Location-based advertising (LBA) is a new form of advertising that integrates mobile advertising with location-based services. The technology is used to pinpoint consumers location and provide location-specific advertisements on their mobile devices.
According to Bruner and Kumar (2007), "LBA refers to marketer-controlled information specially tailored for the place where users access an advertising medium" (p. 2).
Types
There are two types of location-based services in general, i.e. push and pull.
The push approach is a more versatile approach and is divided into two types. A not requested service (opt-out) is the more common approach amongst the two approaches, as this allows advertisers to target users until the users do not want the ads to be sent to them. By contrast, using the opt-in approach the users can determine what type of advertisements or promotional material they can receive from the advertisers. The advertisers have to abide by certain legal regulations set in place and respect users' choices.
In contrast, using the LBA pull approach, users can directly search for information by entering certain keywords. The users look for specific information and not the other way around. For example, a traveler visiting New York could use a local search application such as WHERE on her device to find the nearest local Chinese restaurant in Manhattan. After she selects one of the restaurants, for instance, a map is provided as well as an offer of a free appetizer good for the next hour. (Steiniger, Neun, and Edwards, 2006, p. 5)
Location-based advertising is closely related to mobile advertising, which is divided into four types:
- Messaging
- Display
- Search
- Product placement
Process
For push-based LBA, users must opt-into the company’s LBA program; this would most likely be done via the seller's website or at the store. Then users would be requested to provide their personal information, such as mobile phone number, first name, and other related information. After the data are all submitted, the company would then send a text message requesting users to confirm the LBA subscription. Once these steps have been completed, the company can now use location-based technology to provide their customers with geographically based offers and incentives.
For pull-based LBA, users interact with local, typically mobile sites or applications and are presented offers in a standard pull advertising model. Location-based advertising companies like go2 Media aggregate local listings from yellow page companies, local directories, group discount businesses and others. Users are presented these ads as display advertising integrated with publisher content or search advertising in response to user queries.
In addition to directly opting in, users may see location-based display ads served from a location-based ad aggregator/network such as NAVTEQ or AdLocal by Cirius Technologies.[1]
Technology
The three traditional methods by which technology is used for location based advertising is as follows
Network Based
This method predominantly uses the service providers infrastructure to identify the mobile location.It does not intrude into the privacy of the mobile user as it does not require the installation of any software in the mobile handset.
Handset based
Handset based method requires the installation of software in order to identify the user location.Also the GPS is used to determine the exact location of the handset user.
Hybrid method
This method is generally the combination of the above two methodologies where the location is determined faster and accurately through both GPS and the service provider's data.
Effectiveness
The effectiveness of the location based advertising is attributed to the following reasons
Personalisation
Location based marketing primarily focuses on delivering personalised messages which result in better customer engagement compared to the generic traditional messages.It also increases the relevance to the activity performed which in turn results in higher click ratio.Location based data collection enables to serve the above purpose.From the advertisers perspective it enables them to make customised offers based on where people are and drive their purchasing behavior creating a scenario similar to POP display.
Time Sensitive
Key strengths of LBA is that they are real time.Since they are real time it creates an opportunity for brands to target right people. Generally LBA is effective because people are more likely to enter a shop if they see a particular offer in a specific store and also gives consumers better visibility of relevant deals in the categories that they are ready to buy.
Potential benefits
LBA, as a form of direct marketing, allows marketers to reach specific target audiences. Bruner & Kumar (2007) state that LBA enhances the ability to reach people in a much more targeted manner than was possible in the past (p. 2). For example, if a customer has purchased a Harry Potter movie from a DVD/CD rental store and subscribed for the store’s LBA program, he can expect to receive an email on his mobile phone that informs him about the released date of the next Harry Potter movie, including the movie sample, while he is on the train going back home.
Secondly, since LBA could improve advertising relevance by giving the customer control on what, when, where, and how customers receive ads, it provides customers more relevant information, personalized message, and targeted offer. Vidaille (2007) stated, “With a targeted message, we’ve reached about 20 percent response rate. That’s incredibly good”, (Cited in Girgenti, 2007). Although the internet can do similar things, such as sending new information about products, promotional coupons, or asking consumers’ opinion, but few people respond to e-mail marketing because it’s not personal anymore. In contrast, LBA gives consumers relevant information rather than spam, therefore, it increases the chances of getting higher responses.
