Complete Guide to Location-Based Advertising (LBA) in 2023 – Geo-Targeting, Geo-Fencing, Geo-Conquesting, Proximity Targeting

It is imperative that retailers must make themselves as discoverable as possible online in this digital age. With Covid-19 pandemic easing, marketers of brick-and-mortar stores may want to double down or start looking at embracing location based advertising (LBA) to target their prospects who are within the vicinity of their store to check out their products and services.

Understanding the value of LBA as yet another means to increase their daily foot traffic is critical as part of an omnichannel strategy to create more sales conversions.

A report shared by Factual says that 9 out of 10 marketers believe that LBA creates higher sales, growth in the customer base (by 86%) and an increase in customer engagement (by 84%). 

Almost 9 in 10 marketers said LBA resulted in higher sales, followed by growth in their customer base (86%) and higher customer engagement (84%). LBA is a diverse marketing tool that can be utilized across channels as well. The report by Factual also found that the most-used channel to leverage LBA is via mobile (81%) but “marketers are increasingly using location data in emerging channels, including advanced TV (49%), digital out-of-home (47%), voice/connected speakers (45%), and automotive (28%).”

As per prediction by GrandViewResearch, the global location-targeted ad spend in 2019 was valued at USD 62.35 billion and forecasted a compounding annual growth rate (CAGR) of 17.4% from 2020 to 2027.

The Global Location Trends Report (2020), found that 95% of global companies are employing this medium to reach their consumers. A global average of a whopping 52% was allocated to location based marketing budgets and investments in 2020. Despite stagnant growth in this area for 2020 in light of the pandemic, markets still recognize the value of location based marketing and have invested large portions of marketing budgets in location based advertising. Despite the slowdown, the increasing reliance on digital adoption consequently shift advertisers’ methodologies to reach their audience and inevitably propelled the use of LBA across industries. LBA can be a viable channel mix, especially for some businesses when used strategically.

What is location-based advertising (LBA)?

What exactly is LBA and why is it effective in reaching prospects? 

LBA lets marketers send marketing messages to prospects when they are within a certain distance from either certain place of interests or their business premises. Businesses can tailor their messages based on the retail location, routes, weather, and of course, behavioral patterns of their local customers.

Since LBA works based on the knowledge of the customer’s location and their behavior, they are able to tap into their habits and shopping patterns more effectively. Creating offers and advertisements that make sense to the local customers and relate with them is very valuable in encouraging them to visit.

In a way, LBA is a personalized and targeted form of digital advertising with the context being the geo-location of that person or the advertising business.

Imagine receiving an LBA-centric ad on your mobile phone that talks about this great clothing brand sale that’s running in an outlet just a block away from you. Making a visit to the store would be hard to resist, right? Especially, when you’re nearby!

And if your LBA ad comes with a “Get location” button cleverly placed on it, it will provide the direction to your prospects right away. That is the potential of LBA.

 

LBA in action

“The State of Location-Tracking Mobile Apps in 2019” report shows that 96% of the surveyed adults (727) have seen an ad that references their location.

Using the customer location data and teaming it with the previously acquired knowledge of their behavioral patterns and other details can work amazingly to boost sales. Of course, clever design and marketing strategies like visuals, discounts/offers, CTA tabs play an important part in drawing the customer’s immediate attention.

Regular mobile ads are way more effective when you focus on the target audience and their hyper-local data. LBA is hence used as a personalized form of advertising that hits the target audience timely.

Mobile targeting help brands and businesses to target relevant audiences through advertisements that are based on demographics and other essential data points. The ads work by identifying and segregating consumers who are likely to fit into their “ideal customer” profile.

 

Types of LBA techniques

LBA is affected by various parameters. As a marketer, you may need to collect and leverage on different sets of information to efficiently reach out to your target group of customers.

Following are some common practices used for LBA:

Hyper Contextual Targeting

When it comes to “contextual targeting”, we often associate that with targeting based on texts that users are viewing or browsing. Yet, context has far broader application. Location is yet another contextual signal which in turn could render a few interesting signals. LBA could provide hyper contextual data that’s meaningful to select a group of audience or the “micro-audience”.

Hyperlocal data is collected and then used to deliver these contextual messages. While the method is often used to drive the purchase intent and increase conversion rates, it can also be used by marketers to spread relevant awareness messages within a certain radius.

