Location Based Marketing
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Location-based marketing (LBM) is a direct marketing strategy that uses mobile devices such as smartphones to offer potential customers products at a nearby sales or service location. Users will receive notifications on their smartphone as soon as they are near a predefined location or site and need to have agreed to receive push messages. Location-based marketing requires a single opt-in of the user, usually associated with the use of an app. The app accesses the location-based services of the mobile device and the notification is initiated by this location data when the user is within range. The purpose is to reach users at the point of sale in order to promote a product and increase online customer loyalty and relevance of the transmitted messages.
The basis for location-based marketing are location-based services such as GPS, GSM modules or RFID chips. On the one hand, navigation satellites can be used; on the other hand, mobile radio networks and transponder chips also offer different options for positioning. The principle is that advertising messages are contextualized. The context is the location, which is determined through the above-mentioned technologies and suggests a fundamental interest in the services offered. If a user is near a location and uses the company’s app, it is likely that they could become a customer or at least be interested in the services.
Location-based marketing is basically a form of targeting that relies on location data to provide the user with special offers through an innovative technology. This can serve both customer acquisition and long-term customer loyalty. It is not just the delivery of advertising messages to potential customers, but services that make up and, above all, complement the company’s portfolio. The customer should be offered relevant information in a particular situation. Examples are incentives when buying at the store, additional services or simply helpful information about opening times, current waiting times or information about events and special promotions. Customers can be approached with LBM at the right time, at the right place, and with the right message along the entire customer journey.
How it works
Different approaches exist in the field of location-based marketing such as location determination and the form of the approach.
- Geofencing: In geofencing, a virtual border is drawn, which triggers the delivery of an advertising message when it is crossed by the user. The mobile device exchanges signals and information with navigation satellites or mobile radio towers.
- Proximity targeting: Advertising media is played within a certain range. The area is defined by the technology used. WIFI, NFC, Bluetooth, and Beacons are possible options. Focusing on short-range radio technologies makes for high precision, but the range is significantly lower compared to geofencing or similar targeting forms.
- Local context targeting: Promotional material is delivered using location-based data and additional information about users. This is also described as data enrichment. In addition to the current location, demographic data can also help to show users ads that are more relevant to them or display advertising messages. The purpose of this is to increase reach as compared to Geofencing.
- Location social targeting: When users enter a restaurant, café, or bar, they often check into social media such as Facebook, Twitter, Foursquare, or Yelp. Location social targeting focuses on these check-ins and the app usage and/or browser history is read and linked with location-based data.
The technologies used are different, but in most cases require an explicit consent from the users:
- Locating via radio cell: Each mobile radio-enabled terminal dials itself into the next radio network. The relative position to other radio networks allows a location determination of the device. Positioning with radio cells is utilized by mobile radio operators.
- WIFI hot spots: Within the reach of hot spots in railway stations, airports, cafés or public places, advertising messages can be sent to all participants in the respective WLAN.
- GPS: The global positioning system works with longitude and latitude and can accurately locate devices up to within 10 meters. Most smartphones, tablets, and laptops have an integrated location module. This technology is not very accurate inside buildings since the signals cannot always be well received.
- Bluetooth: Wireless information can be transported with Bluetooth and Beacon (Bluetooth Low Energy). With appropriate systems and receivers, the targeting can be tailored very precisely to buildings. Sometimes a special app is required.
The possibilities for location-based marketing are numerous:
- Stationary trading: Navigation in store locations, click and collect, or discounts for walk-in customers.
- Gastronomy: Special offers for walk-in customers, click and collect, dynamic adaptation of content.
- Events: Event info, ticketing (click and collect), interactive promotions.
- Public spaces and institutions: information on flights, trains or traffic, for example.
Relevance to online marketing
Location-based marketing can be used to link consumers’ offline and online behaviors. The local connection with location-based data allows the relevance of the advertising messages to target groups using mobile devices and thus have a higher probability of users accepting the advertising. Especially in the case of stationary trade, customers can be reached in their immediate vicinity with this kind of mobile marketing and directed to the point of sale. Special advertising tailored to the customer, which is carried out via a mobile device can make a decisive contribution to handle avoidance of effects such as banner blindness and a negative attitude towards ads.
However, legal barriers arising from data protection and the protection of privacy are also central in this context. Opt-ins and the permission to send push messages are just as necessary as the technical relatively demanding implementation of such campaigns. In the marketing mix, location-based marketing can convey advertising messages at the right time and at the right place, especially in the case of young, technology-conscious target groups, if the technical possibilities are used efficiently.
- 3 Ways Location-Based Marketing Is Shaping Retail In 2016 forbes.com. Retrieved on May 12, 2016
- EVOLUTION of Mobile Location-based Services scholar.google.de. Retrieved on May 12, 2016