Is Location-Based Mobile Advertising Real?

Answer: yes, according to LocalResponse

The mobile ad world often gets accused of living in the future, discussing pie-in-the-sky capabilities that aren't yet possible. One of those capabilities is location-based ad targeting. It sounds straightforward—marketers serve ads to mobile users based on where they are—but in reality, it's far more complicated. Still, the immediacy, relevance, and even intimacy associated with a well done location-based mobile ad is every marketer's dream. Yesterday one company attempting to crack the code, LocalResponse, took a step closer with a $5 million fundraise from Cava Capital, Vodafone Ventures, Advancit Capital, and Progress Ventures.

The money will go toward continued development of LocalResponse's delivery system, as well as sales development.

Currently the company delivers location-based ads via Twitter. It collects check-in data that's both "explicit" and "implicit," meaning there are Foursquare and Yelp check-ins, but there are also indirect check-ins such as mentions, photos, and geo-tags on other social networks. In other words, if you make your location known publicly online, you're ripe for a LocalResponse ad.

The company aggregates around one billion check-ins a month, the majority of which are implicit, from 100 million unique users, said Kathy Leake, president and co-founder. The problem is that currently ads can only be served via Twitter "@replies." LocalResponse's software allows the brand's Twitter account to reply to the user's check-in with a tweet that includes a bitly link to a mobile site with an offer or brand experience. It's not perfect because it's limited to smartphone users with Twitter accounts who publicly publish their location, but it's gotten an average of 40 percent clickthrough rate.

LocalResponse is working on ways to better develop its delivery system so it can serve ads to more than just Twitter users with smartphones. Its next frontier is check-in retargeting, which it plans to roll out on the Web. The company will buy ads on exchanges, matching Twitter accounts with the user information often collected by publishers to determine location, said Leake. It doesn't solve the mobile location conundrum, but it opens up the company's available inventory.

In the meantime, LocalResponse will also work with clients on sentiment targeting. The company's check-in data has been used by the likes of Verizon to target users entering any mobile phone store, and especially those expressing frustration with competitors. The company's strategy was to tweet an offer for $100 to switch to Verizon. The campaign went viral and garnered an unheard of 135 percent clickthrough rate.

LocalResponse is also putting the finishing touches on an enterprise solution which includes an analytics tool and dashboard to help its 40 clients (including Walgreens, McDonald's, Aveda, and Coca-Cola) use check-in data to inform research, new business pitches, and media planning.