Finally, unlike other traditional media, LBA, in addition to being used as advertising, can also be used to research consumers which can be used to tailor future offers.[2] “Consumers are constantly providing information on their behavior through mobile internet activity” (Ferris, 2007, p. 33). With location-based service, surveys can take place in the real world, in real time, rather than in halls, focus group facility, or on PC. Mobile survey can be integrated with a marketing campaign; the results of customer satisfaction research can be used iteratively to guide the next campaign. For example, a restaurant that is experiencing increased competition in its area, is able to use the specific database – a collection of small mobile surveys of those customers that had used coupons from the LBA in the geographic area – to determine their dining preferences, times, and occasions. Marketers can also use the customers’ past consumption patterns to forecast future patterns and send special dining offers to the target population at the right place and right time, in order to build interest, response, and interaction to the restaurant.
Concerns
Privacy issues
The mobile phone is an incredibly personal tool. However, as Darling (2007) pointed out, “The fact that mobile device is so personal can be both a strength and a weakness” (para. 14). On one hand, marketers can entertain, inform, build brand awareness, create loyalty, and drive purchase decision among their target consumers through LBA. On the other hand, consumer's privacy is still a concern (Halper, 2007, p. 2). Therefore, the establishment of a well thought out consumer privacy and preference management policy is critical to the long-term success of LBA. Marketers should inform their consumers on how their information is to be stored, secured, and used or combined with other purposes of marketing. If LBA can assist people in their everyday life, they will be more than happy to reveal their current location. To conclude, in order to ensure continue success and long-term longevity of LBA, consumer trust must be established and maintained. LBA needs to be permission based and marketers must take great strides in protecting the privacy and respect in the preferences of each and every consumer. In a recent publication in International Journal of Mobile Marketing, Banerjee and Dholakia (2008) find that the response to LBA depends not only on the type of location but also the kind of activity the individual is engaged in. They are more likely to prefer LBA in public places and during leisure time.
Perception of spam
Another major concern for LBA is spam; consumers can easily perceive LBA as spam if done inappropriately. According to Fuller (2005), spam is defined as “Any unsolicited marketing message sent via electronic mail or to a mobile phone” (para.5). In short, spam is an unwanted message that is delivered to the user even though user has not requested for it. Since customer is in control and all activities are voluntary, customers’ objective, goals, and emotions must be taken into account. A recent survey showed that users spend only 8 to 10 seconds on mobile advertisement (Cited in Fierce, 2007, para. 2). Therefore, the interaction must be straightforward and simple. Marketers must also develop relevant and engaging advertising content that mobile users want to access at the right place and right time. More importantly, marketers must make sure that their offer contains real value for the customer and follow strict opt-in policies. To conclude, the best way for marketers to distance from spam is to give consumers choice, control, and confidentiality while insuring that they only received relevant information.
Location-Based Marketing
Location-Based Marketing (LBM) is defined as the use of mobile marketing to target mobile users within a certain geographic area.It is a direct marketing strategy that uses a mobile device's location to alert the device's owner about an offering from a near-by business.
Typically, location-based alerts are delivered to smartphones through SMS text messages. An alert may include information about a local business' deal of the day or include a purchasing incentive, such as a discount coupon code.
Mobile marketing is such a compelling proposition that Coca Cola has stopped print media advertising in Singapore.
Issue
Consumer privacy is a primary concern when it comes to location-based targeting and advertising, which often makes retailers reluctant to utilize these tactics. When done right though—and with the consent of the consumer—geomarketing can offer meaningful connections to consumers in the mobile moments that matter most.
solution
Give your customers the control. Allow them to opt-in to push notifications and GPS-enabled content. Companies engaging in LBM should take measures to ensure customer privacy through stringent opt-in policies and security safeguards.
The opt-in process usually takes place when the end user downloads a mobile app and responds "ok" to the app's request to use the device's current location. The technology behind LBM takes advantage of geofencing, a software feature that uses triggers to send alerts when a device crosses a pre-defined geographic boundary. The goal of LBM, as with any mobile marketing initiative, is to capture the end user's attention and turn him into a customer. More engagement comes with making that content timely and appropriate to their location.
Proponents applaud location-based advertising as a way to bridge the gap between online and physical customer experiences and promote impulse purchases. Sceptics question whether LBM will cause consumer burn-out and violate consumer privacy if the data that's gathered through LBM is not used, shared, protected and stored properly
Few major examples:
1. In Brazil, Nivea used a Bluetooth proximity beacon embedded in magazine ads, which parents could tear out from the page in the form of a wrist-band for their children. A smartphone app can be used to track how far the children walk away from their parents in places like beaches. Parents receive an alert when the child walks out of a pre-defined range, and can then bring them back to safety. Nivea is now seen as not just the maker of creams to be used in sunny locations, but as a brand which cares for its consumers’ children.
