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The Final Frontier:  Location-Based Marketing

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Of all the big data components, the most dominant this year will probably be location-based marketing, or “geo-targeting.”

On the positive side for retailers, this GPS technology can help cater more specifically to their needs, promote their brand and specific products, and tailor promotions to prospective customers who are within proximity to their store (also known as geo-fencing). Among the many apps that deliver this valuable consumer data are Ban.jo, Path and Foursquare.

But trend reports show an interesting tipping point: Consumers are now more likely to research information that’s related to their current location rather than share or check in with their current status. In this area, Foursquare and Facebook are showing decreased activity. Consumers instead prefer marketers and retailers to notify them with targeted ads and offers based on value.

According to Sense Networks, a company that applies science to mobile location data for predictive analytics in advertising, geo-fencing is just the tip of the iceberg. Sense Networks believes the real application for mobile location data lies in understanding consumer behavior based on where people shop, eat and hang out. With this data, they can build anonymous individual profiles, defining over 1,000 behavior patterns, including dining, shopping and lifestyle habits.

Sense Networks takes advantage of MIT’s highly defined data science to retarget consumers with mobile ads at the most opportune time in their shopping trip.  Since many purchases are planned, rather than spontaneous, this retargeting happens when customers are no longer at a store.

A study done by MDG Advertising shows that 72% of consumers say they will respond to a call-to-action marketing notification they receive within sight of a retailer. As of now, only 23% of retail marketers use some type of location-based mobile marketing. Clearly there’s a huge opportunity to fill this void and give customers what they want when they want it.

Some of the most popular alerts don’t always involve couponing. Special gifts, alerts to flash sales and early access are also popular incentives that tend to have the additional positive side effect of driving customer loyalty. Many of the most effective incentive-based campaigns include some type of alert.

Recently Taco Bell ran a “happy hour” promotion that not only had a proximity alert, but also included an ahead-of-time reminder alert, doubling its effectiveness. Predictability increases the power of a location-based marketing campaign. Marketing to someone when they are likely to be at a location (but haven’t quite made the decision yet) better ensures its success.

Looking at the privacy issue, the Future of Privacy Forum, last October, created a code of conduct for retailers in the U.S. looking to use geo-targeting for marketing purposes. The code includes putting up clear signage informing customers about the collection of their data — but only if unique profiles are stored, as opposed to generic traffic counts.

The Forum is currently working to develop guidelines for data storage, as well as a central “do-not-track” opt-out function, similar to a do-not-call list. It is also creating a standard sign and logo to alert consumers in those stores, a policy it hopes all location-based marketing companies will adopt, though the retailers themselves must agree.

Overall, data-driven location-based notifications represent a major step forward in marketing outside the store.

In-store displays that encouraged users to text to opt-in now deliver mobile promotions based on the retailer’s promotional calendar. With 91% of adult mobile phone users having their devices within arm’s reach, location-based marketing can, and most likely, will take advantage of this fact.

TAGS: retail, retail trends, retailers, omni-channel, customer service,
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