What Is Location Based Marketing – And Why It Matters In 2019

Location-based marketing is a tactic to reach consumers based on their real-time location. More than 2.7 billion smartphone users globally provide marketers with unique opportunities of forming closer relationship with consumers and to increase sales. If you’re not convinced yet, take a look at these stats:

History of Location-Based Marketing

Location-based marketing (LBM) started as the perfectly positioned McDonalds billboard on the way to the shopping mall, or a person handing out a flyer on the high street with a 50% off discount voucher to a nearby restaurant. Brands have been targeting customers locally for a long time, but with limited options to measure the results.

During the 2000’s, phones became truly mobile and advertisers discovered the power of reaching consumers in their pocket with SMS blasts. SMS blasts generally use geo-targeting which is based on the user’s IP address. This is not as precise as GPS locations which reach users down to specific neighborhoods or streets. Therefore, it is no surprise that the major breakthrough for LBM happened with the proliferation of smartphones in the 2010’s.

With recent technology advances, closing the gap between the online and offline worlds is no longer a distant fantasy. It is a tangible reality for forward-thinking marketers. At Ydigital we believe that brands and agencies are just scratching the surface and if done right, LBM can be a tremendous value to brands and customers at the same time.

Below are some examples of the recent development in the LBM area.

1. Pokémon Go: Launched in 2016 it became an instant global phenomenon, representing a watershed moment for location-based marketing opportunities.
2. Facebook Ads: In 2017, Facebook launched a feature to deliver ads based on the stores a person visited.
3. Snap: In 2017, Snapchat’s parent company Snap acquired location analytics firm Placed which tracks and measures the locations of consumers through their phone’s GPS and uses that information to show how online advertising leads to offline store visits and purchases.  
4. Dr Pepper’s: The soft drink brand served location-targeted mobile ads to more than 1,000 grocers — and proved that those placements led to physical purchases. Data indicated the ads helped drive 213,000 in-store visits.
5. Starbucks: The brand experimented with location-based ads which tracked users’ device ID and location and then served them targeted ads and promotions based on that information. The data suggested that the likelihood of a person entering a store increased by 100% after seeing a location-based ad

Data Privacy in Location-Based Marketing

GDPR and data privacy is a hot topic and brands need to take it seriously. Just ask Facebook who’s stock price plummeted in 2018 in the wake of the Cambridge Analytica data scandal. When asked if data privacy is important, 87% users in Singapore said “yes” in a 2018 Google Survey. However, most of us still happily share our location data with the various apps we use on our phones.

Benefits of Location-Based Marketing in 2019

Besides the obvious advantage of being able to reach users in their pocket, LBM has the three benefits below.

1. Increase impulse sales
   Location based marketing can help generate higher conversion rate by getting your business in front of consumers when they are most interested in purchasing your product or service. According to Entrepreneur, location-based marketing through push notifications are 20 times more effective than generic banner ads and significantly increases your chance of conversions.
2. Deepen connections
   Location data allow marketers to deliver tailored and personalized content. This makes your audience feel less interrupted and more connected to your business which in return develops loyalty. Marketing relevance is key in a time where we are bombarded with brand messages all day long.
3. Use online platforms to support offline sales
   90% of retail transactions still happen in the real world and they are often assisted by mobile actions. Mobile devices is a crucial touchpoint in offline sales either through geofencing push campaigns or as a research assistant in getting product information or comparing products in the store.

While mass advertising is still relevant to big brands it can no longer stand alone. To succeed as marketers, we must put great content in front of the right people at the right time. If done right, location based marketing might just be that extra flavor that brands (and consumers) have been looking for.

Ydigital Asia is a hybrid of business consulting and digital marketing agency. We help companies with digital transformation, marketing automation, technology and CRM solutions as well as manage digital marketing services. Ydigital Asia has offices in Jakarta, Kuala Lumpur, and Singapore.

If you are interested to know further about location based marketing, or anything related to digital marketing, we will gladly help you, please contact us.

Vocabulary list:

1. GDPR – The General Data Protection Regulation is a regulation in EU law on data protection and privacy for all individuals within the European Union and the European Economic Area. It also addresses the export of personal data outside the EU and EEA areas.
2. Geolocation –  identification or estimation of the real-world geographic location of an object, such as a mobile phone, or Internet-connected computer terminal.

Geo-fencing involves a location-aware device of a location-based service (LBS) user entering or exiting a geo-fence. This activity could trigger an alert to the device’s user as well as messaging to the geo-fence operator. This info, which could contain the location of the device, could be sent to a mobile telephone or an email account.