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.