consumers now expect their search results to be related to their real-time location automatically. 

What is proximity targeting?

Proximity targeting is the use of mobile technology (using Bluetooth or WiFi technology) to deliver marketing messages to the device owners who are in the vicinity of a business. 

As mentioned earlier, proximity marketing is all about communicating with your customers with relevant and personalized messages on their mobile devices.

The keywords here are “right time” and “right place”.

Proximity targeting is also sometimes referred to as hyperlocal marketing. The idea is to serve local ads to the customers based on their proximity to a location. 

When supplemented with other data inputs like gender, purchasing habits, etc., proximity targeting can work as a very personalized and focused marketing strategy. 

There are various reasons for brands to deploy proximity marketing techniques. These include:

• Get completely customized location-based targeting tailored to a specific advertising campaign
• Convey the complete value of the campaign
• Encouraging the customers to make a purchase decision instantly
• Promoting an ongoing sales/discount marketing strategy
• Getting feedback on a new product and adding value through insights
• Understanding the purchasing habits of the consumers

Digital technologies like beacons have allowed companies and brand owners to target the audience based on one or multiple geo-locations. 

So why is proximity targeting essential, and why does it matter?

Traditional forms of digital marketing believed in targeting a large section of the audience, irrespective of their location. 

“Numbers” and “quantity” were considered important.

While these digital marketing strategies are still successfully deployed by eCommerce brands, they are not really successful when it comes to local businesses and stores. 

A report generated by Statista states that the number of mobile phone subscriptions reached a total of 8.6 billion in 2021. 

Check out the growth curve! 

Needless to say, more and more users are now demanding internet services anytime/anywhere. The need to serve personalized ads that are relevant to their real time experience is therefore required. 

Consider these stats for more clarity:

• 79% of consumers prefer to engage with an offer that has been personalized based on the interactions that they had with the brand earlier (Instapage)
• Around 8 out of 10 marketers report that location-based advertising generated an 85% growth in their customer base and a 83% increase in customer response and engagement rate. (Factual)
• Mobile consumers are 2.5 times more alert when they are out and moving than at home. (Research from the Outdoor Media Association)
• About 59% survey respondents mentioned that they take interest in mobile “Out of home” (OOH) ads, which are specific to their location or to a time during the day. (The Drum)
• Above 75% of local intent mobile searches result in offline store visits within a period of 24 hours and further result in a purchase nearly 30% of the time. (Local Search Associations Annual report)

So, how does it impact the digital advertising world?

With more and more consumers demanding ads that are related to their real-time experience, proximity marketing is perhaps the most viable tool that we have today.  

While consumers are benefited by receiving targeted content that is relevant to them when it matters the most, marketers benefit by getting more conversions and gaining customer loyalty too.

Location-based marketing vs proximity marketing

The two terms are definitely confusing and often used interchangeably. However, there are differences between the two.

While both techniques work by targeting the customers based on their real-time location, proximity marketing is a more granular approach. 

Location-based marketing is used when it is required to target the consumers in a larger geographical spread. The interaction between the customers happens within a specific range. 

This is achieved by using the data (latitude and longitude) provided by the GPS devices on a customer’s mobile phone. As soon as the consumer enters within a pre-marked geographical area, they are sent a relevant mobile ad by the brand. This virtual marking of a region is known as “geofencing“. Have a look at how geofencing can be done in XPO. 

Say, for example, you are a fast-food joint owner and are looking to send advertisements to customers within a small radius of one mile from your store, geo-fencing and location-based advertising seem to be perfect. 

However, location-based services are not really precise, especially when being used indoor. So if a customer is inside a store or an office building, there are chances that they will not be delivered the messages. 

Proximity targeting on the other hand can be used to determine the precise location of a consumer using more advanced technologies like beacons, WiFi, and Near Field Communication (NFC). 

Brand owners place beacons within a particular area around their business location. As soon as a customer’s mobile phone enters within the zone, a message is sent. 

Proximity techniques, therefore, do not require virtual fencing. They focus on targeting every customer within a smaller zone like 100m or less, and that too indoors where GPS can otherwise fail.

