Location, Meet Advertising … Again: Learning from the Past to Prepare for Today
ADOTAS – When it comes to location-based advertising, a map is only one of the essential tools. Having spent nearly a decade in the mapping industry, I’ve personally witnessed the awakening to location. And I’ve seen the value that location brings advertisers. That’s why for publishers, advertisers and even device manufacturers, location is no longer a question; it’s a must-have when targeting consumers.
Companies arming themselves with location-enabled advertising solutions know that the right delivery mechanism and platform are as important, if not more so, than maps for engaging with people on-the-go. And both are critical for reaching mobile consumers outside – and even inside – their homes.
Here’s a little historical perspective. In 2007, Nokia purchased GPS mapping and navigation expert NAVTEQ for $8.1B, instantly propelling Nokia into the digital mapping arena. With the acquisition, the Finnish company had the foresight to see location as the game-changer for targeting consumers.
Two years later, the mapping provider launched NAVTEQ Media Solutions™, which focused its efforts on building the world’s leading location-aware mobile ad network. By leveraging tier-one OEM relationships, their own smartphone installed base, and by delivering ads to consumers based on their precise location, the company was well-positioned to take advantage of the projected $4B location-based services (LBS) market by 2012. See: Mobile Marketer Mobile Ad Stats.
Nearly five years later, the advertising market looks very different – for NAVTEQ, its parent company and the industry as a whole.
Today, no one player has a clear foothold on reaching consumers at the local level, as industry-wide uptake has been fraught with unanticipated challenges.
In Nokia’s case, some key partners were reluctant to adopt its turnkey monetization strategy. Concerned with privacy and driver safety, automotive OEMs hesitated to bring advertising to embedded car screens. One way they are getting around this today is by bringing local deals to automotive screens (see Ford partners with Roximity; additionally, GM and Ford are both opening their doors to developers). But even more importantly, the enormous popularity of iOS and Android smartphones is believed – among other issues – to have held Nokia back from making much of an impact with major advertisers, particularly in the U.S.
Mobile still driving an opportunity
Despite the learning curve for early entrants into mobile, a couple of things are certain: 1) More and more consumers are relying on mobile technologies, and 2) Location-based advertising is not going away. In fact, mobile spending is projected to exceed $21B by 2016 in the US over the next four years, according to eMarketer.
With consumers spending an estimated 80% of their discretionary income within 10 miles of home, hyper-local advertising can make a huge impact on a company’s exposure and their bottom line. From a major retail outlet to a small family-owned store, proximity-based advertising offers distinct value to a company beyond simple revenue:
- By leveraging the ever-increasing network of mobile displays, coupled with location tools, advertisers can reach consumers at the neighborhood-level;
- Marketers can deliver relevant, hyper-local ad creative, messaging and tactics, providing immediate market-based insight on the performance of an ad, and;
- Companies can target very specific areas of a map – during specific times of the day – and test its direct impact on consumers, such as delivering specific ad campaigns during the 2013 NCAA Final Four basketball games in Atlanta, GA. National brands, or even local businesses, can take it a step further and market to individuals in and around college campuses leading up to March Madness.
A Host of Fragmented Solutions
Entrepreneurs across the globe understand the incredible potential of hyper-local advertising, and lots of solutions are popping up in the space. Not surprisingly, some will achieve only marginal results because of their inherent limitations. For example, the majority of today’s location-targeting solutions are centered on one technology: “geo-fencing.” In fact, most companies that consider themselves “hyper-local” use geo-fencing as their primary means of propagating ads and content.
The problem is, the actual act of geo-fencing can be very subjective. Although functional, the term itself is somewhat confusing. Drawing a radius around a few locations – fencing it in, essentially – and calling it your target is the basic definition of a geo-fence. But that sort of fence should not be the end-all solution to reach consumers and gather data. This is especially true for marketers who need to intelligently adjust their campaigns based on location results, but who don’t want to pay exorbitant amounts of money on ad-optimizing solutions and third- party companies to tell them how to advertise.
But how should companies go about capitalizing on location-based advertising without hitting roadblocks? Research is a good start.
In my mind, the use and metrics received from using a marketing platform should be intuitive, self-serving and easily deciphered. Certainly, geo-fencing allows for the pinpointing of a location, but it’s typically not stationary enough to allow for historical learning of a locational campaign. That’s because people adjust their geo-fences when ads don’t garner results. But it’s the historical learning and growing intelligence around consumer behaviors, in certain fixed locations, that separates newer solutions from simple geo-fences.
So, Now What? How to Capitalize on the Opportunity
An all-encompassing solution that helps advertisers reach consumers on the go should provide seven key elements: 1) scale, 2) simplicity, 3) adjustability, 4) real-time intelligence and delivery, 5) first- and third-party contextual data and real-world conditions, 6) liquidity across screens, and 7) adherence to consumer privacy concerns. Providing all of these elements under one umbrella and for all stakeholders – from major media companies that have feet-on-the-street, ad agencies, to big advertisers and even the small business owners – is the real game changer.
Although monetization at the mobile level is still at a somewhat nascent stage, a little research will show that the technology that enables brands to capitalize on mobile is already here.
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