These ads are specifically designed for personalized messages that are relevant only to a specific set audience. Additionally, to make them more impactful, the ads are shown at relevant times during the day.

Geo-Targeting

Geo-aware targeting or geo-targeting uses real-time location data (provided by mobile service providers). Mobile ads are then delivered to consumers who are within a certain radius of the marketers’ business location.

Photo Credit: ©geoawaresomeness.com

Again, the essence here is to study and have a compilation of data on the behavioral aspects of potential customers. So when the target audience is in the vicinity of the marketer’s business location, these ads can reach them at the right time and direct them to visit the business.

Location or Place-based Targeting

Place-based mobile ads target a fixed area and send meaningful ads to customers entering that defined boundary within a specific timeframe.

Imagine entering a movie hall and receiving ad content that also offers you some amazing coupons that can be availed on your snacks while you’re there.

Modern ad designers understand the use of devices and technologies like beacons, wifi, or Bluetooth that can communicate with your smartphones. Such information can help to provide context to the location and timing in which the audience receives the ad.

Geo-Fencing

Geofencing is similar to place-based advertising since it allows you to target customers within a fixed and predefined area. Areas are defined based on the longitude and latitude information that is derived from a user’s mobile device.

Geofencing works like a virtual boundary that is created in a specific area/radius in order to target customers around it and drive them to a particular destination.

Imagine creating a virtual wall that goes around a radius of 500 meters around your store. Geofencing ads designed with rich creatives along with attractive offers can attract the target audience moving within this circle. The idea is to tap the customers within a virtual marked boundary to drive foot traffic to your store within a shopping area.

The technique uses global positioning systems (GPS) along with radio frequency identification (RFID) to create a “fence”.

Geo Conquesting

This could be a potentially powerful strategy. Geo conquesting specifically targets customers who are physically in or around the competitor’s place.

This marketing tactic tries to influence competitor’s foot traffic by offering their prospects better and more attractive deals when they are about to make a purchase at a competitor’s store.

Various sectors like restaurants, clothing brands, financial services, telecommunication services, etc make use of geo conquest advertising techniques. The idea is to leverage on consumer’s behavior and state of mind at an appropriate time through impactful ad content.

Beacons

Using beacons is another aspect of LBA. The technique works similar to geofencing but makes use of small physical objects that are placed in the desired locations. These devices detect the presence of a user mobile, the moment it moves within the range.

As soon as the signals are received, servers send mobile advertisements or in-app advertisements.

 

Benefits of LBA

So why use LBA and how is it beneficial to marketers?

Let us begin by understanding the factors that make LBA so effective. It is true that the consumers have better access to data but there are several other contributing reasons that make these ads so successful.

1. Personalization: Personalizing an ad based on the consumer’s location increases the likeliness to show them something relevant.
2. Timeliness: Since location-based content is served to consumers in real-time, it increases the chances of brands targeting consumers dynamically at precise moments.
3. Targeted: Speaking directly to a defined audience helps you to attract high-quality leads and drive conversions.

And the results?

Prudent Ad Spent: Spend your marketing budget efficiently by reaching a specific target audience at the right time. Mobile advertising is highly effective but LBA is a low-cost highly-targeted tool to further sharpens your campaign to help you meet your ROI.

As per the Location Based Marketing Report by Factual, LBA helped in increase the effectiveness of campaigns evident through an 89% increase in sales, 86% growth in customer base and 84% increase in audience engagement.

LBA delivers a visible lift in sales and increased conversion rates whilst promoting relevant displays to your audience to value-add their shopping experience!

How to get started with a mobile LBA campaign?

The following are some of the essentials that we think you may want to consider before running your LBA campaign:

#1 Plan the campaign

Planning the ad campaign is the first step in the journey. Mobile platforms present the unique advantage of providing the exact information at a specific time and place that prompts the users to take instant action.

