Location-based advertising is a big and growing business, with location-targeted ad spend expected to reach over $30 billion in 2020, according to marketing agency BIA/Kelsey. Location-based ads, which are focused on capturing consumer attention at the optimal moment – when they are in proximity of a retail location or a particular item in a store – help retailers create a more contextual experience to compete with online shopping. However, for many advertisers (and let’s not forget consumers), the location-based ad experience is less than satisfactory. There are many reasons this experience is failing, starting with poor location accuracy, especially in situations requiring vertical (z-axis) and indoor location.
Many location solutions pinpoint devices based on the basic smartphone operating system location, which relies on cell identification via signal strength measurement and GPS when the device is in line of sight (usually outdoors). Some solutions add other layers, but they are primarily localized, often depending on costly and time-consuming processes to install beacons. With those methods, the advertiser does not get the benefit of a robust citywide location identification capability, which would produce more valuable location data on which to design campaigns.
These low-accuracy solutions produce horizontal location data only – location in multi-story buildings is not even a possibility. The result is that advertisers are designing campaigns with the equivalent of one hand tied behind their back, generating two-dimensional campaigns for a three-dimensional world.
What advertisers really need is the ability to reach consumers wherever they are, including the floor level in a multi-story mall, and entice them to enter the store. To achieve this, high-accuracy 3D location is needed. Fortunately, new capabilities are in place to help retailers design more effective campaigns, which will drive better results and raise consumers’ expectations to new heights (pun intended!).
Unsuccessful location-based ads are usually a case of garbage in, garbage out
All you need to know about what is wrong with location-based ads is right there in the name — if the location on which the ad is based isn’t accurate, then the ad isn’t going to work. Market research firm Forrester conducted a survey of several hundred marketers a few years back and found that nine in 10 of them struggled to use location data in their mobile marketing campaigns because they weren’t confident in the quality of the location data or didn’t know how to obtain accurate data from third parties. Who can blame them? The basic location data they were able to obtain was subject to wide variations in accuracy and often failed to get a location fix indoors, where ads were most likely to be generated for consumers in malls and big box stores.
Fast forward to today, and a lot of these marketers are saying that the situation has not much improved. Retailers are continuing to invest in location-based advertising because it seems like it should drive the results they are looking for, but the whole business of getting accurate location data remains challenging. This is especially difficult when the concept of vertical location is introduced, since up until recently 3D location information had been non-existent using traditional location methods, such as mobile operating systems.
Horizontal (x,y) location is relatively straightforward, although getting an accurate horizontal position of a consumer’s device indoors is still frustratingly difficult for many location technologies. When the z-axis is desired, something that is a must-have for retailers in multi-story shopping malls or the proliferating urban big-box stores, results have been much less dependable, if they are attainable at all. This lack of reliable data is driving a chain reaction where poor accuracy produces less effective campaigns, leading to disappointing results for advertisers and consumers, resulting in lower revenue streams and, worse, a decrease in consumer loyalty.
And now, the good news…
The opportunity presented by location-based advertising is too promising to settle for low-accuracy data, and technology providers have risen to the challenge to offer a highly accurate 3D location capability that can be used to power location-based ads. This capability has been demonstrated in citywide vertical location testing to deliver floor-level accuracy (under three meters) and is already attracting attention for use in mission-critical applications such as public safety and healthcare, where accurately pinpointing someone’s location can mean the difference between life and death.
The stakes with location-based advertising are much lower, but still important. Having a software-based option enables retailers to avoid time-consuming and expensive-to-maintain beacon solutions, which were all the rage a few years back but have found a lukewarm reception from consumers because of their focus on singular retail locations.
With high-accuracy, citywide 3D location in place, location-based ads are able to fulfill their original promise of driving personalized offers to consumers when and where they are most likely to respond. Directing a shopper to the right floor in a high-rise mall, and then into a specific store, on to the right aisle, and even to a particular shelf – this capability has the power to drive very actionable behavior, producing a positive ROI for retailers willing to invest in the capability,and ultimately improving the consumer experience.