How to Use Location-Based Marketing to Drive More Sales
Businesses have been using location-based marketing for years to drive more sales. It has been around since local businesses, such as restaurants, began sending messages to different mailboxes based on home addresses. However, with the fast expansion of smartphones, the ability to deliver advertising based on someone’s current location or geofencing has become even easier, and it has been adopted as the next marketing tactic.
As technology has advanced, so has the importance of location-based advertising. The ability to track an audience’s behavior has drastically improved marketers’ abilities to find and connect with prospective customers. This has become increasingly important for conversion rates.
This blog post will discuss some of the best ways to use location-based marketing to increase revenue. We will also provide some tips on how to get started with location-based marketing.
What Is Location-Based Marketing?
Location-based advertising is a marketing strategy that uses location data to tailor personalized messages to users located in a specific place or region. For example, location-based marketing companies can use texts or push notifications triggered within a specific location or by a certain action. Such a tactic is especially valuable for small and medium business advertising, where customers’ location is often a defining factor for purchasing.
If you use any mobile device that has location services on, you can be a target of location-based marketing practices. Location-based marketing worked when people opted-in to location data
mobile apps on their smartphones. This location data is used in real-time to serve an ad, content, or push notification. It is also used to match other customer data with a physical location to create a historical audience segment for advertising at a later time.
Types Of Location-Based Marketing
There are several types of location-based marketing and differences between them:
Geofencing: This form of location-based marketing allows you to define the perimeter or ‘fence’ where your ads would be displayed. You can then choose the radius of the campaign and determine the distance around your store where the users would see ads. For example, shopping malls often use it to get foot traffic to the stores.
Geotargeting: Geotargeting uses the user’s location to serve ads and content to audiences that visit specific locations. This form of targeting isn’t very exact, it is good for targeting on a larger scale – i.e., by state, town, or city. For example, you can advertise restaurants with local cuisine to tourists who have just entered the town or send them push notifications with the best hotel room offers.
Hyper-Contextual Targeting: This location-based marketing tactic involves placing mobile ads within specific locations and a certain timeframe. For example, sports-related offers could be placed around the football stadium during an important match.
Geo Conquesting: This form of location-based marketing includes displaying ads when your target audience approaches your competitors’ stores. Geo conquesting is a great way to improve foot traffic to your store in the area where people shop.
Benefits Of Location-Based Marketing
Location-based marketing is a foolproof technique to increase the number of customers visiting your business. However, we can go even deeper into the advantages of proximity marketing, here are some of them:
- Marketing messages can be more personalized and precise.
- By using location data, you can predict some of the people’s preferences or interests.
- Your focus groups can be more specific with the amount of customer data you will get
- You better understand your customers and build meaningful relationships with them.
- You can compete with bigger brands and win the market share of local audiences.
Location-based marketing mistakes to avoid
There are some instances where proximity marketing isn’t the best choice, here are a few examples:
- For businesses that handle sensitive data (ex. medical services)
- For products and services that are widely available or in highly competitive locations (ex., grocery stores or a shopping mall)
- For locations that aren’t attractive and convenient for customers (ex., a small town or slow neighborhood)
If you want to create a successful location-based marketing strategy, you need to consider if it’s scalable, meaning it could be expanded for more customers. For example, if you live in a small town where the main marketing channel is word of mouth, and you can’t reach a wider audience than local residents, it’s better to sit this out.
However, if you’re sure you would benefit from targeting location-based audiences, up next, we have tips for you to make your life easier.
How To Launch a Location-Based Marketing Campaign
First, it’s essential to set up a marketing plan. The following steps will help you prepare for launching a location-based campaign.
Establish goals: The only way to measure the effectiveness of your campaign is to establish objectives. Ask yourself what the campaign’s goal is. For example, do you want to drive people to your store or steer them away from the competition? What growth percentage do you want to see in a month or a quarter?
Choose a targeting method: Match a targeting method, such as geofencing or geo-conquesting, to your marketing goal. For example, geotargeting helps drive repeat customers into a store, while geofencing may be a method to attract restaurant customers during lunch hours.
Analyze Results: Look at the data collected and see if the strategy worked. Using geo-zone and marketing attribution analytics to better understand what contributes to conversions.
Find Location Based Audiences
There are several places you can find your target audience and their location data:
Mobile Audience Marketplaces are platforms where you can browse and select the audience you need from various providers. Most are just searchable directories of audiences, while some allow for custom audience creation. Examples of mobile audience marketplaces include Adsqaure, Factual, and Pushspring.
Mobile Audience Providers sell mobile location audiences but typically have a standard set of audiences. Therefore, building and creating custom location-based audiences can be a managed service approach. Examples include Unacast, Safegraph, and Gravy Analytics.
Demand Side Platforms (DSP) are used by advertisers and agencies to place media buys. Unlike the first two categories above that provide audiences, you don’t have to activate those audiences on a different platform. Some DSPs have an audience builder or provide a service that will target your audience using their data, requiring you to activate media on the same platform. Examples include Thinknear, Zapp360, and Sito Mobile.
Create Personalized Messages
Ad content usually defines whether you catch users’ attention and make them loyal customers. There are many things to work on while creating your perfect message, but some are especially important:
Remember that certain marketing formats work better with specific channels, and some are more effective for achieving particular business goals. Plan your location-based marketing campaign while taking into account your needs and budget.
Keep your ad from negatively impacting the user’s experience by choosing less vivid but more relevant creative. Then, more often than not, it’ll perform better than irritating ads.
You want your ads to be personalized, so potential customers have the best experience possible, but you don’t want to violate their privacy. Try to find a balance between the two.
Launch the campaign
Once the preparation stage is over, it is time to launch your location-based marketing campaign. To ensure that your strategy is successfully carried out, you need to stick to efficient practices:
Start with the basic settings on DSP
Use basic settings such as choosing traffic, device types, and active time for your campaign. Don’t forget it’s best to use other forms of targeting in pair with location-based targeting. The most important thing is to narrow down your focus group to the most relevant target audience for your business. However, remember not to go overboard – if you use too many targeting filters, you limit your audience so much that no one will see your ads.
Ensure proper location data collection and analysis
Use data-management platforms to organize and track your efforts. It could help you determine whether your location-based marketing campaign meets your goals. In addition, you can improve your ad campaigns by tracking your ads’ performance and analyzing that data.
Analyze your budget with the customer lifetime value
Average Customer Lifetime Value (ACLV) is the metric showing how much money you can get from one person during the customer lifecycle. Keep a close eye on how much you spend on online ads, and ensure that each customer acquisition doesn’t cost more than its projected lifetime value. It should be the other way around – customer lifetime value should be higher than the cost per acquisition.
For example, if your ad budget was $1000 per campaign and it brought you ten customers with $400 value each, your profit is $3000, and the location-based marketing campaign can be considered successful.
You can find managing your location-based marketing campaign difficult, and that’s okay! Consider outsourcing to a marketing specialist to get professional help or advice. Also, if you’re ever feeling lost when setting up or optimizing a location-based marketing campaign, DSP guidelines can be enormously helpful.
Location-based marketing is an essential element of any digital marketing strategy for small or medium size businesses. It can be used to drive sales and improve customer loyalty by personalizing ads and messages according to the location of each user. Using data management platforms, you can track your campaign’s performance and ensure that it meets your business goals. Always analyze your budget in relation to the customer lifetime value before launching a location-based marketing campaign.