Your Complete Guide to Location-Based Marketing

Businesses should use every chance to create more personalized marketing content. Location-based audiences are one of the ways to do that. When you know where people come from or currently stay, you can tailor your ads or messages accordingly.

The best thing about this kind of targeting is that this approach is suitable for most businesses, from ecommerce stores to hospitality. It also involves many types of targeting (we’ve talked about it more extensively in this article about customer targeting) that allow you to track potential customers without violating their privacy.

Would you like to know more about location-based marketing and how you can implement it? Read our guide to know more.

What is Location-Based Marketing?

In short, location-based marketing is targeting potential and existing customers based on their geographic location. It matches opted-in location data gathered from smartphones to points of interest. This way, you can target consumers close to your place and, therefore, more likely to come across. But that’s not all.

Marketers can rely on real-time location data to run more efficient ad campaigns. It’s not only about the current physical location of the person. Geodata also helps to choose the best timing and messaging. For example, mobile device data may show that the user is more likely to engage with ads on their way to work. Hence, it makes sense to serve digital ads during that period.

Location-based targeting is also about adapting the content of both offline and online messaging. For example, you may send different postcards to customers depending on their location.

Finally, collecting geodata allows you to analyze your consumers and build location-based audiences. It will help you find the most effective channels to reach people and make them choose your brand.

How Does It Work?

Location-based targeting heavily relies on mobile device data. It detects a mobile device’s geolocation to alert its owner about an offer from a nearby business. Such alerts are typically delivered through SMS text messages, search advertisements, push notifications, or ads in mobile apps.

But how can a business access information on someone’s whereabouts? When using a mobile device, the person can opt-in for mobile marketing. It usually happens after they download a related mobile app or website and click Agree in a prompt asking them to use the device’s current location.

Afterward, the geofencing feature triggers alerts when a device lands in a pre-defined geographic boundary. Since the user is informed about the data use and gives direct consent, such data processing is compliant.

Still, the approach to collecting location data varies by the type of location marketing. We will discuss it in more detail below.

Why is It Important?

Location-based marketing yields excellent results. It’s an affordable way to create more personalized marketing content and encourage customers to convert. According to the LBMA’s 2020 report, over 40% of companies name the ability to target as the most powerful benefit of this kind of marketing strategy. 20% mention brand recall, and around 15% say it drives foot traffic and sales at POS.

This strategy can:

• Increase the accuracy of your targeting efforts

• Enable you to cover consumers you wouldn’t reach otherwise

• Focus on people who are already close to your physical locations bringing more foot traffic

• Gather demographic, behavioral, and engagement data about your customers

• Improve brand awareness

• Generate more sales and revenue

• Power other marketing campaigns by supplying quality data on consumers

Besides the listed advantages, it also enables you to target consumers across mobile devices. The thing is, cookies are not as effective on mobile as on the web. Even though you can place them in users’ browsers, the information they collect is unreliable, to say the least. Hence, location-based marketing is a decent alternative to web targeting based on cookies. You get a chance to reach consumers who prefer mobile devices and build powerful omnichannel strategies.

Types

As it was mentioned, there are several ways to collect location data and use it for marketing. You may adopt one of them or combine several approaches for increased reach. Here are the main options with benefits and examples:

1. Geotargeting

Geotargeting uses IP addresses, unique codes that make connected devices identifiable. Then, it matches the IP address of a mobile device to a country or ZIP code and determines where the user is located. The technology detects the user’s location to serve them personalized messages. If the person has opted for location data sharing, they may receive in-app messages or push notifications based on their area or store proximity.

Benefits

Enhanced customer experience through personalization and location-sensitive offers.

Examples

Google Search ads are the most famous example of geotargeting. When the person types a Chinese restaurant in search, Google uses their current location data to return suitable options in the area.

2. Geofencing

This method is based on using GPS technology to create an area with borders. It may be anything like a shopping mall where you have a store or a business center. Mobile users get a marketing notification or message whenever they cross the border. They may receive information on nearby stores, special offers, or other promotional content.

