From Local to Hyper-Local: Ad Targeting Gets Smarter in 2015

As early as 2012, big box retailers like Best Buy, Macy’s, and Walmart devised a way to geo-target smartphones of consumers nearby to send them timely coupons and advertisements.

For the first time, this enabled them to draw from a wealth of knowledge about an individual consumer, based on information about each person’s shopping history, location, and other personal data. This translated to a much better chance of actually closing the sale.

Apparently, these tactics have been effective, so effective that some marketers were reporting anywhere from a 300% to as much as a 600-700% increase in sales.

Why?

Part of it is that we’re finally learning how to leverage the enormous amount of data rushing in (big data) and harness it to better understand and take advantage of the marketing cycle for a given consumer—with the goal of reaching them closer to the point of purchase. And retaining them as a loyal customer afterwards.

The Right Words At The Right Time card with colorful background

A focus on social 

Fast forward to this past year, and geo-targeting came on the scene in a big way with social media.  Though Facebook and Twitter have offered “targeted” marketing on a very basic level for a while, it has evolved quite a bit.

Both Facebook and Google have been making a lot of noise in the past few months about maintaining a focus on local brick and mortar businesses.  With mobile being so pervasive, and harnessed with GPS tracking to boot, hyper-local has become the topic du jour.

In fact, just a few short weeks ago, Facebook announced the launch of hyper-local advertising that allows brick and mortar establishments to target ads within a certain distance from their stores.

Facebook also allows for native ads, which tend to get a better response from consumers. Combine native advertising in the social sphere where detailed information about ‘passion points’ and brand preferences run rampant, and you can see where the opportunity lies. Add this to the advantage of real-time tracking, and you’ve got a phenomenal market for timely impulse purchases like fast food and retail shopping.

Getting down to the numbers

It’s no wonder that companies like Millennial Media, which offers exclusively geo-targeted mobile marketing, published their 3rd quarter revenue at $69.8 million with a year over year increase of 24.4%. 

And their clients are doing just as well.

Millenial Media and competitors like MoPub have published some pretty impressive case study stats recently:


Hyper-local marketing on mobile

Let’s go back to this for a second.

Hyper-local marketing, combined with real-time notifications, could have tremendous advantages for both marketers and consumers.

Picture this:

A pizza joint can advertise a ‘no wait’ status for their line at a pizza joint, snagging hungry people out running errands that might otherwise not have been compelled to stop.

They can also add in special perks and streamline the buying process.

When you compare these methods to the more traditional billboards or mall advertisements, the potential savings for advertisers is astronomical.  They can now advertise to the right person in the right way, and only pay for it when the ad is served to that audience.

Retailers may also be able to influence consumer behavior over time by driving purchase with say, meal promotions or a Sunday sale—and staff accordingly.

For brick and mortar shops, that could lead to a positive influence on overhead.

As you can imagine, that could offer savings that span well beyond just a company’s marketing budget.

Coupon QR code on smart phone

The advantage to consumers

If advertisements have the ability to be timely and relevant to a consumer, then they naturally have a much better chance at being useful.

In terms of social, ads may begin appearing more like notifications than unnecessary distractions (re: native ads).

2 Examples:

A nail salon one woman frequents every week just had a cancellation.

The grocery store another woman drives by on Sunday morning has an unbelievable sale on [insert delicious item here].  She didn’t read the paper and she threw away the print advertisements she got in the mail (which were probably, by the way, much more expensive) but this timely, spur of the moment information just might be the determining factor in her actually going into the store to make the purchase.

It is really by being useful (and not overwhelming) that this new technology will have an impact. If the clutter or the noise gets too loud, consumers will filter through it all and ‘put their blinders’ on, so to speak.

This is always a risk with any form of advertising.

iOS vs. Android

A couple of years ago, news broke that companies had the ability to adjust digital prices served to users based on whether they were searching from a MAC or a PC.

It’s unclear whether this same bias applies with iOS vs. Android phones, but it seems probable—but we don’t (yet) have the facts and figures to say for sure.

It is, however, likely that geo-targeted mobile users are more likely to receive special discounted rates to drive them into stores because of their proximity to the location and their position in the marketing cycle.

The launch of the iPhone 6 (and other ‘phablet’ sized devices) has also brought about a lot of buzz for mobile marketers because they offer more screen space for native and integrated ads on a mobile stream.

Smiling female holding mobile smart phone with big sale sign on screen, isolated outside city background, focus on smartphone. Advertisement concept. Positive human emotions, new technology event

The verdict

Overall, we’ve seen a few trends: hyper-local geo-targeted ads work best as native ads, tend to favor mobile devices, and have demonstrated substantial revenue increases while mitigating risks for brands.

As mobile, and specifically the use of social on mobile, continues to grow, we can expect geo-targeting technologies to advance further with the help of both the major social and search players.

More and more companies, from media and advertising, will be expected to tackle these services as a standard and even necessary part of marketing campaigns.

While geo-targeting has grown in the last year, what we’re seeing today is only the beginning of an evolution that will continue to expand rapidly as mobile tech continues to evolve, too.

Sources:

Fast Company: http://www.fastcompany.com/3001156/latest-sales-weapon-best-buy-macys-and-walmart-coupons-sent-nearby-smartphones

Tezz: http://www.mytezz.com/#!4-Effective-GeoTargeting-Techniques/cyvb/1D862B56-EDF9-4F3C-9657-3FE910E7C43E

Forbes: http://www.forbes.com/sites/kathleenkusek/2014/10/11/5-ways-facebook-geo-targeting-will-change-your-life/

Adweek: http://www.adweek.com/news/advertising-branding/iphone-6-should-make-mobile-ads-bigger-deal-159811

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