by Samuel Greengard, Contributing Writer, CMO.com:
Digital marketing has made clear that getting the right message to the right person at the right time is paramount. Yet somewhere at the intersection of technology and opportunity lies the very real world of putting an effective plan into place. At the center of this concept: geomarketing.
“There’s a growing understanding and appreciation for the role of location-based data in marketing,” observed Michael Boland, chief analyst and vice president at consulting firm BIA-Kelsey. “Almost everything hinges on where you’re at and what you are doing at a particular moment.”
Marketers have traditionally approached the task by using IP addresses to identify where a person is conducting a search and what might be relevant. If it is raining in Akron, then an ad network might serve up an advertisement for raincoats or roof repair services. In some cases, news sites and others provide further personalization–and more geographically targeted ads–by letting individuals enter their ZIP code. Meanwhile, retailers, restaurants, and others operating on Foursquare, Facebook, and other social media services have depended on customers to check in manually to drive promotional offers and collect data.
However, location-based technology is evolving rapidly–particularly as consumers turn to smartphones for transactions, product information, loyalty programs, payments, and more. BIA-Kelsey predicts that U.S. mobile ad revenue growth will skyrocket from $7.2 billion in 2013 to $30.3 billion by 2018. Within this space, geofencing, beacons, and real-time data feeds are ushering in an era of instant promotions, contextual information, and big data.
Said Asif Khan, founder and president of the Location Based Marketing Association (LBMA): “The key question that advertisers and marketers must answer is: How, once I know the location of a person, do I put the right messages, information, and media in front of them?
It’s no simple task. “Mobility and geomarketing are difficult areas for marketers to get their arms around,” noted Ray Pun, mobile marketing and analytics leader for Adobe (CMO.com’s parent company) and author of CMO.com’s Mobile First blog. “There are a growing number of channels and an increasing array of things to think about in regard to mobile marketing. There is a need to take data to a far more granular level.”
Location-based marketing takes a step beyond knowing when someone is in proximity to a store or restaurant. “It’s about building a marketing strategy and technology framework that takes location into account across channels, devices and situations,” Pun explained.
It’s no secret that the Internet and mobile technologies have transformed the face of marketing. The post-PC era has ushered in entirely new ideas and expectations about companies, brands, and relationships. Within this framework, accprding to Forrester analyst Sarah Rotman Epps, computing is changing in distinct ways. “It becomes more ubiquitous. It’s something we do anywhere and everywhere, and not just in a fixed location. It becomes more casual, something we do in in-between moments, such as waiting in line at Starbucks.”
In fact, about 60 percent of all Internet activity in the U.S. originates from mobile devices and about half of total Internet traffic flows through mobile apps, according to comScore. In addition, more than half the searches conducted on mobile devices involve location in some way–frequently to find something.
“A few years ago, the goal was to convince consumers to share their location data actively. It was about identifying what a customer was doing and where they were at a given moment–in exchange for a coupon or discount,” LBMA’s Khan said. “We are now adopting a passive framework that revolves around consumers opting in and sharing their data on a constant and ongoing basis.”
A number of factors have contributed to this changing environment. Data networks and connectivity are now nearly ubiquitous, and mobile apps have become increasingly sophisticated–tying into GPS data, social networks, sensors residing both on and off the phone, and enterprise and cloud-based data sources. There’s also a growing use of geofencing tools to establish an electronic perimeter around a specific area. When a person enters the space, a business may send a notification or a coupon to the smartphone. Starbucks, for instance, notifies mobile app users when they are near a store. Other retailers have used the technology to deliver loyalty points and promotions when a customer opens a mobile app in or near a store.
In addition, retailers, professional sports clubs, and others have also begun to adopt beacons–including Apple’s iBeacon–to establish indoor geotracking capabilities using Bluetooth Low Energy. Walmart, Safeway, Tesco, Macy’s, Major League Baseball, and the National Basketball Association have turned to the technology to deliver coupons, promotions, and information to customers.
“Indoor tracking is the final piece of the puzzle,” BIA-Kelsey’s Boland said. “There’s a need to link communication and interaction outside and inside stores.” In fact, the technology introduces capabilities that transcend geotargeted promotions. “It makes it possible to understand how people move through stores, where they spend time, and how they react to different cues and offers,” he added. “This can influence store displays, design, and customer service.”
