Five questions your marketing team should be asking about location-based technology

Reading time: 5 min

Meijer Find-It App Some forms of marketing are fairly black-and-white: Company A emails a coupon to Customers A to Z, who can then use it to take 10 percent off of their next purchase. Or perhaps a restaurant launches a campaign of print, TV and social media marketing to advertise a new selection of entrees. The directive is simple: Visit us to try these delicious new dishes. Now consider the gray area your marketing team will want to explore in the future. This is the world of location-based marketing. We say it’s gray not because it’s new (it isn’t) nor because it’s impossible to sort out (many already have). Rather, location-based marketing is gray because building a strategy in 2015 requires a bit more art than science. It aims to put marketing messages in consumers’ pockets via smartphones, tablets and other e-devices at various times between home and the brick-and-mortar store. It also relies on technologies that are constantly changing and pushing the envelope of what consumers are willing to accept on such a personal level. In this post are five questions every team should ask as they think about opportunities with location-based marketing. This is still very much the Wild West, but careful planning can position your brand for success when the time is right.

1. How exactly is location-based marketing defined?

As we’ve noted, companies in a multitude of industries find the idea of location-based delivery — also known as geo-targeting — very appealing. In their latest “Quarterly Digital Intelligence Briefing,” Econsultancy and Adobe share survey data revealing the sectors exploring this technology:

  • Consumer goods: 33%
  • Financial services and insurance: 37%
  • Retail/mail order (including online retail: 40%
  • Telecoms: 30%
  • Travel and hospitality: 33%

EconsultancyAdobe_SectorApproachToLocationTechnology Adobe itself recently announced tools aimed at helping its clients better cater to the needs of a location-based marketplace. TechTarget defines location-based marketing as a “strategy that uses a mobile device’s location to alert the device’s owner about an offering from a near-by business.” It further points out that customers have to act in order to receive this type of messaging—they must program their smartphone accordingly, sign up for text-based alerts and so on. For those who want a truly comprehensive overview of what this approach can entail, be sure to read this taxonomy from Geoawesomeness, which identifies seven unique categories of location-based marketing including exploration advertising and proximity marketing. It also showcases companies such as Meijer that are using one or more forms of the technology. You get the picture, though: Messages are delivered in a more personal way than traditional mass-marketing, and the customer’s location plays an important role in determining when and how the content is delivered.

2. Who is doing location-based marketing and what can we learn from them?

Many companies already are working to better reach consumers through location-based marketing. Among them are T-Mobile and Citi, which have partnered with AOL to “engage with people across screens and not merely target devices,” in AOL’s words. “Reaching them on multiple platforms with relevant content suitable for each channel–whether that be their desktop or mobile device–helps us target our message, build brand awareness and lead to direct customer action,” adds T-Mobile’s Peter DeLuca, senior vice president for brand and advertising. Meanwhile, Motorola intends to dispatch Bluetooth-powered sensors to its retailers, The Washington Post reports. In turn, retailers can use the devices to deliver deals to customers in-store and gather data for analysis of customer behavior. Bluetooth is among the most prolific technologies available for delivering content to consumers based on where they are in space.

A customer using Macy's shopBeacon app
A customer using Macy’s shopBeacon app
Finally, Macy’s is just one more example of a retailer that will play off of Apple’s iBeacon technology to deliver deals,reports Clickz.com. It will do this on a department-level basis in all stores by spring 2015. The popularity of location-based delivery extends well beyond the U.S. From the United Kingdom to South Africa, marketers are excited by what they see as the next phase of brand outreach.

3. What technology is required to do location-based marketing?

We’ve already touched on those popular sensors known as Bluetooth beacons. This is important because it signals the rise of passive infrastructure that can nonetheless assist in guiding consumer behavior, notes Marketing Land. For those ready to get serious about this approach, be sure to read this excellent post from Galen Gruman over at InfoWorld, which explains from the back end how beacons and apps work in tandem for this type of marketing to be successful. It also assesses consumer anonymity and evaluates some of the financial needs for implementation. Other necessary terms terms of the trade are geo-fencing and RFID, along with intelligent data distribution. These help paint a broader picture of the present and future for location-based technology. (And if you haven’t yet sent your first text-message deal to customers, yes, that’s a form of location-based marketing, too. In this space, there’s no approach too low-tech with which to experiment!)

4. What risks are associated with this approach?

Although it’s true there are plenty of options for marketers to try out when it comes to locational messaging, it’s also true there is a fair amount of risk. Consider the following three examples. First, most of your customers probably aren’t Pavlov’s dog in human form; rather, they take time to investigate purchases, particularly large ones, notes Mobile Marketer. Brands must take care to serve up contextual messages that aren’t exclusively geared toward impulse buys. Second, location-based marketing can be perceived as pushing the envelope when it comes to consumer privacy. It’s feasible future technologies might not only pick up on buying habits but also on consumers’ emotional state at purchase, which raises questions about data collection and analysis. Wearable devices are increasingly popular, but be intentional about message delivery to avoid becoming overbearing—or overstepping your invitation from customers. Thirdly, the technology itself poses challenges. AdWeek points out there are plenty of examples where longitude and latitude being reported are just plain wrong, and it can also be difficult to validate whether a location-based message resulted in an in-store purchase.

5. What’s the bottom line?

Time and advances in technology will determine the future of location-based marketing. Yet for brands with the curiosity and resolve to do the proper legwork, this type of messaging can create exciting new ways of engaging with customers and driving foot traffic for future purchases. Despite the fog of newness that surrounds this approach, gray is a great place to be.

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