iMedia Connection

How advertisers will thrive on location-based ads

David Staas

Do you remember the days when your main source of daily news was delivered on your doorstep each morning? We now have hundreds of ways to get the news in digital formats, and newspapers are struggling to survive. Remember those folded, dog-eared, slightly torn paper maps for driving directions? We now have Google Maps on our smartphones. We're in the era of digitizing everything. And while that's not breaking news, the digitizing of location is an unprecedented development. Yet, location has progressed so much further than just maps and directions. We can now geo-tag everything -- our current location, our photos, our musical tastes, and even our conversations.

This industry is witnessing a new turning point -- the birth of location media. In the last few months, there has been an explosion in location-based services, whether it is a brand new app or the addition of location features to existing services, like Facebook Places. And consumers appear poised to demand even more location-relevant content.

Just as brands needed to socialize themselves when mass market adoption of social media took off, brands now need to localize themselves as we enter the era of location media. Juniper Research estimates that there will be a $12.7 billion increase in mobile location-based services by 2014, but there is no need to wait until then. Advertisers are already embracing this new opportunity by seeking new and exciting ways to locally engage their target audience.

The perfect storm
Location technology isn't new. So why the sudden adoption of location services? Several trends have come together in a perfect storm to make this happen. Connectivity is now everywhere; it's fast and convenient, fueling consumer demand for digital content wherever you are. Simultaneously, GPS and Wi-Fi technology have become a standard in smartphones, making location an inherent part of the mobile experience. Finally, the new devices -- from laptops to iPads to smartphones -- have created an intuitive user experience, driving media consumption on the go. 

The big advancement that all of these trends enable is the development of location-based content and services. Developers have eagerly embraced this with restaurant finders, geo-social services, and local news. For the first time, consumers have an ever-expanding portfolio of products that offer great value in exchange for providing their location, and they are willing to do so. The latest Mobile Audience Insights Report  from JiWire found that more than 50 percent of people on the go are willing to share their location in exchange for location-specific advertising. What's more, people are using their location apps in their home market just as much as when traveling, meaning they are now an integral part now of our entire digital lifestyle, creating a wealth of opportunities for advertisers to build location-based campaigns.

Context is king
A point on a map is a very interesting thing. It tells marketers where a consumer is, which helps them provide local, relevant content -- such as a nearby restaurant, local news, local events, or even a special sale at a nearby retailer. But move that map point a few feet in either direction and it could mean the difference between someone walking by a coffee shop and that person sitting in said coffee shop, drinking a cappuccino. For advertisers, they are two very different consumers in two very different environments. By applying context, location can become as important as traditional content in defining audiences and engaging a consumer. Brands like Buick already understand the value of adding a local element to its national advertising, reaching its key audience of young professionals in café-type venues to promote the sport-injected Regal.

Going beyond the coupon
So how are advertisers leveraging this new medium? There has been tremendous interest in the latest geo-social apps, which allow users to check-in to locations, and this format is proving popular as a means of delivering coupons or highlighting nearby special promotions. In other words, the check-in is acting as a merchandising tool. In fact, JiWire's recent study found that 39 percent of the on-the-go audience was eager to receive coupons and discounts near their current location.

However, a coupon for a product from an unknown or unfamiliar brand doesn't do anyone much good, no matter how attractive the deal. This is where context plays a big role. Context allows advertisers to go beyond the coupon and leverage location-based advertising across the purchase funnel -- from local branding and local presence to direct-response location targeted offers. For example, many brands are launching campaigns with localized content or calls-to-action (such as an invitation to visit the nearest store location) directly in the creative. Consumers notice. When local content is added to creative, users engage, on average, 100-120 percent more than they do with the same ad without the local content. In fact, the same survey that found high interest in coupons found similarly high responses to store location (36 percent), reviews on nearby retailers (35 percent), and info on promotional deals (29 percent). 

Localizing national brands at scale
Place-based advertising has long provided brands with the ability to combine location context with audience data, but it has often been in an offline or non-interactive format. By digitizing location, those capabilities become possible across the digital advertising market and are a major reason location is a critical part of the accelerating mobile ad market. As a result, advertisers are getting smarter about evaluating the venue type, location, and demographic details to deliver timely and relevant promotions.

For example, a major national retailer with more than 2,500 locations recently customized its national campaign to engage at a local level. Utilizing the same national creative, the closest retail location to each user was dynamically added directly in the creative at time of delivery, making the brand more locally relevant for the target audience. In addition, the click-through directed the user to the local store's website, rather than the corporate landing page. This strategy not only maintains the integrity of the brand on a national level, but also adds a new layer to the campaign that gives its target audience the local element with a local call-to-action.

A business services company with a large retail footprint also used location as a core component to its campaign. By leveraging location to help define audience, in this case targeting small to mid-sized business owners in specific venue types, the company was able to promote local business services specific to the SMB market, with a local store finder included in the campaign. Closer to the point of sale, brands are leveraging check-in type features in geo-social apps to provide coupons and promotions when users are within a defined radius of their store location, or even when they enter the store.

With apps like Foursquare now at 3 million users, and in-store location shopping services like Shopkick rolling out in leading retailers, this trend is positioned to grow and become a mainstream commodity in our lives. From small businesses to the national brands, location-based ads are becoming the most lucrative format for reaching these key audiences.

JiWire and Buick will be presenting at the iMedia Brand Summit in Coronado, Calif., on Sept. 13.

David Staas is SVP of marketing at JiWire.

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