2. A Moscow newspaper won a Cannes Lion Award for its mobile app ‘Parking Douche,’ which lets users take pictures of poorly-parked cars, eg. in the middle of the footpath or garage entrance. IP tracking is used to ‘shame’ the owners by displaying their license plates on obtrusive web ads and social media viewed in nearby areas.
3. US music group Blue Brain has produced the world’s first album, ‘which changes the mood of the music as the app user walks by landmarks in locations like New York City’s Central Park.
4. Women's Aid, the UK NGO working to end domestic violence, teamed up with ad agency WCSR to raise awareness about domestic violence via digital out-of-home (DOOH) ads in London. The interactive ad depicted a woman with bruises on her face; through facial recognition technology to track how many passers-by look at the ad and for how long, the bruises disappear as more and more people watch the ad. The campaign’s message is ‘Don’t turn a blind eye to domestic violence,’ and is powered by Weve, a provider of permission-based mobile marketing and commerce services.
5. 313 Somerset, a mall near the Somerset MRT station, is Singapore’s first mall to launch a beacon-based mobile advertising network. With their prior permission, users of the Tring313 app can get coupons and sales alerts as soon as they enter 50-500 metre distances from the mall. In many cases, retailers reported 46% sales conversion due to the app.
6. Also powered by mobile marketing services firm Sprooki, Stores Specialists Inc. (the Philippines’ largest franchiser of lifestyle brands) launched the first location-aware smartphone application for luxury brand shoppers in the Philippines. The SSI Life app offers limited, time-based promotions such as extra gifts with large purchases in 500 stores as shoppers approach them.
7. German pet food company Granata Pet developed a kiosk called Snack Ball Machine which was installed in parks in a number of cities. Each ball has a beacon sensor in it, and the ball is thrown by the vending machine into the park. Dogs which bring the ball back fast enough (based on tracking the distance traveled) are deemed healthy and a bowl of dog food is dispensed from the kiosk.
8. Across a number of countries, Coca Cola has innovatively used its vending machines for effective location-aware marketing. Consumers of Japanese tea can get maps of nearby vending machines which stock their favourite cans; the company is also using beacon technology for a range of smart vending machines in countries like Australia. Coca Cola uses the services of Ground Signal, a location-based social media search firm.
References
- Banerjee, Syagnik & Dholakia, Ruby Roy,(2008)"Does Location Based Advertising Work?" International Journal of Mobile Marketing, Dec
- Bruner, G., & Kumar, A. (2007). Attitude toward location-based advertising. Journal of Interactive Advertising. Retrieved August 5, 2007, from http://jiad.org/article89
- Darling, A. (2007, May 9). Mobile starts to pay its way. Marketing. Retrieved July 29, 2007, from ABI-Inform database.
- Ferris, M. (2007, March). Insight on mobile advertising, promotion, and research. Journal of Advertising Research. Retrieved July 29, 2007, from Business Source Premier database.
- Fierce Markets Inc. (2007, March 1). IDC says don’t underestimate full potential of mobile marketing. Retrieved August 10, 2007, from http://www.fiercemobilecontent.com/node/2941
- App Marketing Agency (2013, June 1). Location Based Ads – Best Examples. Retrieved August 13, 2013, from http://www.appmarketingagentur.de/mobile-advertising/location-based-ads-best-examples
- Fitzgerald, R. (2006, September 14). Technology: Follow you, follow me. The Guardian. Retrieved July 30, 2007, from ABI-Inform database.
- Fuller, P. (2005, September 7). Why spam doesn’t have to happen on mobile device. Retrieved August 9, 2007, from http://mmaglobal.com/modules/wfsection/article.php?articleid=44
- Girgenti, D. (2007, April). Mobile marketing. Media. Retrieved July 29, 2007, from ABI-Inform database.
- Halper, P. (2007, March 5). Advertising goes mobile. Fortune. Retrieved August 4, 2007, from Business Source Premier database.
- Mobile Marketing Association. (2007). Media advertising guidelines. Retrieved August 5, 2007, from http://www.mmaglobal.com/mobileadvertising.pdf
- Mobile Marketing Association. (2007). Mobile marketing industry glossary. Retrieved August 5, 2007, from http://www.mmaglobal.com/glossary.pdf
- Sharma, A., Delaney, K., Bryan-Low, C., Spencer, J., & Ramstad, E. (2007, August 2). Google pushes tailored phones to win lucrative ad market. Wall Street Journal. Retrieved August 4, 2007, from Business Source Premier database.
- Steiniger, S., Neun, M., & Edwardes, A. (2006). Foundations of location based service. Retrieved August 5, 2007, from http://www.geo.unizh.ch/publications/cartouche/lbs_lecturenotes_steinigeretal2006.pdf
