It’s already proven that shoppers prefer stores with a mobile app, and that location-based mobile ads are the new hot-ticket for bringing in business. LBA (Location-Based Advertising) has arrived.
Don’t believe me? A recent study by Berg Insight forecasts that location-based ads on mobile phones will drive 28% of all mobile marketing dollars by 2016. That’s a compound annual growth rate of 91%. Do the math: total dollars spent on LBA in 2011 were $192 million. Which means by 2016 marketers will be spending over $4.9 billion.
A 2500% increase in five years? Why are marketers hot on LBA?
What is LBA? Location-based advertising (LBA) is advertising that uses a consumer’s current location to enhance the ad experience.
How does LBA work? A consumer opts in to the merchant’s advertisements via their mobile phone (usually via SMS text), thereby allowing location sharing. The merchant then sets up a geo-fence around their business that automatically sends advertisements to the mobile devices when the consumer enters the targeted area.
Who uses LBA? LBA ads may be time-sensitive coupons, such as half off a lunch special for the remainder of the lunch hour, or they could be strictly informative, such as information about upcoming events at the store. Instead of a customer receiving advertisements via email or (dare I mention) snail mail that typically get lost in the pile (we all have one), merchants can now send ads specifically when customers are nearby. This allows for a more polished and relevant ad experience for the customer, making them more likely to stop by and take advantage of that discount. (See here for companies.)
Do customers want LBA? Yes. The Berg study proves that more people are opting in to location sharing with merchants. Previously, consumers were weary of sharing their location. But with the onslaught of location-based discount programs such as Groupon, consumers are becoming more comfortable and even pleased with the enhanced experience of LBA.
Chief Location Officer take: One day I will get a text from my Starbucks barista when I am a block away, informing me that my grande no-whip white chocolate mocha is in the making and will be ready when I arrive. Real-time location data is the new kid on the block in mobile marketing budgets. Customers (including CLOs) are now more finicky than ever. We want stores to know who we are, what we like, and send tailored information and discounts when it’s convenient to us based on where we are. CLOs take note: your customers’ shopping experiences will dramatically improve with location-based advertising.
The Where challenge isn’t finding the store (walk 2 blocks and you will bump into a Starbucks). The Where challenge is location relevancy in a mobile society. We welcome you, LBA
Berg Insight. (9 May 2012). Location-based Advertising will account for 28.3% of mobile ad spend in 2016 [News story] Retrieved from www.gisuser.com/content/view/26728/2/