Where next? Why Facebook is investing in location targeting and why marketers should be too
Location is becoming one of the fastest growing areas in advertising. BIA Kelsey analysts recently revised estimates for location-targeted mobile ad spend in the US, now expected to grow from $8.4bn in 2015 to $11.3bn in 2016. One of the reasons is that it drives superior performance over typical mobile advertising.
In fact according to the Mobile Marketing Association’s SMoX report, location can have an impact of 120 per cent on ROI. This is driving marketers to invest in this new way of identifying and reaching valuable customers.
As a result of location’s growing usage and success, it’s understandable that Facebook would want to get in on the action. Last week the social media company rolled out two new ad products for location targeting, aimed at small businesses.
The first allows companies to target their adverts at multiple locations based on where customers are, and the second (which is limited to the US for now) gives companies the ability to understand the demographics of Facebook users who have passed through their nearby area each day.
For small cafes for example, this means they can hone their advertising to target people on their local high street, or those that have passed the high street. While Facebook is only able to offer this once a day, other location-targeting providers are even able to deliver this insight in real-time, so why should companies be investing in location?
A new era of personalisation
As the trend for personalisation mounts, customers expect a new level of service based on personal context, and this is where location comes into its own, for international and local brands alike.
Location data is the cornerstone of a successful campaign. Why? Put simply, it is the gateway to invaluable wider insights on customer behaviour. When you know ‘where’ someone is, you are able to understand more about ‘who’ they are, and also ‘why’ they might be in that place.
To do location right, there are two areas that providers must master: verifying the precision of location data signals – where a device is and what degree of accuracy that is – and what physical place is the signal coming from – the type of business by brand or category.
Getting signal verification and place accuracy right is what enables marketers to distinguish whether a person visited a store or just passed nearby. These real-time, granular insights offer clues about context, which is crucial for marketers to target consumers in the right place and at the right time. And ultimately, these insights can provide insights to influence and drive the places people visit new.
Bridging the online and offline data black spot
A recent report by xAd, Mobile Path to Purchase, showed 31 per cent of people visit a physical store during their search for a product, and of those that convert to purchase, 56 per cent do so in store, while 40 per cent convert online (mobile or desktop). This proves the increasing fluidity between consumer movements on and offline, and reveals that mobile really is bridging the gap.
Mobile is changing how people shop; not just directly, but also as a facilitator of sales across all channels. Mobile is used to research products, informing purchase decisions for when a final conversion is made on another channel, such as in store.
For example, brands can target people near to competitors’ stores and share content to drive them into their own. When consumers are using mobile on-the-go, they have often done their research and are ready to make a decision; research shows that 42 per cent intend to make a purchase within an hour. Details that drive action, like showing the closest business location, are key in this moment.
Over the Christmas season when there is so much competition, this is particularly relevant insight to act on in real-time.
Location will inform 2016 marketing strategy
In 2016 marketers are set to realise the value of mobile because the data the device provides enables more precise targeting and contextual knowledge. Location will become a marketing category in its own right next year, to rival search or social for spend. As search became a measure of online intent, location in years to come will become the ultimate measure of offline intent.
Next year, marketers will need to understand the context of their customers more than ever, as a new era of personalisation begins. Partnering with a specialist in learning to use location insights to inform strategy will be imperative in helping marketers to achieve long term and personal customer relationships that drive tangible business outcomes such as physical store visits and sales.
Theo Theodorou is head of EMEA for xAd