How Brands Are Getting More Sophisticated at Using Location Data

And a look at what’s next for marketers

Marketers need to keenly focus on leveraging location data. Getty Images
Headshot of Brian Czarny

Location data is powering ad targeting, customer insights, user engagement and campaign measurement and has established equal footing with traditional assets like purchase histories, digital interactions and email response rates. Marketers need to keenly focus on leveraging location data or miss out on crucial opportunities to engage customers and acquire new ones.

For instance, during an Adweek-hosted roundtable last fall, a HotelTonight exec stated that well-timed, location-targeted ads have been “incredibly successful” for the brand. BMW has won accolades for measuring campaign effectiveness with location data when it comes to dealer visits and sales. According to researcher BIA/Kelsey, location-based ad spending in the U.S. will grow to $38.7 billion in 2022, up from $17.1 billion last year.

Such tremendous growth isn’t shocking when one considers positive, tech-based developments in modeling mobile device state (i.e., a consumer’s “state” denotes if he or she is at home, work, on the move, at a restaurant, at a park), quality filtering of device source data, and building “places” (or point-of-interest data), all of which now leverage machine-learning techniques and large data assets for training and modeling.

But even with the growing importance of location data, it’s often also one of the most misunderstood areas in marketing. Let’s demystify the space a little with an overview of the rise of location data and how marketers are increasingly using these insights to target ads, develop customer experiences and build their businesses.

Geofencing garnered early-days buzz

Location data has always been of interest to marketers, but it really came into vogue circa 2010 with brands like Starbucks, The North Face and L’Oreal testing geofencing, a technique that employs GPS or radio frequency identification (RFID) technology, such as beacons, to define a geographic boundary to trigger a location-based mobile ad in real time.

This is the over-referenced use case of, “Cool, Starbucks can send you a notification for a latte coupon when you are close by.” While this example never made much sense to me (Starbucks is never that far away, and I’d just go in if I wanted one), there are plenty of legitimate use cases to drive customers to retail stores.

As a result, the industry started to associate location data with triggering real-time notifications and driving potential customers into stores. While geofencing is a powerful tactic, it has a few inherent issues—such as limited audience reach and notifying consumers during moments when they cannot properly receive messages such as driving a car. It was an interesting opening salvo, but it does not capture the full potential of location data.

Location data has evolved

Marketers were quick to notice the potential of location, and they began to no longer think of it as a real-time-only tool for retailers but rather as a rich data source for multiple use cases. Understanding that a consumer goes to Whole Foods twice a month or golfs every weekend is incredibly leverageable in many ways beyond when they are actually at those places.

As such, location data soon became more about building sophisticated targeting strategies, measuring campaign effectiveness and gaining deep customer insights. These use cases are along the lines of what marketers were used to doing with purchase data, web browsing data and social data.

This expansion was great validation for location data, and marketers saw results once they realized that location was not for simply driving customers to stores. Verizon provides a good example of this step in location data’s evolution, targeting ad creative at non-customers who have either recently walked into one of the brand’s stores or one of its competitors’ outlets.

What’s next? Even richer datasets

Have we harnessed location data and all of its use cases? Let’s call it a work in progress. Location data isn’t a silver bullet that delivers a sale with one geo-targeted interaction, but we’re getting to the point where an increasing number of brands are fine-tuning how they can maximize location data’s effectiveness. And the time is now; this isn’t a box that can wait to be checked next year—location data is at the heart of why CMOs plan to increase mobile spend by 127 percent in 2018.

What’s more, as people increasingly use mobile and IoT devices, the vast cloud of location data will only become richer and more powerful in ways that we still have not imagined. For example, connected cars will give brands a dynamic look into in-vehicle shopping habits, which may result in store visits or ecommerce purchases. Connected cars will also offer merchants actionable insights on customers’ music listening, podcast and video preferences, voice search activities, etc.

Altogether, if you’re a marketer who has yet to meaningfully incorporate location data into your marketing mix, you are missing out on a big chance to get a leg up on the competition.

Brian Czarny is the CMO at Factual.