Location, location, location: the rise of hyper-local marketing

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Location, location, location: the rise of hyper-local marketing
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The advertising industry has been getting excited about the ability to use mobile technology to better target messages by using the consumer’s location for around 20 years now. But the confluence of several emerging tools, such as iBeacons, in-store Wi-Fi and the ability to push messages to apps on mobile phones has put hyper-local marketing back at the top of the hype cycle.

The premise of knowing a person’s location before sending them an advertisement is that location is a good proxy for context. If a Topshop customer is near one of their shops, goes the argument, wouldn’t it be great to offer them an incentive to entice them in? This obviously assumes that the consumer has previously self-identified as being a customer and is happy to receive these types of messages.

However, it’s just not that simple in reality. Yes, someone might be near a shop, but they might not be in a shopping frame of mind to respond positively. They could be working near by, visiting a sick friend or just not in the mood. The risk for the advertiser is that if they push the right message but at the wrong time, the consumer may decline to engage in the future, losing them as a potential purchaser forever.

So, using location to understand context is a much more subtle game than it might appear on first examination and advertisers need to be careful exploring.

A further issue is most advertisers still look for high reach in their marketing efforts. However, if filtering is applied around one store at one location at a specific time of day, often the numbers being engaged are so tiny as to not make any difference to the footfall resulting from the micro-campaign.

As an example, Blis helped Spotify generate great results by serving ads in coffee shops in airports on the assumption that consumers would be in the mood to buy last-minute travel entertainment. Similarly, ads for the Mini Paceman and Countryman addressed high-earning individuals by advertising when they were in 4/5 star hotels, airport lounges and Michelin-starred restaurants.

Location can be used even more precisely by advertisers who invest in understanding the potential of the new tools. Sky Sports are currently running a campaign aimed at people who have attended football matches at the stadiums of either Sunderland or Newcastle to promote a forthcoming derby match being broadcast between the two rival clubs. It’s easy to see this kind of thinking being replicated at scale across Premier League fans.

The in-store opportunity

The other area of opportunity for hyper-local marketing is in-store and with 76% of purchase decisions being made there (POPAI) this could be a marketing game-changer. While there’s much talk around iBeacons, there is a strong case that instore Wi-Fi is where the smart money will go – after all, the Wi-Fi option doesn’t require additional in-store equipment installation and maintenance and yet achieves arguably a better reach, with the same accuracy.

According to WiForia a specialist in this area with dozens of trials planned in the coming months, while supermarkets will probably be the first adopters of the technology and marketing channel, other verticals such as malls, travel hubs like airports and stations, and even bars will quickly follow.

The vision around in-store hyper-local marketing is to recruit the consumer to opt-in to use the platform via an app in the case of iBeacons and via a one-time registration for Wi-Fi. Then, when the consumer returns to the store, the marketing programme can roll smoothly into action.

This is still a relatively new concept, with best practices and result-optimisation yet to be established. But examples might be offering in-store coupons, promoting special offers depending on outside variables such as the weather (ice cream on a hot day, for example) or specific messages when they leave the store.

The platform can also be linked to an existing or bespoke loyalty programme, which can further personalise promotions based on previous purchases or patterns, such as reminding parents of babies to stock up on nappies. Electronic signage in-store can also be used to display different messages to specific consumers as they pass by.

One immediate need for retailers trialling these techniques is to establish guidelines so that messages are seen as useful, as opposed to creepy (“How do they know I’m pregnant?!”) or intrusive in terms of volume – I think we can all agree that a constant barrage of phone-beeping would quickly get annoying.

And the future? We know that many customers already research purchases online, which increasingly means “on mobile” before a store visit. As consumers can be tracked both digitally and in the real world, we’ll certainly see an increase in in-store advertising being used in retargeting campaigns in-store – a technique that will have to be used with caution to avoid that feeling of Big Brother lurking behind the freezers waiting to leap out in front of spooked shoppers.

Russell Buckley is a UK government adviser and tech investor

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