Additionally, proximity targeting is a more personalized approach where only contextually relevant messages are sent to the user. Beacons are used to track the consumers who are close to the brand outlet, and customized digital ads are then used to influence their purchasing decisions. 

Proximity marketing is therefore a technique that is used to influence a consumer who is indoor, within say, 50 meters range to make an impulsive decision. 

Beacons can therefore take into consideration your purchasing habits like which shopping department you spent the most time in a store and can send you attractive offers for a product in the department. 

Learn how XPO lets you target prospects in real-time and/or based on historic locations by using Proximity Targeting using Factual.

How can I leverage proximity marketing to grow my business?

While advertising and influencing a customer’s buying decision is the direct use of proximity marketing beacons, the technology can find other applications for business owners. Some of these are:

Targeted advertising

As reported by GeoMarketing, the number of global beacon deployments is expected to cross 400 million. This means that customers will now be targeted with precise advertisements based on demographics and location.

According to beaconstat report, the beacons technology market value growth is expected to hit $56,554 million in 2026 (as compared to $519.6 million in 2016)

Proximity targeting beacons are the tools that advertisers have been long searching for. It not just helps them to engage with their existing customers but helps create new ones too.  They can use it for:

• Sharing product information
• Announcing about a sales/discount offer
• Getting the customers to give relevant feedback and stay connected

Content sharing has never been so targeted and easy. Using beacons also means that the money spent on traditional advertisements like printing can be put to much better use. 

More engagement

User experience is the key to retaining customers. While big eCommerce brands use it to create positive consumer reviews, it is no longer limited to just them. Proximity techniques are equally beneficial to any brick-and-mortar business that is looking at providing customized and location-specific services. 

Relevant and well-timed content is known to increase the purchase intent. Proximity targeting can, therefore, be used to:

• Pull the shoppers to the less visited areas of a store
• Interact and engage with the customers using fun quizzes and gamification.

Additionally, the use of proximity marketing techniques helps the brands in retaining their loyal customers by keeping them involved and engaged. 

Strategies like sending time-sensitive geo-targeted offers, rewarding loyal customers for spending time in your premises, etc have proven to be very important aspects of customer loyalty programs. 

Data aggregation

Companies can harness the data that they capture through active beacons and internet-connected devices. 

Businesses are now considering the use of localized marketing with the introduction of beacons within the stores. The target here is not just to create a better user experience but also to collect data for future campaigns. 

Proximity targeting devices can help by: 

• Tracking the footfall within the store
• Record customer’s buying preferences
• Assess the customer’s loyalty to the brand
• Analyze their content preference

Create easy navigation

When you’re within the premises of a large shopping mall or in a store, the support of GPS is no longer useful. 

This is where proximity techniques and beacon-powered applications can be leveraged to create comfortable shopping experiences. The devices are used to help consumers navigate to specific pinpointed locations within the store. 

Various leading eCommerce brands are already using this technology to help customers find a product and see its exact location within a store. 

Proximity technology is, therefore, extremely beneficial in navigating through large shopping malls, museums, multi-story buildings, or even airports. 

Types of proximity marketing

Proximity targeting can be implemented using the following methods:

1. Bluetooth Beacons 

Beacons are small devices that transmit signals to internet-connected devices like a smartphone. Beacons work by broadcasting radio signals (a combination of letters and numbers). The mobile devices then track the beacon signals.

Beacons are used to collect customer data and help deliver proximity campaigns to mobile users. 

• Bluetooth Beacons are used for:
• Location tracking
• Engagement
• Navigation
• Data collection and Analysis
• Customer interaction 

2. Geo-fencing

As mentioned earlier, geo-fencing is a virtual boundary in a pre-set radius around the store location. When a customer enters a defined radius, they receive a push notification. 

While geofencing is not really proximity targeting (since it uses GPS technology and works outdoors), it is being considered here since it works in a small and precise radius.

So how does it work? 

It uses GPS and mobile network triangulation to understand a user’s precise location and proximity to the reference point. 

When the users enter the defined geographic area like a shopping mall or a retail store, push messages are sent to their smartphones.

3. WiFi

Various outlets like coffee shops, fast food joints, restaurants, etc provide free internet access to the customers. By doing so, they get connected to the mobile devices of the customers for sending relevant push notifications. 

