How location-based advertising can revitalize bricks and mortar shopping

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How location-based advertising can revitalize bricks and mortar shopping
Gil Larsen

In today’s highly connected digital world, smartphone technology and mobile behaviors are rapidly revolutionizing everyday life for consumers in many ways. Mobile disruption is reinventing and reinvigorating virtually every ‘traditional’ market sector and this has led to significant shifts in terms of the way people work, communicate, consume media, entertain and, in particular, how they shop and purchase goods.

The question we want to answer today is: how does mobile location-powered advertising affect the modern retail paradigm?

The evolution of bricks and mortar retailing

In terms of online and mobile commerce, digital advertising and location-based technology are well-embedded. But what about traditional ‘bricks and mortar’ retailing? How can location-based technologies and digital advertising augment the traditional business of physical retail?

We’ve all read how online retailing has affected high street shopping and how retailers are closing hundreds of stores. As Business Insider’s Hayley Peterson recently wrote: “Retailers are bracing for a fresh wave of store closures” and “the industry is heading into 2017 with a glut of store space as shopping continues to shift online and foot traffic to malls declines, according to analysts.”

But physical retailing is by no means dead. In fact, we are seeing physical in-store retailing becoming an extension of the mobile experience, and vice versa. Our personal time is at a premium and we now tend to research purchases online using our mobile device, often guided by targeted advertising, or we buy online and then collect in store the same day.

According to ICSC’s “Thanksgiving/Black Friday Shopping Report the share of Americans who purchased online, picked up in store and then also made an additional in-store purchase during Thanksgiving weekend” was 64 percent. So there’s a beneficial additional effect in terms of impulse buying once people are in-store – a place where online retailing cannot really compete.

Online retailers get physical

What’s more, online retailers are moving into physical retail spaces. Amazon announced its first Amazon Go grocery store in Seattle late in 2016, where customers install the app, log in and shop. There’s no need for checkout and no lines to wait in.

There are a number of ways in which the physical retail experience is being enhanced and, in some respects, merging with the digital experience. Virtual and augmented reality apps, for example, are being harnessed by retailers in a number of ways. One example is Ikea using a customer’s smartphone to show what a room in their house would look like with a certain paint color or with a certain piece of furniture in it.

Location-based intelligence drives physical retail audience targeting

Location-based intelligence and the consumer insights it provides, is fast becoming a high value and powerful marketing tool for retailers, providing them with a wealth of data relating to location visits and foot traffic. Typical location-based intelligence includes how often customers visit retail outlets, and how this correlates with other marketing activities, such as specific promotions, nearby competition, OOH advertising, seasonality etc. This provides brands with greater insight into which tactics work and which don’t.

Marrying this data with user demographics and digital preferences, search history and other data enables companies to target consumer audiences in increasingly granular and contextually relevant ways than ever before. In fact, the use of location-based data itself is evolving fast, as technology innovation, machine-learning and AI-driven data mining and analysis techniques, make predicting consumer behavior a reality. Today, brands rely on historical (where consumers have been) and real-time data (where they currently are) for location-based advertising. But what if brands could see into the future? What if they could target consumers by predicting where they will go in the future?

Where are we going next?

Blis is set to announce a first for the mobile advertising market in early 2017 – an AI location-powered performance product which will use deep-learning algorithms to determine where an audience is going to go and drive footfall sales for physical retailers. Blis Futures will provide insights and technology powered by AI, enriching audience targeting, leveraging consumer location behavior and, importantly, guaranteeing footfall for advertisers. It will enable brands to access accurate predictions about consumer location behavior, married to demographic and digital behavioral markers, and target them accordingly. Introducing a new performance-based metric, Cost Per Footfall (CPF), Blis Futures leverages AI techniques to enrich audience targeting, consumer location behavior and, most importantly, guarantee footfall for advertisers.

Rise of the machines and operational automation

Digital programmatic advertising is a natural test bed for AI-driven technologies. The vast amounts of data available, including location data, that algorithms can analyse and learn from, drive rapid and effective results when these technologies are applied. Location data is especially suitable as humans tend to follow specific patterns of location behavior, which offers valuable insight into their habits within the physical environment.

We are in an innovative and rapidly developing era – at the intersection of cognitive technologies, mobility and the creation of consumer demand for retailers. Learning individual preferences and behaviors and catering to those in a timely, acceptable way, will create new benefits and opportunities for both the end user and the advertiser, as well as optimizing ad spend and eliminating wastage.

The model of paying based on actual results, such as Blis is pioneering with Futures, also helps retail advertisers control costs as they are not simply throwing a ton of money at something and seeing what sticks. This is “intelligent audience targeting” in its purest form.

Highly targeted, relevant and measurable communications with customers, based on personal preferences and real-world behavioral patterns, has enormous potential to create demand for businesses who can benefit from associative or impulse purchases.

Should more online retailers move into physical locations in cities and towns, mobile advertising technology will have an even greater role to play in driving traffic and extending the online experience into the physical one.

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Gil Larsen is VP of Americas at Blis. He is responsible for driving Blis’ ad sales revenue in the U.S. and has built strategic media and marketing partnerships with leading brands over the past 20 years.
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Mobile devices provide the answer. By revealing where consumers go, mobile location data can tell brands which consumers spend their time browsing similar products at a competitor’s store. Let’s say Target wants to reach out to consumers who usually shop at Walmart. They can use location data to identify—then target—those who frequently visit the competitor yet still live near a Target store.