It is important to consider the following points when planning a mobile ad targeting strategy that is location-based too:

• Leverage the data technology and data to create a location-based strategy for your campaign.
• Optimize the features of mobile advertising. These include contextual, in time, personalized, etc.
• Make the camping customer oriented and ensure that the customers benefit from the said mobile marketing and like the way you present your brand/product.
• Understand and select mobile technologies for optimal results
• Work with the ad designers to enrich your banner ad formats and content
• Ensure that the ad is not disruptive to the customer’s experience.
• Make sure to add CTA tabs like “click to call”, “ get directions”, “download coupons”, etc. Ensure that your viewers are prompted to take instant actions on viewing the ad.
• Set up metrics for evaluating the success (reach, clicks, click ration, cost per click, conversions, conversion to leads, traffic volume, etc). Some of these terms are not just game-changers in the world of content and SEO case studies, they are equally vital for the digital advertising sector.  To assess these figures, it will be required to track user actions in terms of coupon claims, phone calls, footfall, etc.
• Mark out the places where your target customers will be at a specific time and define the radius around your building.
• Understand the target audience’s needs and buying behavior when in a targeted locality and match it up with their demographics.
• Procure data on the search history of your target customers. This will help design targeted personalized messages for the audience.
• Check out your options during media buying and bid on advertisements offering better locations
• Use location-centric keywords like “salon near the cafe”, etc.

The aforementioned points teamed up with well-defined marketing objectives is considered an excellent strategy to unlock the potential of mobile advertising and get higher sales figures, store visits, and conversions.

Needless to mention, great ad content and leveraging of technologies are crucial to get great results. Various platforms like Online-to-Offline (O2O) platform can help you track and manage your marketing channels.

 

#2 Media buying for location-based targeting

In order to show your ads to the target consumers every time they are surfing the Internet (or even at a specified relevant time), you need to buy ad space. Solutions like using Demand Side Platforms (DSP) are used for media buying and location targeting. DSPs can be in the “do it yourself” models or can be handled by managed services. Most service providers will typically ask for a minimum ad spending per campaign.

Various creative technologies are used to make these ad campaigns successful. Ensure that your advertising budget brings your appropriate results in terms of sales and conversions.

 

#3 Producing banner creatives

Banner designs play a significant role in designing a successful mobile advertising campaign. Interactive or dynamic ads can be helpful in capturing the user’s attention and turn it into conversions.

Various creative ad services are offered by rich media vendors available in the market. Most organizations have ready to push templates that can be modified based on your needs. A rich media ad can be included in a pre-packaged plan in addition to other services like media buying, optimization, etc.

Advertisements that display actionable tabs like the following are considered very successful:

• Tap to call buttons that help the users to make bookings/reservations.
• Discount coupons can be redeemed as soon as the target customers walk into the store.
• Get direction or similar features that guide the prospective client to move them to your store.

 

#4 Ad campaign management, tracking and optimizing

Once your banner creatives are in place, it is required to effectively manage your campaign during its running period. LBA campaigns are carried out through a step by step process in order to successfully reach your goals.

It is hence important to ensure efficient management to get maximum impact.

Following are some important tips to consider during the campaign management stage:

• Create a proper tracking mechanism to collect data based on your metrics plan (cost per click, cost per conversion, sales, etc). This is extremely important to gauge whether the location-based mobile advertising campaign is meeting the set objectives. In short, ensure that all actions (taken after viewing the ad) can be tracked.
• Get sufficient data to get insights into the behavioral patterns of your target customers. The data generated through the first stage of your campaign can also be used to optimize your future campaigns.
• When considering outsourcing, choose an ad agency that can provide end to end location-based mobile advertising services to you.
• As mentioned earlier, base your deals on the end results, which are the leads and the sales. Ad views that don’t get conversions mean nothing in the business world.
• Estimate the average annual as well as Lifetime Value (LTV) of a customer and plan your ad spend accordingly.

Tips to boost the effectiveness of your LBA campaign:

How can we make the most out of LBA?

Advertising can cause consumer reactance, whereby consumers feels a lack of control and their freedom is being threatened. They would behave contrary to the desired call-to-action of the marketing campaign.

