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A Quarter Of Global Marketing Budgets To Be Devoted To Location

Meanwhile, over 50 percent of companies are currently using location-based data to target their customers, The LBMA said at its Retail Loco event at SxSW this weekend.

Spending on location-business services for advertising and customer relationship management are leading to a massive shift in budgeting priorities by leading brands, a survey of 500 marketing decision-makers from around the world suggests.

The report, which was released by The LBMA during its Retail Loco conference at SxSW this past weekend, found that 25 percent of marketing budgets are spent on location-based marketing.

At the same time, over 50 percent of brands are currently using location-based data to target their customers to drive connected consumers from mobile search or ad views to the point of purchase in a physical store.

Location Validation

The LBMA’s executive survey offers additional amplification to the recent BIA/Kelsey forecast that said geotargeted ad sales will to rise from $12.4 billion in 2016 to $32.4 billion in 2021. 

Among The LBMA’s main findings:

  • Company usage of location-based marketing is on the rise in most countries — 5 percent increase in the US from 2016 to 2017, 6 percent in Canada, 7 percent in the UK, and 3 percent in Singapore. Only Germany saw a 3 percent decrease in location-based marketing usage.
  •  Executives agree LBM is an important business issue and its importance will increase in 2017.
  • Social Location Services and Location Based Advertising were the top areas of interest in 2016 and will continue to be so in 2017.
  • Location-Based technology will increasingly be used for customer service and other non-marketing initiatives.

 “Our report validates the importance and increased adoption of LBM,”Asif Khan, The LBMA’s founder and president, said in a statement. “The future is bright as we see an overall increase in LBM usage globally. We are so glad to share such valuable insights into the industry with our members, the community at SxSW and beyond.”

Beyond Ad Targeting

There are several converging threads that have led to the accelerated shift in spending and interest among marketing executives’ embrace of location technology.

To start, the growth of mobile as consumers’ main media device has unlocked online-to-offline marketing programs with insights grounded by smartphones’ geo-data is the most obvious reason for the change in the minds of brands.

On top of that, the rise of the Internet of Things and the connected home featuring voice-activated digital assistants has been the other main driver of the spending shift to location. The use of voice and machine learning has demonstrated an almost instant appeal to consumers who initially marveled and now expect direct, personal answers to users’ queries, as opposed to offering a list of choices based on what has attracted the most clicks on a PC.

Here too, location is at the center of powering the artificial intelligence of these smart, virtual agents.

While location accuracy is still a problem for brands, the ability of methods from geofencing to the use of in-store sensors from beacons to connected lighting fixtures have also narrowed the connection from online to offline, and outdoor to indoor marketing.

The greater sense to both target someone in the moment their near or at a store, is matched by the analytics that can also understand and package consumer profiles for brands in a demonstrably more meaningful way than ever before.

Source: The LBMA

As such, many of those surveyed by The LBMA also noted their greater affinity for using location business services to promote their CRM programs, a notion that enterprise software providers from Salesforce to IBM to Intel to proximity marketing platforms like SITO Mobile have a adopted as part of their respective product offerings.

“This report proves that location data is of huge value to the world’s biggest advertisers. We are seeing a major increase in our deterministic proximity being used for enhanced attribution and targeting,” said Thomas Walle, CEO and co-founder of Unacast, the world’s largest network of proximity data. “The issue to date has been using it due to the fragmentation of the proximity industry. Unacast has cracked the code on how to effectively mirror the accuracy of online data collection in the real world. Deterministic proximity data provides not only a pervasive connection with the consumer, but also the conditions for a much deeper and more personal relationship with them. With our Real World Graph, marketers can understand their customers’ real world behavior and how they are contextually connected to physical locations with accuracy and relevancy.”

Proximity And Post-Beacon Marketing

Over the past three years, the use of beacons as a proximity marketing tool for brick-and-mortar businesses was propelled by the rollout of programs promoting their use by Apple, Google, and even Facebook.

But despite the continued use of beacons by mainstream retailers, there is a sense from the report that beacons’ future rise may be somewhat limited.

According to the LBMA, wifi and GPS are the most heavily deployed LBM technology — Germany and Singapore show more GPS technology deployment than other countries.

Also, countries plan to deploy more Near Field Communication (NFC) technology in 2017.

For example, in the US, just 16 percent of the survey respondents said that beacons were a priority for them last year, while 18 percent said it was a secondary interest in 2016.

Nevertheless, other indoor technologies like smart lighting and wifi remain fairly low as well.

Ultimately, the lack of creative use cases for sensors has tended to hamper adoption by brands, while consumers have tended to be largely unaware of beacons, while others regard the steps that need to be taken for it to work as too cumbersome (e.g., Bluetooth receiver must be set to on, a consumer must have previously opted in to accept push notifications from a marketer, while a branded app must be downloaded.)

But as the demands for more actionable online-to-offline uses starts to materialize, that could inspire still more spending by brands, and more interest in by consumers.

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.