Additionally, WiFi devices are perfect for collecting behavioral data like customer movement, purchase preferences, etc. This data can later be used to create customer loyalty programs and re-target the previous consumers. 

Proximity apps are often used to communicate with the customer, once they have signed in for free WiFi. The router determines their position within the store and their proximity to different sections in the store. The information is then used to send relevant and personalized greetings or promotional offers. 

4. NFC

Near-field communication (NFC) works by establishing a connection between two devices- a nearby smartphone and an NFC tag. This happens when the two devices are within 4 cm of each other. 

Phone locations are tracked by attaching RFID chips on products. Various departmental stores use this technology to share product information or for contactless payments or simply sharing some promotional videos or files. 

NFC tags are nothing but programmable stickers embedded with circuits. They can track a smartphone when it is within 4 cm of the tag.

What type of targeting technology works best for your business? 

The type of targeting technology you choose depends on your marketing goals. 

For those looking at outdoor targeting, geofencing alone can do the job. However, if you’re looking at collecting information like purchasing habits and customer behavior data within store premises, Bluetooth beacons are a better option. 

Sometimes, brands also prefer to use a combination of beacons, NFC, and geofencing techniques for more granular results. 

Different proximity data service providers are available for this purpose. They are designed to help businesses understand the real-time as well as historical locations of their customers. 

For example, Knorex XPO has an inbuilt geo-targeting service, making proximity targeting more convenient and simplified for marketers.

Proximity Targeting in XPO

XPO by Knorex is a cross-channel marketing cloud platform that supports a wide variety of proximity targeting methods, such as geo-targeting and geofencing.

To make the use of geofencing easier and more intuitive, XPO uses a KML file with geographic data and coordinates as the locations that the advertiser wishes to target. Additionally, XPO’s latest updates also allow the usage of a GeoJSON file, a geofence file format that is easy to understand and read, while still being thorough and accurate in representing geographic areas.

The ability to proximity target in XPO can greatly help advertisers in focusing their advertising efforts on a certain geographical area of customers. Reports and data collected in XPO also help to provide a holistic, well-rounded overview of the results for advertisers to better understand their audience and the effects of their geofencing, to improve their efforts and make improvements to their geofencing targeting, if needed.

How does proximity marketing work?

As mentioned earlier, proximity targeting uses physical devices like beacons that send information (images, text, video) as soon as they come in contact with a Bluetooth-enabled device like a smartphone. 

Once beacons have been purchased, they are set in specified locations within the store. When a targeted consumer having a mobile application (that supports beacon targeting) on their phone walks within the range, the beacon receives a signal to send push notifications to the app.

Simple, right?

But how do these proximity marketing devices work in terms of technology? 

a. Generating ID numbers for Bluetooth-enabled devices

Beacons generate a unique ID for each Bluetooth-enabled device that has a matching mobile app. As soon as the app and the beacon ID numbers are marched, the beacon releases push notifications prepared by the brand. 

b. Seeking permission

Once an app is spotted within the proximity device’s range, it simply initiates a request to the user asking for permission to communicate with the device. 

c. Pushing notifications

When a user grants permission, personalized messages, and content (audio, images, text, videos, etc.) are uploaded on their device. 

How to do proximity targeting and location-based marketing on Facebook, Search, and Display channels?

To apply this setting, the following steps are required:

• Select a campaign under the “campaign menu” and choose an ad group for which you want to apply geo-targeting. Within the targeting options in the ad group setup, you can see a proximity targeting feature (under Geography)
• Add your target locations in terms of geographical input (latitude, longitude, country, city, zip code, etc.)
• Mark a suitable radius

Have a look at Knorex Help Center for more details on:

• Proximity Targeting Using Factual
• Geo-Fencing: Geo-Targeting Using Polygon
• Geo-Targeting On Facebook, Search And Display Channels

Creating audience using location data

Benefits of proximity targeting

The power of proximity targeting has been wooing marketers for many years now. Popular brands like Dunkin Donuts, Starbucks, Burger King, Walmart, etc. have been known to use the technique of proximity promotion by delivering relevant and well-timed offers to their customers. 

