Location based advertising

Location-based advertising (LBA)

Location-based advertising (LBA) is a new form of marketing communication that uses location-tracking technology in mobile networks to target consumers with location-specific advertising on their mobile devices. As Bruner & Kumar (2007) stated, “LBA refers to marketer-controlled information specially tailored for the place where users access an advertising medium” (p. 2). Imagine if a tourist is in Tokyo with friends and are looking for a restaurant, she can just use her mobile phone to connect to the dining club’s websites to browse according to her location, culinary preference, and time. The dining club server then provides her a list of restaurant nearby offering that culinary preference and accepting discount coupons at that time.

Types of LBA approaches

In general sense, there are two types of location-based services. Steiniger, Neun, and Edwards (2006) concluded that, considering on whether the information is delivered on users interaction or not, LBA is divided into two different kinds; push and pull approach. (p. 5)
The LBA push approach delivers information (send ads) to the user, determined by the device’s location. In addition, within the push approach, there are also two types of advertising; not requested and indirectly requested services. A not requested service, advertisers would send ads to users until users request them not to send anymore. In contrast, an indirectly requested service, advertisers must receive permission from users before sending the ads to them. For example, the push approach was used when moviegoers walked passed a theater and received text messages to download free movie samples. In this case, an indirect requested service would mean recipients would have previously indicated their interest in receiving message from the theaters whereas a not requested service means they would not have done so. (Steiniger, Neun, and Edwards, 2006, p.5)
In contrast, the LBA pull approach, occurs when users request some information directly. In other words, users are seeking information (pulling) rather than information seeking them (pushing). For example, a traveler visiting New York could use her device to find the nearest local Chinese restaurant in Manhattan. After she selects one of the restaurants, a map is provided as well as an offer of a free appetizer good for the next hour. (Steiniger, Neun, and Edwards, 2006, p. 5)

How does LBA work?

First of all, users must enroll in the company’s LBA program; this would most likely be done via their website or at the store. Then users would be requested to provide their personal information, such as, mobile phone number, first name, and other related information. After the data are all submitted, the company would then send a text message requesting users to confirm back the LBA subscription. Once these steps have been completed, the company can now use location based technology to provide their customers with geographically based offers and incentives.

The potentials of LBA

Reach, Relevant, and Results
First and foremost, LBA is today’s most personal and direct marketing channel that allows marketers to reach a specific target audience; marketers can create campaigns aimed at more specific age, gender, income, and lifestyle segments. As Bruner & Kumar (2007) stated that LBA enhances the ability to reach people in a much more targeted manner than was possible in the past (p. 2). For example, if a customer has purchased the previous Harry Potter movie from a DVD / CD rental store and subscribed for the store’s LBA program, he can expect to receive an e-mail to his mobile phone that informs him about the released date of the next Harry Potter movie, including the movie sample, as he is on the train going back home (And the customer probably has a chance to stop off at the DVD / CD store before getting there).
Secondly, since LBA gives consumers control on what, when, where, and how customers receive ads, it provides customers more relevant information, personalized message, and targeted offer. As Vidaille (2007) stated, “With a targeted message, we’ve reached about 20 percent response rate. That’s incredibly good”, (Cited in Girgenti, 2007). Although the internet can do similar things, such as, sending new information about products, promotional coupons, or asking consumers’ opinion, but few people respond to e-mail marketing because it’s not personal anymore. In contrast, LBA gives consumers relevant information rather than spam, therefore, it increases the chances of getting higher responses.
More importantly, unlike other traditional media, LBA is not only used principally for advertising, but also doubled as a means of researching consumers. “Consumers are constantly providing information on their behavior through mobile internet activity” (Ferris, 2007, p. 33). With location-based service, surveys can take place in the real world, in real time, rather than in halls, focus group facility, or on PC. Mobile survey can be integrated with a marketing campaign; the results of customer satisfaction research can be used iteratively to guide the next campaign. For example, a restaurant that is experiencing increased competition in its area, is able to use the specific database – a collection of small mobile surveys of those customers that had used coupons from the LBA in the geographic area - to determined their dining preferences, times, and occasions. Marketers can also use the customers’ past consumption patterns to forecast future patterns and send special dining offers, such as Mother’s Day specials and Thai food fare deals, to the target population at the right place and right time, in order to build interest, response, and interaction to the restaurant.

