Location Based Advertising (LBA)


Mobile Advertising. It’s trendy, it’s the most talked about service in the mobile marketing industry, 2012 is perceived as it’s year. But what happens when you want to run a more targeted advertising campaign using the user’s exact location?

Below I am trying to identify how LBA or Location Based Advertising works in our rapidly evolving industry.

Problem Definition

Location Based Advertising (LBA) is the form of advertising that integrates mobile advertising with various mobile technologies such as location based services. LBA compromises the successful delivery of strategic advertisement to consumers based on their location as well as interest on products and/or specific topics. LBA is expected to significantly grow in the wider mobile advertising industry as it presents emerging opportunities for higher return on investment for brands and advertisers when compared head to head with other mobile advertising means.

LBA is perceived from brands and advertisers as the most personal and direct marketing channel allowing marketers to reach to their specific target audience delivering more personalized Ads based on users’ personality, age, location and interest.  Demand for LBA has jumped by 170% over the last couple of years as more and more advertisers are pursuing mobile ads that include location services enabling them to locate users where they are, target specific areas and drive them to take actions locally. The ability to instantly connect users to various locations, places, and businesses in their current location while promising a seamless experience, emerge brands to be more willing to spend more on location based Ads rather than rich media ad units or standard banner advertising with up to 3.8 times higher for CPMs or Ad impressions.

Consumers are becoming more positive with sharing their current location through their mobile device by the day. Consumers are looking for location based services that can facilitate in their hunt for value added services or branded physical deals that can take advantage on the spot. Over the past 3 years there has been a significant increase on the willingness and interest of consumers to receive location based mobile offers in any form.

But how many Location Based Advertising methods currently exist? There are three (3) different types of LBA:

  1. Messaging
    One of the common approaches and methods to reach and advertise to consumers on their mobile device is through SMS messaging. Under such method mobile users have to opt-in to some short of community or a mobile alert program allowing the brand or the advertiser to push SMS Ads on their devices regarding a product, brand, or even a store location. Such promotional campaign can be implemented through either geofences in pre-defined areas or through brand specific broadcasts.
  2. Display
    Display advertising on mobile is the most commonly known method of advertising tactics by consumers as it places a banner Ad on their phone applications or mobile pages they visit. Display advertising can be either through standard banner adverts or through rich media Ad units where the application reads the user’s location and provides specific Ads that reflect the location. It becomes possible for an advertiser to know that a user is in front of a coffee shop, and send them a relevant Ad or coupon.  This Ad can be from the coffee shop they are standing in front of, or it can even be for the competition down the street and around the corner.
  3. Search
    Search advertising enables advertisers to promote brands and products when users directly search for specific information and providing them with Ads and promotions related to the search keyword. Such advertising method can be seen either on mobile web platforms, mobile applications like Yelp!, where people look for businesses, or through Augmented Reality applications and platforms.

In 2010, location-based advertising was $588 million (18.5%) of all mobile advertising, but according to Pyramid Research, by 2015, location-based advertising will be $6.2 billion. Location Based Advertising is perceived to generate 60% of all location-based revenue in four years.

Companies and brands are enthusiastic about this particular advertising channel, which provides them with the option to advertise personalized content to a wide and mobile customer base. LBA enables behavioral targeting, leading to unrivalled levels of Ad customization and personalization that underlines the relevancy of the same to the customer, and also increasing the chances of completing a sale transaction.

Consumers are now becoming increasingly receptive regarding the sharing of their location through various mobile services and applications in exchange for local, well-timed and appropriate promotions and deals, reflecting a shift towards location relevant Ads being provided by location-based applications and advertising platforms.

Such service it is no news to the mobile advertising era, but it has been long rejected by both advertisers and brands due to its doubtful nature of sharing user data and invading personal space without enabling users to take control of their space.

Location Based Advertising in Action

There has been a constant increase of local business and large companies taking advantage of the possibilities and capabilities LBA enabled campaigns incorporating it on their mobile strategy in terms of location based marketing as related with their target audience’s interests. Based on a JiWire research, users are primarily interested in sales specific or promotional mobile Ads that will assist with the purchase decision.

There are a number of Ad agencies implementing such technologies where their platform can accurately read a user’s exact location and serve a predefined mobile banner Ad indulging the consumer with an offer or a co    upon to be redeemed in store. Brands can and are leveraging such method to successfully attract consumers in-stores aiming to incentivize that small additional sale that can make the difference.

Additionally such advertising campaigns are sometimes time based as well as location based delivering a more personalized and customized message. The more personalized the mobile Ad, the more effective and the better received by the consumer is.

Following the Ad agencies, there are also an increasing number of publishers hosting such campaigns, enabling advertisers to perform LBA tactics and expand their reach. The Weather Channel, for instance, maps ZIP codes to Prizm clusters and enables advertisers to cut their buys and tailor their messaging to reach different audience. Auto advertisers vary the model to the location, packaged goods advertisers trigger ads to places based on cold-weather conditions such as chance of snow, sunscreen ads are triggered based on UV indexes.

LBA campaigns can be seen on various mobile sites and applications such as Yelp!, Open table Fandango and a  number of travel content mobile sites. Such publishers use user location, upon user approval, to increase the relevance of Ads being served.

Limitations

Being a new and evolving concept, the LBA market faces certain teething problems, which need to be resolved in order for the market to realize its full potential. As with any other service that utilizes and is based upon user location or personalized data there is a number of concerns and limitations to be considered.


Privacy is obviously number one concern holding older consumers back from location sharing. A Nielsen study showedthat consumers under the age 35 are less concerned with privacy when using location services as opposed with users between ages 35 to 44.Marketers are yet to understand of how to maximize ROI from personalization that LBA services provide. In addition, separate costs associated with designing and advertising, absence of consistent and reliable methods for measurement of metrics and privacy invasion also hamper higher adoption of LBA.

Market Opportunities

It is clear that market opportunities for such solution are numerous as reflating with specific vertical markets. Most if not all vertical markets can benefit from such solution with the retail industry marching first in line. Retailers can benefit in the long run of the Location Based Advertising era with the automotive industry coming second but close.

Other industries that can benefit of such service are:

  • Travel & Tourism
  • Restaurant / Food & Beverage
  • CPG/FMCG
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Categories: Mobile Advertising

2 replies

  1. Nice summary Nikolas, I like your tweet shares on mobile advertising.
    Brands need to start adding real value and create unmatched user-experience to solve the privacy issue, through opt-in. Once they have done that, LBA is probably the most promising part of mobile advertising when combined with word-of-mouth and communities.
    Keep up the good work!

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