By Danielle Savage, July Systems
Location-based marketing has been projected to become the next big thing in mobile since 2006, when mobile phones’ SMS and cellular data were just starting to be used widely. There are more than 100 companies that are trying to show that this is the missing link in in-store retail marketing, but the proof is not quite there. While some companies have been able to show that people are clicking on their pushed ads, and that people are in fact coming into the store, we await any real data showing a causal link. Here is why it may be a while before we get any real answers.
What marketers should already know by now is that location-based advertising is not as simple as pushing an advertisement when an individual walks in or walks by a store. It is essential to “provide the right content in the right format to the right person at the right time” (Bauer, C et al, 2016).
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People Like Their Privacy
In this digital age, people are continually concerned with the information that they share. While the abundance of information shared on social media sites may lead some to believe that this is changing, what we know for certain is that nearly half of mobile users have at some point disabled their locations services for privacy reasons (Pew Research). “Generally, consumers’ privacy concerns are high with respect to LBA while the perceived benefit and their willingness to use LBA are relatively low” (Bauer, C et al, 2016). This puts location-based advertising at a strange place to start with because it virtually eliminates half of mobile users when it comes to whom they can advertise to.
The Clutter of Ads
On estimate, the average American is exposed to approximately 4,000 to 10,000 advertisements each day (Red Crow Marketing). So when thinking about adding more advertisements to the mix, it is essential to think, “How will these one or two ads break through all of this advertising clutter?”, because who is to say that just because it is “a new form” of advertising that it is going to be any different.
Customers are most accepting of these location-based advertisements when they are already ready to consume (Conti et al, 2012). This then begs the question: How useful are these ads to incentivize consumption if the consumer was already en route to doing so?
This is where the distinction between push and pull advertising comes in. Especially when it comes to location-based advertising, it is essential that marketers use pull rather than push strategies to reach their target audience. Consumers are half as likely to receive push advertisements in a positive light than pull advertisements. People want to feel in control of the content that they receive, and they want to use location-based services because they enjoy doing so (Bauer, C et al, 2016). Specifically, people use these location-based services not primarily as a tool for receiving promotions, but rather as a way to facilitate interaction with the community around them.
More Than 50% Of App Users Find Push Notifications Annoying
While push notifications are generally the opt-in or “pull” marketing strategies, there remain issues with the way they are currently being implemented. In fact, some location-based advertising has proven to have the opposite effect when not used appropriately.
Spamming customers with promotions and ads, regardless of relevance, time or place, can cause customers to be more reluctant to 1) Sign up for promotions in the future and 2) Un-allow access to their location, and other consumer information. App-based push notifications often see high rates of uninstalls if the users feel the number of ad pushes are excessive. As many as 46% of customers will opt out if they receive more than one ad push a week (Localytics).
Location-based advertising may still be the next big thing, but there still remains a missing link before anyone gets there. “Too many mobile ad platforms are pitching where a consumer goes as the most important information for targeting, which is fraught with problems. That’s not to say location doesn’t matter in mobile marketing, because geography provides much-needed context.” However, in-store retailers need to know more than who comes into their store and how frequently that happens (Mobile Insider, 2015). They need to know more about their individual customers and their habits.
Instead of focusing these location-based advertisements on situation-centric triggers (such as location) it is important that companies remain focused on gathering person-centric data to further expand the knowledge that companies have on their customers (Bauer, C et al, 2014). Until that happens, location-based advertising remains just as effective as those coupons we all get in the mail.
Danielle Savage is a marketing intern at July Systems, a provider of mobile experience and engagement cloud platforms. July’s latest cloud product Proximity MX helps enterprises to complement their current digital marketing strategy with person-centric location intelligence to acquire and engage visitors walking into their buildings.
