All the smartphones that we buy nowadays have a GPS technology that is capable of locating our exact position on this planet. Moreover, “with two-thirds of the world’s population now connected by mobile devices, location data has emerged as one of the most powerful and important data sources” (Czarny, 2018). Marketing is using this feature our smartphones possess to target customers on specific locations. Literally, they can see where we are, how often we visit a certain place, how much time we stay at that place and when do we leave the place (Grevey, 2014). We are not talking about cyber-criminals We are talking about retailers.
So, what exactly is geolocation marketing? And how do brands use this? Basically, it is a personalized message sent from advertisers to potential customers based on their current location and in real time. The information is gathered from the data that mobile devices provide. It is, therefore, used by brands in several ways. For example, imagine if you are on a trekking trip on the outskirts of London and you get a message from GAP mentioning you have 25% off new season shorts. There is not a GAP store within hundreds of miles away, therefore, it wouldn’t be relevant to receive this message! On the other hand, if you are walking in down Oxford Street and you get a personalized message from the GAP store on that street, you are therefore more likely to pay more attention to it (Simpson, 2016). This is geo-location marketing.
There are different ways in which businesses around the world can use geo-location marketing. Barney’s in New York, for example, is using beacons, which are small sensors located in the stores that track foot traffic as well as browsing time. This allows them to understand how customers are shopping (Lewin, 2017), especially how much time they are spending shopping, allowing the branch to influence in their merchandising strategies. Another technique could be using predictive analysis. McDonald’s in Chicago, U.S.A, uses this in many locations. The way it works is that by implementing algorithms, the store can predict the location or possible activity based on previous data collected (Lewin, 2017). This way, the store can predict how many footfalls on average they will have on a certain day.
However, according to experts, the most effective way to use this type of marketing is called geofencing. This allows the brands to choose a specific area around the branch and send push notifications to people they choose within that radius (eg. ½ mile radius) (Greene, 2018). In 2014, Starbucks decided to implement this strategy, in which they sent personalized messages to customers that were near a certain branch. For example, if a potential customer was walking through Baker Street, they would send a message instructing there is one branch in the tube station and before arriving to Oxford Street. The results were very effective! According to Starbucks, the increase of likelihood of people entering a store was of 100% after seeing the ad (Simpson, 2016). This also allows the branch to promote specific products. For examples, their new ice-teas during summer time or hot chocolate during Christmas season.
More and more companies are investing in geo-location. In fact, just in the U.S.A, companies spent USD 17.1 billion on this technology, and this number is expected to increase to USD 38.7 billion in 2022 (Czarny, 2018). The reason for this increase is because companies are starting to look for other alternatives rather than only using Facebook and Google for online advertisement. According to historic data, using geo-location strategies has been positive in terms or revenue for several companies. According to a report made by factual (2017): “More than 8 out of 10 marketers say location-based advertising and marketing produced growth in their customer base (85%), higher response rates (83%), and higher customer engagement (83%)”. This also allows the brands to gather more knowledge about their customers’ needs and interests, which could be translated to an increase of revenue, by personalizing targeted messages to specific needs, which are then converted to transactions.
However… not everyone is happy with the fact that companies know where we are, for how long, how often, etc. this popular method has become a concern for many customers regarding their personal privacy. In fact, as a study conducted by Punchtab (Digital marketing platform), more than 50% of participants (+1150) didn’t like the fact that retailers were following them at all (Grevey, 2014), and the ones who were willing open to tracking by retailers, wanted something in return for their location data. Such ‘rewards’ could be in the form of coupons or discounts in the retail stores. Personally, I think that what is most concerning is that most of us aren’t aware that we are being tracked by some (or many) retailers in this exact minute. It is true, however, that with all this new data protection regulations, companies are more careful and are disclosing in their ‘Terms & Conditions’ that they are tracking out locations. At the same time, a study conducted by Deloitte, mentions that 90% of consumers accept legal terms and conditions without reading them (Cakebread, 2017), meaning that customers are also partly accountable for giving the retail brands permission to be tracked.
If you feel you are being followed and won’t be able to sleep tonight, take a deep breath and relax, there are solutions for this. You could just delete the retail apps you have on your smartphone or download other that serve to block mobile tracking (such as Xprivacy, Ghostery, AVG, etc.). You could also take a couple minutes and read the ‘Terms & Conditions’ pages and see if they are actually tracking you or not. It is true that most people, specially millennials, do not like being followed by brands (Dubos, 2016), as they want to control who they are giving their information to, and what they are doing with it. Nonetheless, there is also a paradox, in which some of the consumers are willing to give this information in return of something in exchange. The truth is that geo-location marketing strategies will continues to increase globally, and it’s up to you to decide if you are willing to provide these stores with your information or not. The question you need to ask yourself is: Do you really feel comfortable knowing that other brands know where you are?
· Brian Czarny, 2018. The Factual Location Based Marketing Point. [online] Available at: <https://www.factual.com/blog/factual-location-based-marketing-report//> [Accessed 15 September 2018].
· Caroline Cakebread, 2017. You’re not alone, no one reads terms and service agreements. [online] Available at: http://uk.businessinsider.com/deloitte-study-91-percent-agree-terms-of-service-without-reading-2017-11> [Accessed 15 September 2018].
Chloe Dubos, 2016. Consumers’ concerns around the issue of geolocation systems for mobile marketing.[online] Available at: <https://esource.dbs.ie/bitstream/handle/10788/3085/ba_dubos%20le%20cadre_c_2016.pdf?sequence=1&isAllowed=y> [Accessed 15September2018].
· Jack Simpson, 2016. What is location-based advertising & why is it the next big thing?. [online] Available at: https://econsultancy.com/what-is-location-based-advertising-why-is-it-the-next-big-thing/> [Accessed 15 September 2018].
· Kate Lewin, 2017. How brands are using Geolocation Marketing. [online] Available at: <https://creativepool.com/magazine/technology/how-brands-are-using-geolocation-marketing.13034> [Accessed 15 September 2018].
· Morgan Grevey, 2014. Location Based Marketing: Ethics and privacy concerns. [online] Available at: <https://www.csid.com/2014/08/location-based-marketing-ethics-and-privacy-concerns/ > [Accessed 15 September 2018].
· Victoria Greene, 2018. Why Geolocation Marketing Is Something Your Brand Should Know About. [online] Available at: <https://www.hellodigital.marketing/learn/why-geolocation-is-important-for-your-brand/> [Accessed 15 September 2018].