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Keep Them Interested

What’s the first thing you do when you wake up in the morning? For most of us, it’s look at our phones to turn off our alarms before checking the weather and scrolling through our Twitter feeds. And throughout the day, we continue to stare down into the faces of our mobile devices: checking the news on the train, sending an email between meetings, or watching videos from our living room sofas.

In order to engage consumers on the devices we use day in and day out, advertisers will need to serve ads that make sense for the consumer depending on where they are during the day. To do this, advertisers must first ask the question: What do consumers want to see on their mobile devices and when? Consumers spend a third of their time online watching videos, for instance, but they aren’t going to watch a 30-second video ad while walking down the street.

To boost engagement, brands can use knowledge about a consumer’s historical and real-time whereabouts to reach out at the time and place that will produce the greatest level of engagement. To effectively grab the attention of a consumer that’s out and about, a banner ad may work best. Later that evening, when the consumer is at home using a tablet or laptop, a longer video on a larger screen may work well.

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How can brands make sure they retain the new and existing customers they’ve worked so hard to gain? They must first recognize and show appreciation for their most loyal customers.

Most advertisers identify loyal customers by looking at newsletter subscriptions and online purchase histories, but they may be missing other valuable customers who prefer to shop in stores. By identifying devices that frequently visit a brand’s store location, advertisers can make sure they are recognizing—and thanking—all their biggest fans. When an existing customer comes into a store a certain number of times, for example, advertisers can deliver a thank-you message—perhaps offering the loyal customer a generous coupon to redeem in-store.

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Following its decision to buy e-commerce company Jet.com last year, Walmart recently agreed to acquire Bonobos, a retailer with a strong online presence and generous shipping policies. If these moves weren’t sign enough that the physical and digital retail worlds are merging, Amazon’s acquisition of Whole Foods is the ultimate wake-up call.

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Understanding Consumers though Mobile

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Beyond real-time location data, retailers can use historical location data to understand a consumer’s habits. For example, some consumers might visit a luxury jewelry brand on Fifth Avenue just to browse, even if they have no intention (or monetary means!) of buying. Thus, for that specific retailer, in-store visits may not indicate ideal customers. Instead, that luxury retailer can look at historical location data to identify their ideal consumers: perhaps individuals who frequently stay at the Four Seasons Hotel or regularly check in to exclusive country clubs.

But retailers shouldn’t rely on mobile data alone. By layering mobile insights with other valuable sources of data, advertisers can gain a holistic picture of their perfect audiences. Data collected from laptops, for instance, can reveal browsing histories and online shopping patterns; however, consumers won’t be opening up their laptops while shopping in stores. The trick is for retailers to match the data across devices to unique mobile device IDs. Only then will they gain a more holistic understanding of consumers and will be able to target or retarget them with products they are likely to go buy.

Driving Foot Traffic Creatively

Once they’ve gotten a clear and thorough understanding of their ideal audiences, how can retailers use mobile devices to drive foot traffic? Proximity targeting—delivering ads to consumers when they come within a certain distance of a store location—is a common approach. Retailers can maximize the power of proximity targeting by crafting unique and imaginative creatives.

For instance, advertisers can deliver ads to shoppers already in the area to tell them about an in-store sale, or offer them a coupon they can only redeem in person. Retailers can also deliver ads that feature a handy map telling consumers how to find their store.

Sometimes, targeting consumers when they are walking by a store may be a little too late. A QSR wanting to boost its 10 am breakfast crowd, for instance, may want to target consumers when they wake up around 7a and begin planning their day. Otherwise, the consumer has most likely already made their breakfast choice.

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Tune in next week to read all about how mobile is fast becoming the extension of a retailer’s store.

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But mobile devices also give consumers something they can’t get in stores: personalized marketing. Collecting data like shopping histories and browsing patterns, mmobile devices provide retailers with detailed insight into individual consumers and a means of communicating with them directly.

How can retailers use mobile insights and capabilities to craft effective, one-to-one messaging?

1. Get personal.

Today, consumers want—and expect—ads to speak directly to them. In fact, 74% of customers feel frustrated when their online experiences aren’t personalized.

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Let’s say a CPG brand wants to reach out to a previous customer who hasn’t been seen in store lately. The marketers can use their knowledge of the consumer’s daily commute to deliver the ad just before he leaves work, suggesting he stop by on his way home. They may even offer him a discount on the product he previously purchased.

2. Market to individuals, not devices.

Once retailer marketers have identified their ideal audiences on mobile, they shouldn’t see phones as the only means of communication. Consumers own an average of 3.6 connected devices, so retailers should communicate with consumers across the devices they use, including tablets, laptops, desktops and addressable TV.

However, if a retailer sees a user reading political news on the tablet all day but watching cartoons in the evening, it might not be the same same person. With families and partners sharing devices at home, marketers need to make sure they are constructing nuanced consumer profiles across devices in order to reach out to individuals, not just devices.

3. Don’t be creepy.

Personalized, cross-device marketing is on the rise in part because consumers are increasingly willing to disclose their data to retailers. After all, purchase histories and location data are essential for useful or interesting ads.

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But how, exactly, do they measure these improvements? Find out next week when we assess the best metrics for retailers.

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