Benefits

Geofencing relies on real-time location data, which means interacting with potential customers when they are right at your doorstep. Besides, it allows you to cover a larger area, which may be highly effective for locations with lots of traffic.

Examples

If you run a flower shop in a busy city center, you may use geofencing to show ads to people as they approach your location.

3. Beaconing

Beacons are small, wireless transmitters that use Bluetooth or WIFI to connect with predetermined apps running within range of the beacon. They send signals to the user’s device to prompt a server to serve specific content. Beacon proximity marketing is effective in targeting existing customers in a small area. 

Benefits

Although users must opt in and turn on Bluetooth to receive more relevant ads and notifications, beacon technology ensures more direct communication. It also allows you to send alerts even if users are not online.

Examples

A large department store may place beacons in aisles to send offers to people as they pass different areas.

4. Geo-Conquesting

Geo-conquesting utilizes GPS technology to target users close to competitors’ businesses and drive them away. You create a virtual parameter around the competitor’s location and send better deals when consumers enter it.

Benefits

It’s a cunning way to outperform other companies in your niche and find customers who already use similar services.

Examples

If you have a car repair service and know several other popular repairs in your city, you may try to target their customers. Geo-conquesting will detect when a person approaches the specified area to serve them your ads.

5. Mobile targeting

This approach means that you target users with online ads on their smartphones. You create audience segments in a mobile ad platform to specify whom to reach and when. Location is one of the qualifications to use for targeting. You can also segment people based on time or device.

Benefits

Segmentation ensures better-tailored content for every user group.

Examples

A local restaurant can run social media ads to engage people living in the same city or area.

Generally, location-based marketing and data collection approaches will depend on the tool you pick. Just make sure the chosen software is regulatory compliant while meeting your marketing and analytical needs.

For Which Industries is This Kind of Marketing a Good Fit?

Even though this guide focuses on running location-based marketing campaigns for ecommerce, there are many other use cases. Here are the primary industries that can benefit from location and proximity marketing the most:

Ecommerce retail industry

This marketing strategy is classic for retail companies that have both physical stores and ecommerce channels. They can use proximity marketing to capture the attention of passers-by and make them come in. Purely e-commerce brands can also adopt a location-based marketing strategy, but in this case, geo-conquesting is recommended.

Food & Dining

Geotargeting, geofencing, and geo-conquesting are suitable for promoting your dining place. But note that when it comes to food & dining, location marketing may be less potent for small restaurants. National and local chains usually benefit from it more.

Consumer Packaged Goods (CPG) Brands

Geolocation marketing can work for you if you sell unique products at selected locations. But be sure your brand image is strong enough to make people visit a third-party store only to buy your product.

Seasonal Events

If you run a festival, sports event, or any other show, geotargeting, geofencing, and mobile targeting are a natural fit. Once a potential visitor comes to your area, they will instantly see info about what’s happening.

Travel & Hospitality

With location data, the marketing teams of resorts, hotels, amusement parks, or beaches can engage with people in the area. Since potential customers in resort destinations come and go, real-time notifications can boost engagement.

Of course, there are cases when location-driven mobile marketing is not an option. It’s not a good fit if you sell products available anywhere, like dairy or soda. It would be difficult to convince buyers to choose your place over dozens of similar stores. In such cases, demographic targeting strategies are more effective.

You must also be careful if you work in strictly regulated industries like healthcare. Regulatory organizations limit data collection from audiences at sensitive locations and have standards against creating discriminatory audiences.

Real-Life Examples

So you can better understand the concept, we have collected some good real-life examples to illustrate how it works for physical retail locations and online stores.

Burger King

The love-hate relationships and rivalry between Burger King and McDonald’s are never-ending. These competitive locations tease each other on billboards, social media, and other channels. Location-based marketing is not an exception.

