The rise of smartphone usage has led to a whole new era of communication. There are staggering amounts of data being shared by people on a daily basis through social media, location check-ins, online shopping using smartphones, hotel bookings, buying tickets for travel etc. Companies leverage this data for various marketing and monetization purposes Today our GPS, Wi-Fi and Bluetooth-enabled smartphones are capable of aggregating and sharing huge amounts of data. GPS enabled devices have enabled geo-fencing. Geo-fencing is the concept of creating an invisible fence around a physical area. Geo-fencing has many advantages and is utilized by companies to reach users in real-time based on the location they are in.
However, the concept of geo-fencing, as it is being used today, is broken.
Geo-fencing is based on the premise that solely targeting users based on their location should somehow result in the users buying into the value proposition being sold to them. While, geo-fencing does provide a lot of advantages, like serving real-time contextually relevant ads as opposed to blanket targeting, just location alone isn't enough to get users to buy something.
Let's look at some examples:
1) Safeway has set up a geo-fence to trigger and send coupons to users when they are within the geo-fenced area. Now, pushing a coupon for coffee to a non-coffee drinker or a meat coupon to a vegetarian would be completely irrelevant even though the user is in the right location.
2) Big 5 Goods has set up a geo-fence and wants to target users when they are in the vicinity of the store. If the store sends a coupon for sports equipment to a person who doesn't like sports but is in the specified location, it would not result in a purchase.
3) Fry's has a geo-fence set up and sends a discount for a television to a user who is nearby. This does not mean that the user will walk into the store right away and buy the television as he might not need a new TV. He still has to decide if he can afford to buy one. Big dollar items are rarely purchased on an impulse.
What are the other challenges in using location-based advertising?
Location-based targeting, if used as the only targeting strategy, has many challenges such as:
- Privacy Concerns: Most users are wary about the fact that companies can track their exact location. Privacy continues to be the biggest issue for location-based targeting and it has become important for companies to be transparent and educate their users about the value of getting targeted advertisements.
- Impulse Buying is not the norm: Studies show that most users will spend some time thinking before making a purchase. This is especially true for high dollar goods like cars/electronics. While geo-fencing might work for coffee stores, restaurants and some retail stores, it won't work everywhere.
- Personalization of the advertisements: What if the user enters a mall where several stores have set up geo-fences? Should the user now be bombarded by advertisements from all stores/restaurants in the mall? It is very hard to prioritize and personalize location-based advertisements so as to ensure that the users only get the most relevant ads. Personalizing location-based advertisements and making them relevant is challenging.
How can you solve these problems?
It is evident that targeting solely based on location isn't going to cut it. If companies expect to engage and retain users effectively, there needs to be a paradigm shift in the way they approach targeting.
Companies like Personagraph have developed a sophisticated algorithm, based on machine learning and cutting edge data science insights, which generates rich profiles of mobile users. The Personagraph SDK has several sensors which help collect data from various device sources such as apps, context, social media and location. The data is collected and then passed through an inference engine that generates a robust user profile.
This rich user profile data helps make location based targeting richer because:
1. Users control their own data:
Personagraph gives users total control of their own data. We believe that true targeting happens when users have given consent to be targeted. Users can choose to turn off any of the sensors if they wish to do so. In addition, users are also able to curate their own profile to get more relevant advertisements. This allows users to choose whether they want to be targeted or not.
2.Transparency in data collection:
One of the biggest concerns with location based targeting is privacy. Mobile users are very apprehensive about the fact that companies have the technology to track their every move and target them accordingly. The majority of the time this happens without user consent. Personagraph gives users complete control of their data and the data collection process is open and transparent. Users have access to their own user profiles and can see what inferences are being made about them. They can curate the information that they don't think is completely accurate.
3. Robust user profiles:
With Personagraph, companies, app developers and marketers will have access to a 360° view of mobile users. Having access to rich user profiles in addition to location information helps make targeting more efficient and effective. If a user enters a mall, based on the interests in his user profile, only the most relevant advertisement or push notifications can be sent to him instead of being bombarded by multiple sources.
Location information alone isn't enough for effective targeting. User consent along with knowledge of users' interests makes targeting a much more effective and can result in high level of user engagement and positive ROI for companies and app developers alike. Learn more about how you can enhance your location-based strategy and help you better engage your mobile users.