May 22, 2013
As seen on AdExchanger
When considering location data, marketers – not unreasonably – tend to focus on its ability to tell them where someone is at a given moment. They’re missing the point. The real value of location data lies in the context, what it tells them about who that person is. Instead of trying to deliver offers to the right person at the right place at the right time, which is a hugely challenging proposition of questionable effectiveness, you should be using that data to drive behavioral targeting for every impression you deliver, wherever you deliver it.
Location data has long been seen as the key to increasing mobile advertising spend, which hovered at $4.06 billion in 2012, according to eMarketer. The idea is that we could use the shifting location of a smartphone or tablet to target specific ads to consumers based on their real-time location – for example, showing a consumer a Starbucks ad within their favorite mobile app at the moment they’re walking by a Starbucks store. But how feasible is this concept, really? What kind of scale are we talking about? Even if a handful of consumers fit the ideal profile – people walking past a Starbucks while using the right app (instead of, say, trying not to get hit by a scooter) on a device whose GPS data they’ve shared – how many such impressions would actually be available to Starbucks in a given period of time? And how many of the recipients would be delighted rather than creeped out?
The winner of this type of advertising will always be Google and local search. Google’s AdWords Enhanced Campaigns make smarter use of location data within the context of larger campaigns, allowing marketers to increase their bid prices for mobile users closer to a location. Still, this model works better for search advertising or location-based services, where we know people will be actively engaged with their devices with an explicit intent, than for other types of mobile inventory.
But while the potential of location data has been misunderstood, it hasn’t been oversold. Location data can indeed be a powerful tool for marketers, but its real impact will come from what it can tell us about someone’s daily routines, and how we can correlate that information to the rest of the person’s profile to improve behavioral targeting.
Untapped Potential: What We’re Missing Now
Today, most behavioral targeting is built around usage and activity across apps – and that’s about it. What we know about consumers is fairly narrow, reflecting what they do online but not so much what they do in the real world. This limitation is inevitable when it comes to desktop connectivity, but mobility can add an entirely new dimension to the picture. By learning how someone moves around over the course of a day, you can enrich data gathered through other sources to better understand how they relate to your brand and your products.
One approach is to view location data as an indication of habit. For example, John passes an AMC movie theater on the way to and from work every day. AMC can use data about this daily routine to target him for free passes to a movie later in the afternoon, predicting that the convenience of the offer will resonate with him. It doesn’t matter where he is when he receives the offer; what’s important is that its location is relevant to his routine.
Maybe you want to target college students at NYU. The campus itself only spans a few blocks, but you don’t have to limit yourself to that geography. By creating geo-fences around the campus, you can identify the consumers most likely to be students, then target them anywhere they go. You can also use location data over time to refine an individual’s profile; if they show up at a hospital every day, the person is likely to be a medical professional, whereas more occasional visits would suggest that they’re a patient instead. That’s the “ah ha” moment, when a brand can identify the difference between the doctor and a patient or between a car salesmen and a car buyer.
The bigger platforms are already taking location to the next level. Facebook recognizes the value of location for behavioral targeting. The Facebook Home family of apps is designed to be the starting point for all of an individual’s social activity, from email and messaging to photo sharing. By running all the time and capturing GPS data along the way, Facebook Home enables Facebook to capture a tremendous amount of location data and build more complete user profiles. In other words, instead of monetizing location data in the direct and narrow context of mobile marketing, the company uses it to enhance the value proposition of its marketing and advertising programs as a whole.
Just as walking around with your nose in an app can be a good way to walk into a wall, focusing too narrowly on location-based offers can blind you to the larger opportunity right in front of you. By using location data to drive behavioral targeting, you can make every impression you deliver more effective, whether consumers are on the go or home for the day.
Follow Krishna Subramanian (@ksub15) and AdExchanger (@adexchanger) on Twitter.