Advertising Innovation - Part 2: Mobile Geolocation Targeting

How does mobile geolocation targeting work?

Advertisers can use mobile geolocation targeting to reach their audience based on the current location of their smartphones and serve relevant ads in real-time, or they can use a person's previous location to serve ads at a later time.

With a well-designed, geo-based mobile campaign, advertisers can serve a relevant ad message to their target audience in the right place at the right time, increasing awareness and providing attractive incentives.

Here's how ads and content can be delivered based on previously collected location data, according to Reveal Mobile: Companies need to match latitude and longitude data with a point-of-interest (POI) such as a grocery store, restaurant, or car dealer. Advertisers are now able to create audiences made up of people who visit the places that matter most to them. Once they have identified these audiences, they can create campaigns and reach people across the digital advertising ecosystem, including social media, Google, and other networks. 

How does IP geolocation targeting work in mobile advertising?

The IP geolocation technology is not a new thing. It has been around for nearly two decades and is used globally for a variety of use cases. Websites, for example, have been decoding desktop IP addresses for years to personalize content, such as displaying a user's local language or providing prices in local currency. 

While geolocation captures data across multiple touch points, IP geolocation targeting collects information from a single source. For example, in mobile phone tracking, the IP address is obtained from the cell tower to which the smartphone is connected. If the device changes cell towers, a different IP address is captured.

Advertisers can obtain location-based information about their target audience from IP databases provided by vendors such as GroundTruth, Digital Element or Smaato. An IP geolocation database is a regularly updated and downloadable collection of geolocation data from active users of IPv4 and IPv6 addresses worldwide. Depending on the provider, this data may include an IP address, user's Internet service provider (ISP), connection type, country, region, city, latitude and longitude coordinates, postal code, time zone, and GeoName ID.

What are the advantages and disadvantages of geolocation and IP geolocation in mobile advertising?

Advantage 1: Anonymity

In her "Cookie Life" series of articles, Lauriane Tiard-Caillaud addresses the end of the cookie era. A big advantage of geolocation and IP geolocation targeting is that smartphone users can still be served contextually relevant advertising messages while remaining completely anonymous.

Advantage 2: Personalization 

Businesses benefit greatly from real-time personalization and interaction management: improving customer experience, relationships, and loyalty; increasing conversion rates; and driving significant, measurable business results.

According to a study by Salesforce, in 2020 92% of advertisers said their audiences expected a personalized experience, and 99% of them noted that personalization had improved their customer relationships.

Advantage 3: Higher click-through rates, cost-effective PPC

Including location as a targeting option in audience profiling facilitates the development of true geo-demographic clusters that have been shown to deliver higher CTRs and achieve a higher price.

Advantage 4: Fraud reduction

E-commerce businesses can use IP geolocation to verify the identity of customers during transactions. Integrating IP verification into the checkout process (i.e., ideally before a transaction is authorized) can ensure that the customer is who they say they are.

Disadvantage 1: Only at the zip code level

IP Geolocation can only determine the location of smartphone users down to the zip code level. By comparison, GPS data can determine the exact position of a device with an accuracy of up to five meters. However, the use of this data must be approved by the user.

Disadvantage 2: Scalability issues

Location-based campaigns make the most sense for companies with a large retail footprint, multiple locations, and a high number of daily visitors. In contrast, a business with only one location typically doesn't have enough foot traffic to target a large enough audience - unless it covers a vast area, such as an auto dealer. One way to overcome this challenge is to target groups that visit competitors' locations. A local coffee shop using geographically targeted mobile advertising might try to reach visitors from Starbucks, for example.

Disadvantage 3: Not suitable for FMCG products

Geotargeting is not so well suited for products that are available everywhere, such as shampoo, candy, flour, etc. Since these products can be found in many different stores, advertisers of omnipresent consumer goods have better chances of success with other strategies, such as demographic targeting, for these products.

How can geolocation be applied to mobile marketing?

Expert Break-Out with Christoph Herwig from Adsquare

Advertisers in the digital world have been targeting people based on the context of publishing content for a long time. That's the very foundation of advertising. Makeup brands advertise on fashion blogs, sports brands on fitness apps, grocers on food e-commerce sites.

The same principle applies to proximity targeting, also known as geo-contextual targeting or location targeting, but instead of relying on the context of the publisher content, advertisers rely on the context of the location where users are at the time of ad delivery. In its simplest form, this could be selecting a radius around specific stores. For example, a burger chain could run a drive-to-store campaign by advertising on billboards near a store.

Proximity targeting in the world of programmatic advertising is a bit more complex. A number of apps collect data about users' latitude and longitude as part of their function; weather, mapping, and dating apps, for example, all require location data. Out-of-home inventory owners, of course, know the exact locations of their digital screens anyway. The geo-coordinates are passed from Supply Side Platforms (SSP) to Demand Side Platforms (DSP) as part of a bid request. Third-party data specialists such as Adsquare can enrich this location data in real-time with data about the context of the surrounding space.

From the advertiser's perspective, this type of geo-contextual/location targeting couldn't be easier to enable. Before bidding, the advertiser can choose from thousands of spatial data in the Adsquare platform and activate them in the desired DSP before the campaign starts. Spatial data that can be used for proximity targeting campaigns include the following: Stores, household data, purchase data, weather conditions, or movement data from specific target groups.

"Understanding consumers' location context helps advertisers deliver more relevant campaigns, as their products or services are more likely to be the focus of interest. Advertising messages can also be tailored to the expected emotional state - influenced by location - of the desired target audience."

Christoph Herwig
VP Marketing bei Adsquare

Summary

Geolocation data gives advertisers an additional opportunity to refine their targeting and deliver timely and contextually relevant ads to the ever-growing audience of smartphone users.

Sources:

• https://de.statista.com/themen/6137/smartphone-nutzung-in-deutschland/#dossierKeyfigures
• https://de.statista.com/statistik/daten/studie/585883/umfrage/anteil-der-smartphone-nutzer-in-deutschland/
• https://de.statista.com/statistik/daten/studie/500579/umfrage/prognose-zur-anzahl-der-smartphonenutzer-in-deutschland/
• https://de.statista.com/statistik/daten/studie/594909/umfrage/umfrage-zur-dauer-der-mobilen-internetnutzung-pro-tag-nach-alter-in-deutschland/ 
• https://www.mobileworldlive.com/targeting-and-trust-how-ip-geotargeting-can-help-solve-digital-marketings-current-issues
• https://madvertise.com/de/news/location-based-advertising/
• https://martech.org/using-geo-location-turn-mobile-traffic-line-gold/
  
• https://demotix.com/role-of-ip-geolocation-in-marketing/
  
• https://www.business2community.com/marketing/personalization-trends-99-of-marketers-say-personalization-improves-customer-relationships-02308625
• https://geotargetly.com/blog/differentiating-between-geolocation-and-geolocation-by-ip
  
• Digital Element: “IP Geolocation Myths and Facts: Setting the Record Straight
• Digital Element: “The power of where IP geolocation applications in advertising”
• Salesforce: “Realizing the dream of 1-to-1 personalization”