Khan said he believes that beacons and other emerging tools have remarkable implications for marketers. Apple’s iOS 8 will reportedly introduce geotargeted app recommendations on the bottom front left corner of a locked screen. “Although you haven’t purposely checked in or provided any active information, the phone can notify you that there’s an app available for the business or museum and ask you if you would like to download it,” he said.
Kahn also pointed out that the use of beacons needn’t be limited to smartphones. For example, billboards along a highway could transmit offers to automobile navigation systems. This, in turn, might lead to digital billboards or services such as Google Outside, which pulls contextual data and introduces a dimensional location-based marketing approach.
“The goal,” Khan said, “is to create a real-time environment that taps into contextual data. It must be relevant and valuable to the individual … the true power of location-based marketing is the ability for marketers to move from a framework of mass media into a world of where it appears as though you’re delivering a TV commercial for an individual.”
Marketers must get to a level where a number of data points and variables come together, including location, time of day, weather, past behavior and purchase history, and inferred intent when conducting a search. What’s more, a company’s databases and IT systems must be equipped to respond to this real-time environment. “It’s a step beyond what almost every organization is doing today,” Khan said.
Mapping A Future
Navigating the emerging world of location-based marketing is not a task for the faint-hearted. Khan, who coined the phrase “location in the new cookie” in 2012, said that CMOs must adopt a more holistic and comprehensive view that ultimately connects to loyalty and branding. This means thinking about mobility as more than the sum of smartphones and tablets, and viewing coupons and promotions as only part of the marketing opportunity.
Within this arena, success revolves around the relationships of “people, places, media, and objects,” including sensors and machines comprising the Internet of Things. Contextual data drives results. For example, this might translate to a clothing retailer using a smartphone app and RFID tags on clothes to deliver personalized music in a dressing room–and later texting the customer with an offer to purchase the song.
Adobe’s Pun said he believes that a key to building out this type of next-generation environment is assembling, storing, managing, and sharing data effectively. “Too often, data winds up residing in different places in different formats,” he explained. “Moving forward, there’s a need for a centralized data source for digital marketing.”
This could include the use of a master marketing profile that feeds data through multiple channels, including SMS, e-mail, push notifications, mobile apps, and other forms of interaction and communication. In almost every instance, it also means breaking down internal silos and working with business partners to establish an IT platform and data exchange standards to support an agile, real-time framework. This also could include the use of marketing and analytics clouds.
Boland said that it’s critical to think about the customer cycle in an end-to-end fashion. Among other things, this means tying together all the various elements of customer interaction, including loyalty programs and payments, and bridging online and offline channels. There’s also a growing need to use beacons and other tools to deliver product information at the store shelf.
“Businesses must extend systems to the last mile of the store and the point-of-sale terminal,” he said. “In order to achieve complete visibility into the relationship, everything must be traceable and trackable.” Boland pointed out that within this emerging environment, objects such as Google’s Nest thermostat and Apple’s iBeacon embedded in phones become potential data sources. At the end of the day, he added, smart homes, smart cars, computing devices, and just about everything in between create data collection opportunities.
The marketing field is currently in the early stages of adopting a location-based approach, Boland pointed out. Unfortunately, adoption typically lags expectations and buzz–and many of the same challenges that undercut other tools and technologies may slow adoption of location technologies. There’s a fundamental need to think differently on both a conceptual and practical basis, he said. This includes rethinking metrics, key performance indicators, and other measures of success. Yet, more than anything else, success revolves around segmenting groups, bridging technologies and digital delivery channels, and understanding markets, customers, and advertising in fundamentally different ways.
Boland and other experts said it’s wise to think creatively, pilot projects, conduct A/B testing, experiment with technologies, and continually learn from results. Testing different providers of ad technology and different ad networks specializing in location marketing is also advised.
“There’s still a need for national campaigns–that isn’t going to go away,” Boland said. “But it’s important to target more narrowly and understand each customer’s unique behavior and interests.”
Pun said that marketers must think more in terms of using a carrot rather than a stick. “It’s critical to find ways to get customers to share their data and make sure there’s something valuable in it for them,” he said.
In the end, all roads lead to location-based data, Khan said. “Whether you’re at home or in the car, at work or in a store, you’re at a location, and you’re using a device–phone, tablet, laptop, or desktop computer–to go online and handle tasks. There is a constant transition through the day of an average consumer–where are they, what device are they using, and what are they trying to do? That’s the cookie we need to be tracking. Marketers must obtain data from devices and then combine and correlate it with other data–both online and offline–to produce new and deep insights that are relevant to both the business and the consumer.”