It comes as no surprise that the proximity targeting market is predicted to grow at an annual rate of 31.9% from 2023 to 2030, and is projected to reach USD292.2 billion in 2030. (Verified Market Research)

In addition to the retail sector, other important industries that have made use of proximity targeting programmatic channels include hotels, museums, airports, etc. 

Following are some of the key benefits attributed to proximity targeting:

1. Gives higher branding impact and competitive edge

When you create an interactive environment for your customers and serve them the right content and the right place/time, the boost that you give to your brand name is significant, to say the least. 

In a competitive world where brands are fighting for every single user’s attention, capturing it at an appropriate time can give you an edge. 

2. Boosts “footfall to store” campaigns and creates conversions

By creating higher app engagements, proximity targeting campaigns help you increase to physical footfall within a store, which in turn creates higher sales conversions. 

Proximity marketing campaigns help you connect with your clients when they are most likely to make a purchasing decision. 

Retailers use the technique of prompting the customers at perfect timing with attractive discounts and sales offers. 

3. Offers insights on consumer’s purchase behavior

This is a very valuable aspect of the technique. When you gain communication access to a user’s mobile device, it is possible to catch the data that is created in the process. This includes their purchase history and behavior. 

The technique allows you to study historical data like what drives your customers to make a purchase, whether they prefer interactive campaigns or informational messages, the discounts that appeal to them, etc. 

This data allows you to map out your future proximity marketing campaigns. 

4. Complete automation

Proximity targeting is automatic. You do not really need to put in any physical effort at your end. The technology does the marketing work for you!

5. Increased App engagement and App retention

Engaging users is one of the most important tools for establishing commercial success. Geotargeting and sending push notifications works as an important app engagement tool. 

Similarly, app retention is important for all brick and mortar businesses with a mobile app. Proximity targeting campaigns that use beacons help in increasing customer loyalty, brand image, and customer retention.

The increase in app engagement and app retention will in turn help you reach your conversion goals. 

When you connect with your customers at a time when they are most likely to make a purchase decision, the chances of getting higher sales conversions are significantly increased. 

6. Leverage real-time data

When you capture real-time customer data, like their movement within a store, their proximity to a section within the store, it is possible to leverage it by sending relevant push notifications and advertisements. 

Proximity marketing examples

With more and more big brands and small retail outlets getting into proximity targeting across programmatic channels, the examples of those who’ve nailed the technique are numerous. 

Following are some of the popular brand examples:

1. McDonald’s

The McDonald’s chain integrated with a popular Turkish app (Shopping Genie) in 15 of their Istanbul coffee outlets. This was done to target the customers who were around the brand outlet.

They were sent push notifications like discount coupons, etc. which enticed them to purchase a coffee. Beacons were used for the proximity campaign. 

The result? 

The brand achieved 20% higher conversion rates. 

2. Carrefour

Carrefour is a well known multinational retailer. The brand installed beacons around 28 of its stores in Romania. 

Push notifications were sent to consumers which suggested additional items of interest based on their purchase. Consumers were sent mobile coupons and product recommendations. 

Beacon technology was used to catch customer’s real-time location data as well as their behavior patterns like time spent in a section within the store. 

The number of brand app users increased by 600 %. 

3. Walmart

Walmart implemented its beacon- based proximity targeting campaign in partnership with GE. 

GE light bulbs were used to host beacons and send mobile notifications like discounts to in-house customers. 

4. Sephora

Sephora is a leading name when it comes to luxury beauty products. The cosmetics brand used in-store beacons to digitally connect with customers. This was done by sending valuable notifications like reminders to pick up a complementary package, etc. 

As soon as a consumer (with the Sephora app) walks in the store, they are provided with a map of the store along with promotional offers in each section. 

Final words..

As more and more marketing strategies are now being formulated around targeted and data-driven solutions, proximity marketing is already being considered a huge hit!

It is perhaps one of the fastest and most effective mobile marketing solutions to gain a competitive edge within an industry. While personalized content is a vital success factor, the key is to serve your consumers at the right time and the right place. 

Because of its ability to capitalize on location and data-driven experiences, proximity technology has a tremendous impact on marketing strategies. And it is only expected to improve in the years to come!