November 20, 2019
November 20, 2019
Location Data Success: Bridging the Omnichannel Gap
Who would have ever thought marketers could harness location data to target someone down to a footstep? The idea would have seemed like science fiction back in the 1950s when Nielsen sectioned the United States into a 210-piece DMA jigsaw puzzle. However, it has become second nature in advertising to modify landing pages and creative placements by location to better target our customers.
Looking at the following data, location-based marketing seems to be on everyone’s radar:
- 89% of surveyed marketers said they increased sales by using consumer location data to boost the effectiveness of their ad campaigns [2019 Location-Based Marketing Report Lawless Research and Factual]
- Location-based advertising on mobile devices is predicted to exceed an ad spend of $38.7 billion by 2022 [BIA/Kelsey’s U.S. Local Advertising Forecast 2018: Mobile and Social]
- More than 84% of marketers currently use location data in their marketing and ad campaigns, and 94% plan to in the future [Factual’s 2019 Location-Based Marketing Report]
- 40% of businesses consider location intelligence their top technological focus [Carto’s State of the Intelligence Report, 2018]
If location data is the key to creating a seamless, omnichannel experience, then why aren’t marketers dancing in the street over the most granular consumer targeting in history?
The fact is that while location data bridges the gap between online and offline sales, there are a few cracks in the information gathering system. Here are the primary factors influencing location data’s effectiveness, for better and worse.
Topics of Discussion:
- Location Data Management
- Inaccurate Data Reporting
- Local Targeting Gaps
- Consumer Privacy Regulations
- User Experience
Location Data Management
Omnichannel data collection seems simple: serve an ad via a browser or in-app, record a transaction via POS, and cross compare sales to discern which IP addresses correlate with foot traffic.
But we’re not shooting fish in a digital barrel yet.
With individuals changing locations rapidly, data can quickly become irrelevant, and it requires constant vigilance for someone to sift out the bad (i.e. irrelevant) data. If you have multiple brick-and mortar locations, this could translate to millions of data points being mapped and discarded each day. Of course, retargeting should not be undermined, but the beauty of location data is how much information it can capture in real-time.
The infrastructure needed to output such individualized data, particularly in the moment, is an overwhelming feat for any organization, let alone non-enterprise ones.
When clients come to us with budget and data management concerns at Asher, we help them save costs by partnering with vendors for various facets of data management. Essentially, the agency manages the ad spend while contracting with the vendor to report on additional data for attribution purposes, such as measuring online and offline conversions for geofencing. This is not to imply that vendors are infallible, since in-house staff must often reconcile vendor invoices.
It takes a digital village to ensure proper data management.
Inaccurate Data Reporting
It’s migraine-inducing to realize how many factors can lead to inaccurate location data. Location Sciences, a data verification firm, finds that as of 2019 65% of media spending on location-based advertising is wasted because of poor or misdirected targeting.
Why is that? First, even the most accurate form of location data, GPS, can be inaccurate at times. Mountains, buildings, trees, and even the human body can lead to satellite signal blockage. These obstructions become more cumbersome in cities, which are referred to as multi-path environments, because signals are bouncing off various structures. While a smartphone receiving directions within a few meters of accuracy within meters is good enough for the user to orient themselves, this problem is still a bit of pain for advertisers. The good news, however, is that as this problem has been dealt with over the last few decades, tracking systems have grown increasingly more sophisticated. Therefore, the 5 to 10-year outlook for GPS systems looks bright, despite the current frustration with location services’ limitations.
Another factor to consider is the Internet Service Provider (ISP), which grants your public IP address. Some ISPs route all their traffic to a central location before it reaches the public internet. For example, your business might be in central Indiana, but your Internet might be routed through Chicago before reaching prospects in your area. Thus, your location reports might indicate traffic coming from Chicago.
These shortcomings don’t mean we should throw out our Google Analytics reports with the bathwater though. Google Ads and Google Analytics aren’t guaranteed to yield the same data by design.
Google Analytics is equipped to pinpoint a country, region, or state, but it’s best suited for on-site activity and channel attribution. There are so many loopholes with an IP address that it should be considered an estimation. Multiple users could have the same IP address if they share a device in the same household, so one could easily target irrelevant audiences based on IP address alone.
In contrast, accurate location data is essential to Google Ads, partly because it’s wasted ad spend to direct irrelevant users to a landing page. Google Ads uses multiple methods to gather location data compared to Google Analytics just relying on an IP address. Some tracking methods include GPS, Wi-Fi, Bluetooth, IP address, and Google’s mobile ID (when GPS or Wi-Fi is unavailable).
Like big data management, digital reporting tools, even at the enterprise level, require expertise and vigilance as well or else they become counter-productive. Our media buyers at Asher monitor multiple accounts each day not only to optimize campaigns, but also to flag inconsistencies, which are often tied to data fraud (e.g. bot traffic, irrelevant clicks, unusually high or low bounce rates, etc.).
Local Targeting Gaps
Geolocation data, the information used to identify an electronic device’s physical location, has promised a helping hand in brick and mortar survival.
Proximity marketing has presaged the future of mobile marketing since majors retailers like Walmart and Target started installing beacons in 2013. By mixing the reporting of sensors, cameras, and beacons, retailers harness customer data to optimize store layouts and merchandising. Data includes shopper pathways, behavioral patterns (i.e. return visits), website visits (for product and price comparison), and personalized deals.