The limitations of LBA

Privacy and Perception of Spam
The mobile phone is an incredibly personal tool. However, as Darling (2007) pointed out, “The fact that mobile device is so personal can be both a strength and a weakness” (para. 14). On one hand, marketers can entertain, inform, build brand awareness, create loyalty, and drive purchase decision among their target consumers through LBA. On the other hand, many consumers are still concerned for their privacy and risk of being monitored without being aware of it (Halper, 2007, p. 2). Therefore, the establishment of a well thought out consumer privacy and preference management policy is critical to the long-term success of LBA. As Fitzgerald (2007) stated, “People are willing to give up their privacy; you just have to give them a good reason to do so” (para. 4). Marketers should inform their consumers on how their information is to be stored, secured, and used or combined with other purposes of marketing. If LBA can assist people in their everyday life, they will be more than happy to reveal their current location. To conclude, in order to ensure continue success and long-term longevity of LBA, consumer trust must be established and maintained. LBA needs to be permission based and marketers must take great strides in protecting the privacy and respect in the preferences of each and every consumer.
Another major concern for LBA is spam; consumers can easily perceive LBA as spam if done inappropriately. According to Fuller (2005), spam is defined as “Any unsolicited marketing message sent via electronic mail or to a mobile phone” (para.5). In short, spam is what the consumer perceives as an unwanted marketing or message they did not directly opt-in to receive. Since customer is in control and all activities are voluntary, customers’ objective, goals, and emotions must be taken into account. A recent survey showed that users spend only 8 to 10 seconds on mobile advertisement (Cited in Fierce, 2007, para. 2). Therefore, the interaction must be straight-forward and simple. Marketers must also develop relevant and engaging advertising content that mobile users want to access at the right place and right time. More importantly, marketers must make sure that their offer contains real value for the customer and follow strict opt-in policies. To conclude, the best way for marketers to distance from spam is to give consumers choice, control, and confidentiality while insuring that they only received relevant information.

Conclusion

In conclusion, there are three main potentials of LBA; reach, relevant, and result. Firstly, LBA provides marketers fantastic reach, as people almost always have their mobile phone with them. Secondly, since LBA gives customers control on how they receive ads, customers receive more relevant information, personalized message, and targeted offer. Lastly, LBA is an extremely accountable medium; it helps marketers to gain better understanding of their customers with real-time market research, which results in higher advertising impact and greater customer satisfaction. However, the fact that LBA is so personal can be both strength and weakness. Many consumers are still concerned about LBA invasion of privacy and risk of being monitored. Therefore, in order to ensure continue success and long-term longevity of LBA, consumer trust must be established and maintained. The best way for marketers to exploit the opportunities is to give consumers choice, control, and confidentiality while insuring that they only received relevant information. To sum up, LBA is a marketer’s dream. If done right, it will be incredibly successful. However, if abused, it could turn a lot of people off very quickly. Thus, for LBA to be successful it needs to be permission based, relevant, and timely.

References

*Bruner, G., & Kumar, A. (2007). Attitude toward location-based advertising. Journal of Interactive Advertising. Retrieved August 5, 2007, from http://www.jiad.org/vol7/no2/bruner/Attitude%20toward%20location-based%20advertising.pdf
*Darling, A. (2007, May 9). Mobile starts to pay its way. Marketing. Retrieved July 29, 2007, from ABI-Inform database.
*Ferris, M. (2007, March). Insight on mobile advertising, promotion, and research. Journal of Advertising Research. Retrieved July 29, 2007, from Business Source Premier database.
*Fierce Markets Inc. (2007, March 1). IDC says don’t underestimate full potential of mobile marketing. Retrieved August 10, 2007, from http://www.fiercemobilecontent.com/node/2941
*Fitzgerald, R. (2006, September 14). Technology: Follow you, follow me. The Guardian. Retrieved July 30, 2007, from ABI-Inform database.
*Fuller, P. (2005, September 7). Why spam doesn’t have to happen on mobile device. Retrieved August 9, 2007, from http://mmaglobal.com/modules/wfsection/article.php?articleid=44
*Girgenti, D. (2007, April). Mobile marketing. Media. Retrieved July 29, 2007, from ABI-Inform database.
*Halper, P. (2007, March 5). Advertising goes mobile. Fortune. Retrieved August 4, 2007, from Business Source Premier database.
*Mobile Marketing Association. (2007). Media advertising guidelines. Retrieved August 5, 2007, from http://www.mmaglobal.com/mobileadvertising.pdf
*Mobile Marketing Association. (2007). Mobile marketing industry glossary. Retrieved August 5, 2007, from http://www.mmaglobal.com/glossary.pdf
*Sharma, A., Delaney, K., Bryan-Low, C., Spencer, J., & Ramstad, E. (2007, August 2). Google pushes tailored phones to win lucrative ad market. Wall Street Journal. Retrieved August 4, 2007, from Business Source Premier database.
*Steiniger, S., Neun, M., & Edwardes, A. (2006). Foundations of location based service. Retrieved August 5, 2007, from http://www.geo.unizh.ch/publications/cartouche/lbs_lecturenotes_steinigeretal2006.pdf

External links

*Mobile Marketing Association (MMA) [http://mmaglobal.com/]
*Mobile Advertising Guidelines [http://www.iabmexico.com/downLoads/mobileadvertising.pdf]
*Scansave, LLC in-store target marketing and promotion optimization [http://www.scansave.com]