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Mobile marketing: Why marketers need to use location based ads

Location-based advertising has long been one of the most hyped promises of GPS technology and the mobile marketing boom. It's hard not to see why: Imagine a retailer being able to identify when a customer is close to a store and instantly send that customer a custom offer tailored to preferences and purchase history. But so far, the concept hasn't lived up to billing, primarily because of concerns over consumer privacy and poorly-executed campaigns.

But a new study -- from Verve Mobile, a niche mobile advertising network -- on the use of location-based advertising by restaurants, suggests that marketers are finally catching up. According to the report, which tracked results of over 100 Verve mobile marketing campaigns between January 2012 and March 2013, "casual dining" merchants reported significant increases in click-through rates and sales after deploying location-based ads to nearby consumers. What, specifically, is driving those results?

Here are a few eye-openers from the report:

  • Advertising campaigns that used location data performed twice as well as those that didn't.
  • Foot traffic to a nearby restaurant more than tripled when location-targeted ads were used.
  • Ads made consumers 20 percent less likely to visit a competing restaurant.
  • Survey participants that used location-specific ads saw a 3 percent increase in click-through rates (compared to the average CTR of 0.1 percent).

One of the campaigns Verve highlighted in its report used location-specific data to tailor mobile marketing ads to provide interactive restaurant menus, a map and social media integration. Consumer engagement with the expandable ad lasted an average of 23 seconds and generated a 3.21 percent click-through rate (compared to the 0.1 percent average).So what are the broader takeaways for marketers?

  1. The consumer mindset is shifting. Consumers are getting more comfortable with the idea of being tracked by marketers -- and are increasingly eager to learn about special deals or a new product they can quickly check out.
  2. Improved targeting opens up new opportunities. The technology has advanced enough that marketers are getting better at targeting the right ads to the right consumers. This is happening because advertisers are moving away from "geo-fencing" (which involves bombarding users in the same area with the same ad regardless of whether the ad is relevant to the customer) and toward "geo-aware techniques" (which "send different messages to different users based on their position," according Business Insider). Google Now, Waze and Foursquare are just some of the players experimenting with new ways to help businesses make the most of location-based advertising.
  3. Consistent messaging and experience across channels. It's the same phenomenon that's happening throughout digital marketing: brands are getting smart about identifying potential customers and engaging them across all channels -- from email to display ads to mobile to social -- with messages that they welcome.

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