Several years ago, Burger King used mobile geofencing to steer customers away from McDonald’s. Anyone who entered within 600 feet of most McDonald’s locations could get a Burger King Whopper sandwich for a penny using their mobile app.

Urban Outfitters

This lifestyle retailer uses geo-targeting to promote party dresses to women who have recently visited a bar or nightclub. The brand delivers push notifications in their app based on the places app users have been to.

Barneys New York

The luxury department store used beacon technology to nurture customers with personalized offers and options for nearby activities. It kept them near the store, making them more likely to purchase. After users with enabled push notifications and location sharing entered the neighborhood, they saw valuable recommendations for spending time.

GDPR Concerns

The General Data Protection Regulation (GDPR) act implemented in 2018 regulates data processing practices by any business serving EU citizens or working in the EU. Violations are costly due to hefty fines and reputational losses.

Thus, marketing teams must strike a delicate balance between ensuring data privacy and personalization for location-based marketing. You need to do several things to stay compliant:

• Provide a clear mechanism for location data sharing

• Collect only the information you need to provide the services and marketing specified in the consent prompt

• Make all data processing practices transparent in your Privacy Policy and Terms of Use

• Ensure save data storage

• Use marketing tools that ensure privacy and don’t collect any personal data. In particular, Verfacto is a great option for compliant real-time customer profiling based on location. It captures where users come from and automatically delivers the necessary ads or messages across digital channels.

Even though GDPR imposes some limitations on location-based marketing, you can still run such campaigns lawfully.

How to Use Location-Based Marketing for Your Ecommerce Store

The main problem with using location-based and proximity marketing in ecommerce is that you may not have a physical store. Hence, you will need more creativity to design a successful location direct marketing strategy. These are the steps to take:

1. Decide what you want to achieve

Before targeting users based on their physical location, you must set the goals for your new marketing campaign. The chosen approach will depend on what you expect to achieve. You may want to increase brand awareness, generate more sales, or nurture loyalty.

2. Analyze your target audience and the market

Try to learn as much as possible about your target audience. Are they willing to install an app and get messages from you? Or would it be better to deliver SMS? Their preferences and behavioral patterns can help you choose the most appropriate strategy.

3. Choose a marketing approach

Pick the most suitable location-based strategy for your businesses. Here are several options:

• Target users based on what brick & mortar locations they visit. You may track other locations that sell similar products to drive their customers. You may also track location-based audiences at places related to your products. For example, preschool visitors are highly likely to be interested in toys.

• Create location-based audiences to offer a more relevant selection of products and ads. People living in hot climates are usually interested in summer clothes and vice versa.

• Use location-based data for more effective local SEO promotions. You can optimize content for different audiences based on their geodata.

• Customize online and offline messaging using geodata

• Run pay-per-click ads in a specific location to enhance targeting and reduce marketing costs.

• Increase visibility of your store with location tags on social media posts. This way, consumers may find you while searching for products in a specific location.

  4. Implement and test it

Connect customer journey analytics and location tracking software necessary to implement the preferred strategy. You may focus on one location marketing approach or combine a few. Note that advanced location-based marketing requires automation software to track the location and trigger the necessary marketing activities based on real-time actions.

The Future is Customized

Like every other kind of marketing, these campaigns become more personalized, agile, and data-driven. Marketing teams look for ways to outperform competitors by using advanced technology. It results in the growing popularity of augmented location targeting. Thanks to augmented reality, apps can create experiences based on the current location of app users. Proximity marketing and hyperlocal marketing also gain traction.

Finally, the main trend is that location-based marketing is becoming a common thing in ecommerce and other industries. Companies willingly invest in technology that can track customers and shape their experiences based on where they are.

Conclusion

Location-based marketing can become a successful marketing strategy for businesses in many industries, including ecommerce. You can use it both if you have physical locations or work solely online. Just be sure to find a reliable customer analytics platform that will collect location data meeting regulatory requirements. It must also enable automated marketing communications and integrate with top online advertising tools like Google Ads and Meta Ads.