Where Are You Going, Where Have You Been?

Location-based technology will redefine behavioral targeting, maybe sooner than you think

Delivering an ad based on whether it’s snowing in Vermont is one thing—delivering an ad based on whether it’s snowing on a given city block is another. McCormack says that this year, TWC will roll out a new location-based function enabling advertisers to target a consumer below the ZIP code, potentially factoring in a person’s behavior or intent.

The Weather Channel isn’t the only company experimenting with location-informed ad content. Forrester’s Parrish points to Victoria’s Secret. A user clicking on one of the retailer’s rich-media display ads expands to reveal the message: “The closest Victoria’s Secret to get this set of pajamas is 0.4 miles away. Click here for directions.”

But location-targeted mobile display ads face a familiar obstacle: consumer action, or the lack thereof.

Generally, consumers don’t have to check in to a location to receive an LBS ad, but they do have to open an app to see one. Geofencing sidesteps that. After the consumer completes an initial opt-in—usually through a third party operating the geofence for a brand—all that’s required to participate is for his phone to be turned on in order for a marketer to target him with a local ad.

“If geofencing allows [consumers] to not have to download an app to check in, the barrier to entry is lower,” says Parrish.

The problem, Parrish says, is that most marketers perceive geofencing as lacking scale. “Somebody’s going to have to lead the market,” she said. “It’s either going to be the marketers offering real value or the consumers being willing to try to see what will happen. I feel like it’s in marketers’ best interest to go ahead and try to set the stage.”

Another major concern: privacy. Congress grilled reps from Apple and Google last spring following reports that the companies were logging the location history of devices running their respective mobile operating systems. The issue was reignited in November after the mobile software company Carrier IQ was discovered to be storing data such as device-location history. That led Rep. Ed Markey (D-Mass.) last month to introduce the Mobile Device Privacy Act, requiring companies to get a consumer’s consent before collecting location information.

When it comes to privacy, location-targeted mobile ads sound fewer alarms since they run in apps that already require consumer consent—Westin’s ads via The Weather Channel’s app, for example. But messages via geofencing technology are where things can get really creepy, which is why companies like location-based marketing firm Placecast require consumers to opt in.

Privacy concerns could actually facilitate the entry of highly regulated verticals that are generally hesitant about testing newer technologies but that are persuaded by the adoption of safeguards to address privacy concerns. Pharmaceutical and healthcare companies are among the most legally constrained when it comes to consumer privacy, but Carat svp and head of mobile practice Jason Newport hopes to see those industries expand their use of location-based mobile campaigns this year.

“You can imagine geofencing campaigns around pharmacies for vaccination reminders or something like that,” he said.

Likewise, JetBlue used Placecast’s ShopAlerts program to geofence airports.

Placecast CEO Alistair Goodman says more than 6 million consumers to date have opted in to receive ShopAlerts, while more than 130 brands used the company’s platform last year. North Face uses Placecast to geofence ski resorts and deliver snow reports to skiers on their way to the slopes. “It creates ways for the brand to interact with those consumers in meaningful ways tied to location,” Goodman said. “It doesn’t just have to be deals.”

Not that deals don’t work. Among purchases based on a ShopAlert message, 19 percent are the result of a reminder while 49 percent weren’t planned at all, according to Goodman.

More than 90 percent of ShopAlert messages are opened within three minutes of being delivered, Goodman points out. That is all well and good as long as a consumer enrolled in the program only receives five offers a week. But as the number of brands that set up geofences swells, consumer adoption could actually shrink because of the very real possibility of geofence overload.

As location-based marketing has become more commonplace, consumers have come to expect that marketers will use the latest technology to track them down wherever they are, whatever they are doing, to offer them that coffee or back rub.

“From a consumer perspective, location is just something that’s expected,” Where CEO Doyle said. “It’s become almost like a dial tone where you expect [a mobile service] to contextualize to where you are.”

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