Babar Khan Javed
Sep 12, 2017

3 common misconceptions about location-based marketing

TIP SHEET: We look into three concerns about location-based marketing: that it gives false footfall numbers, fails to account for duplicate device impressions, and is only good for incremental sales.

3 common misconceptions about location-based marketing

As one of the world’s leading manufacturers of lingerie and underwear, Triumph International has always relied on bricks-and-mortar stores as a sales channel. With the growing adoption of online and mobile, the brand discovered a decline in the effectiveness of traditional marketing, and turned toward new methods of generating footfall.

In the lead up to Chinese New Year, Triumph Singapore tapped the APD Group to implement a location-based marketing campaign. By the conclusion of January 2017, the effort had directed more than 6,000 qualified shoppers toward outlets, resulting in a 27 percent in-store revenue lift and a 9:1 ratio of sales to marketing investment.

“This campaign demonstrated how we can reach our target, younger audience on mobile and on the go, and yet still drive customers to stores and attribute sales,” said Chris Miles, the head of Southeast Asia at Triumph. “Tying together our messaging with in-store promotions and our audience’s location made sure they were given a strong incentive to visit their nearest stores, and we saw great performance as a result.”

Despite success cases such as these, marketers remain apprehensive about location-based marketing as a tactic due to issues stemming from a lack of knowledge or misconceptions fueled by previous failures. There are three common misconceptions.

False footfalls

Brand marketers we spoke to showed concern about the accuracy of beacon technology in distinguishing between footfall that actually walks into a store versus foot traffic that walks past the store.

Weak sensors have made this error in the past, and it is a valid concern for two reasons. The first is that the success of a tactic is gauged by the number of shoppers against the number of attracted walk-ins. So if the sensors count window shoppers as footfall, the ratio between buyer and browser looks worse. The other reason is that operationally, retail locations may over staff an outlet based on the data collected, which in turn wastes resources.

“By geofencing individual stores, we can track when a member of the audience visits with a high degree of accuracy,” shared Tom Jones-Barlow, the media director for APD Group in Southeast Asia. “Not only that, but we are aware that by definition, if we’re using proximity as a part of our location targeting, then there’s the argument these customers could be visiting the store anyway, and the ad we deliver has no actual influence.”

A campaign planner can track audience members who have seen the ad and those that haven’t as well, which results in a control group for either data set, Jones-Barlow said. This allows a customer to learn the uplift resulting from mobile ads viewed.

Jeremy Sigel, the global director of partnerships at Essence Digital, asserted that the type of signals location-based media companies are leveraging (such as beacons, WiFi, GPS, cell data) have a lot to do with accuracy in distinguishing between actual footfall and people passing by the store.

Duplicate device impressions

Another valid concern from brand marketers concerns cost of customer acquisition and clickthrough rates.

First, there's a concern that a mobile ad will be shown to a unique person on two devices or more, wasting the impression spend. A second concern is that sensors will count two people entering a store, particularly if a shopper has two devices on hand. So is cross-device measurement impossible? Jones-Barlow said marketers need to be imaginative and use some assumptions.

“We know through our campaign how many customers we drove to the store,” he said, “but we don’t have any way to connect that to the store’s point-of-sale system, or their footfall counter at the front door, let alone tracking a single user from mobile ad, to store visit, to purchase.”

Armed with an understanding of what proportion of visitors make a purchase, his team tracks the average basket value during the two weeks of the Chinese New Year campaign for Triumph. “So with a little bit of lateral thinking you can suddenly give a very real return on investment, and brands can finally unlock their budgets for digital and mobile,” he said.

Brand marketers need to work with companies such as OpenDNA that can match device IDs to households and individuals. While Facebook, Oath, and Google can track users across home-based devices and mobile devices, they are confined to the ads served on their own platforms.

Sales equals effectiveness

Not all agencies and solutions are created equal, but brand marketers expect every vendor to guarantee or promise a return on investment as the baseline for every deal. This is because sales are often the only measure of success with location-based marketing.

After deploying a location-based campaign for Nike, the team at MWM Studioz reverted with data points that added more value for the client than sales. “We were able to uncover unseen problems with regards to visual merchandising, the visibility of in-store promotions, and gaps in customer service,” shared Danish Ayub, chief executive officer at MWM Studioz.

This is similar to how Disney World uses location-based data gathered from MagicBands to determine the user experience for visitors navigating its park. This, in turn, provides the park planners a blueprint for park design and sign placement.

“The audience has outpaced marketers, and that’s a reality that needs to be acknowledged,” Jones-Barlow insisted. “Right time, right person and the right place has become a cliché, but now right place can have that meaning.”

According to Jones-Barlow, this goes beyond simply finding somebody near a store and delivering them an ad. He hopes that as more marketers start experimenting with location, it will “helps us make advertising better again.”

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