Personalization is a pervasive theme in modern marketing as brands strive to understand customers as individuals. Previously, personalization meant targeting a message to a seemingly specific demographic, such as females aged 25 to 30 who reside within a certain ZIP code. Today, personalization means targeting Kate, when she is walking by DSW, because she might be in the market for some new snow boots since the weather in Chicago is getting colder and she left those size 8 Sorrels in her online shopping cart last Saturday.
Location-based technologies are a powerful way to learn about shopper behavior, both in and out of store, and can empower marketers to better personalize future communications. In store targeting provides data on shopper behaviors in aisle, while outdoor targeting seeks to locate shoppers on the go. To better inform marketers, this paper will eliminate technical jargon and discuss the advantages and limitations of the three main outdoor targeting technologies: geofencing, mobile IP lookup, and proximity-based detection.
Geofencing technology is a product of an early 1990s government regulation requiring wireless operators to be able to locate any cellular device on their network. The primary motivation for this mandate was to reveal the source of 911 calls from mobile devices when the caller's location might not have been known. The infrastructure created by wireless operators enabled them to locate any mobile device on their network, in any geographic location, provided that the device was within range of their cell towers. Some service providers took this development to the next level by mapping out geofences around specified areas like shopping centers, so that marketers could locate customers nearest their store via mobile device. A use case for geofencing might proceed as follows: About a week ago, Kate got an email from DSW and opted in to their text campaign so she could receive location-based offers. Now she is about 100 yards from the retailer, receives a text message showcasing several new styles with a $20 off coupon valid for today only, and heads into the store.
Geofencing is a marketer's dream, but unfortunately implementation is not as easy as it sounds. One of the major issues is that geofencing service providers are not automatically notified when a mobile device enters the fence area. Instead, it must constantly locate the device throughout the day, waiting for the moment when the user steps within the boundary of a geofence. This can be extremely costly. For example, a retailer with a subscriber list of 10,000 wants to locate each customer twice per hour during their business hours of 8 a.m. to 8 p.m., and if this costs just 1 cent each time the provider confirms the subscriber's whereabouts, the cost to execute this strategy is $2,400 per day! Another complicating factor of geofencing is that the accuracy of the method is directly correlated with population as well as cell tower density. Strategies executed in an urban area with high population density are quite accurate, and providers are able to create smaller geofences using more towers, while fewer towers and lower population density in rural areas can result in a much larger fence area, compromising the accuracy and suitability of this method in these cases.
The second method is using mobile IP lookup technology, which pinpoints the subscriber's location using the unique IP address assigned to a mobile device while it is connected to internet. A device reports its IP address when the user is browsing online or using a mobile app. In keeping with our example, if Kate has previously downloaded the DSW app, the service layer of the system can use the IP address to confirm the physical coordinates of her mobile device while she is using the app. Her location is further verified by a method called triangulation, which calculates a mobile user's location and direction of movement based on the distance between multiple physically based location access points, such as cell towers or Wi-Fi hotspots. This information presents an opportunity for marketers to customize the content pushed to the cell phone via in-app push notifications, customized search results, or ads displayed to the user while browsing a mobile website. Mobile IP lookup technology is advantageous in that it does not require constant monitoring of the device like geofencing and can more accurately determine location; however, its functionality requires that the user first have the app with notifications enabled, and also allow it to track their location, introducing a broad array of privacy concerns.
The third location-based technology that is gaining attention among mobile marketers is proximity-based detection, which uses Wi-Fi access points to identify a mobile device attempting to use its services. This method can work in a retail setting, event, public space, airport, or any other venue offering Wi-Fi network access. The user is initially asked to sign-in via mobile opt-in form. Going forward, they can be detected any time they are within range of the Wi-Fi access point. For an illustration of this method, we can go back to last month, when Kate took advantage of a $5 off promotion by signing up for DSW's Wi-Fi. Today, just as she's heading down the escalator into the store, she receives a personalized coupon for an additional 30 percent off sale items. Proximity-based detection technology is distinct in that it only detects the user when they are within range of the Wi-Fi and does not track customer movements on an ongoing basis, making it the best option for maintaining customer privacy. The use of a proximity based detection strategy is limited to Wi-Fi enabled smartphone users and to retailers or venues that offer Wi-Fi access, but as a result it is also the easiest and most cost effective location-based solution to implement.
Geolocation, mobile IP lookup, and proximity-based detection share a common end goal of locating the mobile customer while on the go. They all have the ability to collect valuable metrics about shopper behavior such as number of store visits, duration of each visit, or time since last visit, allowing marketers to combine that knowledge with data on purchasing behaviors for a powerful way to retarget customers while they are on the go. The real challenge is to select the best solution for each business need as they all differ in execution, cost, accuracy, barriers to entry, and overall advantages to the marketer. It is important to identify and execute a strategy best suited to each situation, and also to consider how a location-based strategy can tie in with other marketing initiatives. This way, when marketers locate customers, they can combine insights from across channels to personalize the conversations and ultimately strengthen brand's relationship with the customers.
Cezar Kolodziej is the president, CEO, and co-founder of Iris Mobile.
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