However, like digital reporting, there are plenty of factors that can skew in-store metrics in relation to location data.
For example, a caveat to geofencing on mobile is that the user could be engaging in plenty of activities on their phone as they pass by a brick-and-mortar location. If the user is on a call, checking email, or texting, then the notifications won’t have any impact. It wouldn’t be realistic to expect everyone to be glued to their phones, but what incentives would encourage more digital in-store engagement?
Another reason for unoptimized location data is not applying data insights to the customer journey properly. Measuring overall user activity and pinpointing exact location are both valid targeting methods. Each method is simply best suited for different steps in the consumer journey.
For example, a user who makes their first touchpoint with your brand by seeing your outdoor signage is at the top of the funnel, although you should never underestimate the power of an impulse purchase (considering the brevity of the customer journey for some B2C products), or a charismatic salesperson. Typically, the person seeing your signage for the first time would be less likely to convert than someone who has been in the store and researched your product prior. Therefore, segmenting traffic according to conversion funnel stages paints a more accurate picture of shopping patterns, rather than assuming a nearby user is in-market.
Having a holistic view of a user’s movements also creates a more nuanced view of how your product could fit into a user’s life. For example, there’s a big difference in opportunity between a user who is casually shopping, and one who passes by your store quickly on the way to work. Taking this example in store, you also don’t want to inundate shoppers with a coupon every time they walk past a beacon. Thus, the messaging, as with any marketing campaign, needs to be strategic lest it annoy and repel.
Consumer Privacy Regulations
Additionally, some consumers use Virtual Private Networks (VPNs) to mask their geographic location. GlobalWeb Index found in 2018 that VPN usage is most frequent among 16 to 24-year-olds (35%). This result makes sense for a generation that has grown up in an era of data breaches. GlobalWebIndex also discovered that anonymity while browsing was the 3rd largest reason (31% of respondents) for VPN usage. Granted, the behavioral data from anonymous browsing can still be useful. Thus, while the upward trend in VPNs should be acknowledged, it’s doesn’t presage geolocation doomsday.
The European Union’s General Data Protection Regulations (GDPR) sent a shockwave through the advertising world by putting more strain on how advertisers retrieve user information. This crackdown is not the death knell for location data by any means, however. Although Google and Facebook were fined for not meeting standards, in the end the regulations swept away the Internet giants’ competition. A fine of 4% of a company’s global turnover, or $20 million euros in severe violation cases, is quite a blow to companies outside the advertising oligopoly (Amazon, Google, and Facebook). As options have narrowed in ad-tech providers (not necessarily vendors), advertisers have invested more heavily into the large providers who can absorb compliance costs. After all, who wants to take any chances with that much money at stake?
Primary concerns hitting advertisers who use Google products include:
- Remarketing data
- Conversion event data
- Customer match (CM) data
- Remarketing Lists for search ads
These areas are impacted due to GDPR’s push for greater attention to first party-data (i.e. personally identifiable information, such as name or email).
As a simplification, to meet requirements you must disclose what data you’re collecting and what you’ll be using it for. You can also only store the data as needed for your business objective, and you’re responsible for data loss and theft. If you are going to be exchanging data with third parties, such as advertisers who will use such information to later target the user, then you must disclose that as well.
It’s easy to get enthralled by how technology facilitates our targeting efforts. But we don’t want to get so swept away that we forget the most important element of all: the user. It doesn’t matter if we can pinpoint people down to a shelf or personalize ads if doing so makes them never want to visit a shopping mall again.
Users’ willingness to share information correlates directly with the perceived value of giving that information away. In 2019, HERE Technologies conducted a study in 10 countries across the world and found that 76% of consumers were willing to share their location data with navigation and mapping services, public transport, taxis, and ride-hailing services. This finding isn’t surprising considering the utility of those services.
In The Manifest’s 2019 Location Tracking App Survey, 57% of people reported being comfortable with apps tracking their location. Moreover, 42% of people found location tracking apps convenient, while an additional 29% of people felt safer when apps knew their location. Marketers should rejoice at the idea people looking to their phones as a safety vessel though. That means location tracking isn’t going anywhere.
In the end, people will sacrifice a little bit of privacy to save time and money. They do so, however, if the disclosure doesn’t inconvenience them further (i.e. receiving an annoying amount of notifications and then de-installing an app). Location services are a savior for the lone traveler needing directions to the nearest gas station, or the tourist who can’t make up their mind for a meal.
Therefore, getting users to opt-in to location services amounts to convincing them that this data makes their lives easier. Asking users to opt-in to location services is like offering a cookie consent form. Most people probably aren’t going to object to a banner offering to save their preferences and make their digital experience better. So why should location services be any different?
- Data management will require increasingly more vigilance as targeting becomes more granular
- Inaccuracies in reporting systems are the greatest barrier to location data flourishing
- Consumer privacy regulations make advertisers more reliant on the the largest Internet providers, but the restrictions should also save time in targeting relevant users
- Location data is most effective when placed in context of the buyer’s journey
- Keep messaging user-centric to ensure or optimize user opt-in
We know data management, particularly for location, is difficult. As you expand your business, it becomes increasingly more necessary to keep track of consumer behavioral patterns in a geographic context. If you’re struggling to maximize your location data or want to refine your practices, feel free to email or give us a call. We’ll make your data work better for you.
Co-author: Marisa Sloan