Location-Based Marketing Segment Set to Soar

Location-based marketing will be a $43.3 billion market by 2019, Asif R. Khan, president of the Location Based Marketing Association, told the audience at the group’s annual regional meeting in Chicago Thursday.

But the segment, which encompasses various channels to enable a brand to expand its reach, should not be confused with mobile advertising, which is only one part of a much larger marketing ecosystem that includes billboards, display advertising, and other channels, Khan said.

He cited an effective effort that combines gamification with location-based marketing, for example. In the campaign, certain stores (which Khan declined to name) were able to attract customers who are fans of the game Angry Birds; though the targeted customers like the game, they demonstrated an unwillingness to pay for more than the first three (free) levels. The stores sent notifications via the gaming app that they could download other levels for free by visiting different stores.

The location-based applications collect valuable data, Khan added. But that data should be seen only as the bottom layer of a three-layer cake. Companies can combine location-based data and push-marketing with beacons, near-field communication, Wi-Fi, and other technologies to drive engagement, and then in turn drive revenue.

"One of the challenges with mobile is that once the impression is lost, the message has lost its legs," added Ian Dallimore, vice president of digital strategy and innovation for Lamar Advertising. So rather than simply pushing out a mobile message that expires quickly, Lamar sends out a notification of a message that drops into the targeted customer’s email inbox so that it can be retrieved later. This strategy leverages immediate notification without "losing the legs" of such messaging.

Another challenge with location-based marketing is that beacons, Wi-Fi, and other technologies collect data in different formats. So companies have to have a way to merge and analyze this data to derive usable marketing intelligence, Dallimore added. "The information can't be siloed."

Despite the challenges that some of the presenters mentioned, location-based marketing offers some definite benefits when done correctly.

According to Brent Hieggelke, chief evangelist for Urban Airship, video kiosk operator Redbox has had 30 million downloads of its mobile app. Whereas 83 percent of consumers delete most apps within 30 days of initial download, Redbox has successfully engaged customers to where more than 80 percent have kept the app and accept push notifications from the company.

Rather than simply providing the mobile app, Redbox offers immediate on-boarding with a promotional offer, then follows up with a message offering another promotion if the consumer connects with Redbox’s various social media sites.

"The customer has an immediate connection with the brand," Hieggelke said. Redbox continues the engagement with push notifications that go out every Friday with Redbox-selected top weekend picks. The message goes into an inbox so that it isn’t missed if the targeted customer is otherwise engaged.

"Location-based marketing is powerful, but it can't be a blunt instrument," Hieggelke added. "I don't recommend blasting out notifications."

For example, Urban Airship worked with the organizers of the 2012 London Olympics on a mobile app with a pair of geofences. The larger geofence, covering the Olympic village, enabled users to buy tickets, locate events, find restaurants, etc. The smaller geofence, limited to the stadium, enabled organizers to deliver a video of the opening ceremony lighting of the cauldron. It was a special feature for those who purchased opening ceremony tickets—and were inside the stadium.