1. Know your audience and target accordingly
   Based on empirical research on Behaviorally targeted location-based mobile marketing (Bernritter et. al, 2021), in order to reduce resistance to your ad message, run out-store LBA displaying non-price promotions (i.e. informing consumers about products and services without discounts) to consumers with high personal relevance and offer price promotions to consumers with low personal relevance.
2. Compelling Creatives and Call-to-Actions (CTA)
   Attractive designs that capture your target audience is the first and foremost objective of your advertisement. To boost your creative, include CTAs in your advertisements to encourage engagement!
3. Measure with Footfall Attribution

Measuring the quality of location data

For an LBA campaign to succeed, it is vital to rely on the following three parameters:

1. Accuracy – The distance between the estimated location and the actual location.
2. Precision – Level of pinpointing for a particular device location. Lat longs that measure up to two decimal points are precise within one km of the user location whereas those measuring up to 4 decimal points can be precisely pinpoint within 10 meters.
3. Recency – The time lapse between when the location data was collected and when it is passed on to the ad servers.

The aforementioned factors can in turn be impacted by the data source, GPS coordinates, apps, accuracy in interpreting the data, Centroids etc.

How different industries are using LBA

Almost all businesses that operate through a physical store and rely on their sales figures can benefit from LBA.

But beyond that, even service-related businesses like finance, electricians, painters, cleaners, beauticians, etc are now beginning to use LBA to improve their business reach. Service-related professionals work in fixed localities and find hyperlocal mobile advertising extremely beneficial to find new customers or get more work from the existing ones.

Following are some examples that go to show how businesses can benefit from LBA.

 

Food & Beverage: Starbucks

Starbucks uses LBA mobile ads to successfully target their prospects. The metric for the measurement of success was the footfall or the number of people that walked into the food outlet after seeing the advertisement.

Photo Credit: ©geoawaresomeness.com

Since then, various other global fast-food chains have used LBA to increase their sales.

 

Fashion: Urban Outfitters

Urban Outfitters optimized their App using location data to recommend and promote products to their shoppers. For instance, female shoppers who visited bars and nightclubs were promoted with discounts on party dresses. As a result, the campaign saw a 75% increase in conversions and 146% increase in revenue.

 

Cars and automobiles: Rodeo Ford

Car dealerships have benefited from the use of LBA.

Brands like the Rodeo Ford tapped into its customer base by targeting males within the age group of 30 to 45 years with more likelihood/intent to buy. The ad included a store locator as a CTA (call to action feature).

The result? An overall increase in the likeliness of people clicking the ad, visiting the store and inquiring or booking appointments for the car. In another article, we explore 8 key advertising strategies to drive conversion in the automotive industry across each stage of the customer journey.

Knorex XPO comes with proximity capability. You can also easily run geo-conquest (see above) marketing campaign.

 

Restaurants and food chains

Restaurants and food joints have been the most enthusiastic players in the mobile advertising sector. Geo-targeting customers that are local and are usually available/reside within a defined radius of the outlet has been their winning strategy.

Special promos/food coupons that are time-based are embedded within the ad design and the ad is pushed out to the chosen group within the vicinity of the outlet (also an example of place-based targeting).

 

Gyms

With health and fitness being the latest fashion trend, it is only natural for this sector to tap into the potential of the latest technology in the world of LBA.

Gyms use various formats for LBA. These include geo-targeting, or targeting a customer as soon as they are within a pre-defined radius of the gym building.

Others include strategies like geo-conquesting wherein the health centers target the customers entering a competitor building premises. As soon as you enter a gym building to look up their monthly/annual plans, your mobile device is hit with a more attractive offer from your center. Smart, right?

Couple that with some wonderful promo offers and an easy to fill online form and you’ve got a conversion on your hands!

 

Property dealers

Property agents can and do make use of LBA techniques. The use of rich media components like a property picture gallery or a map guide that pulls the customers to make a visit are used. Other CTAs like tap to call, book a meeting, etc are added in the ad design.

Geo aware targeting helps the house owners to visit/reach your proposed property when they are house hunting. Other marketing strategies like geo-conquesting can also be used effectively.

 

And the list goes on….

There are simply endless possibilities and there’s no reason why your business can’t benefit from an LBA advertisement! Various businesses like retail stores, spas and beauty services, hardware services, car servicing, financial services etc are now making used hyper-targeted marketing techniques.

 

Final words

As the pandemic eases, footfall to retail stores is recovering. Marketers should restart if yet to do so, to tap on LBA ads to reach out to their desired audience. LBA helps to lift yet another source of traffic albeit primarily to the retail stores.

Contact us to request a demo to start driving footfall traffic and conversions!