Can location data be the powerhouse of digital advertising?

One thing modern marketers aren’t short of is user data. All the efforts over the past few years to encourage users to hand over their user data – just in time for GDPR to potentially upend those advantages – have paid dividends. It’s been true for a few years now that accurate user data is effectively just table stakes for any marketer worth their salt, and media companies have been espousing the value of their first-party data even more vehemently since issues of fraud have become table talk.

Location data and digital advertising
Take me to your Lidl

But for marketers in particular, there has been much investment in data and less in a framework that can tie all their data points together in an actionable way. It’s been very possible to use reams of user data to target them with offers and ads in their email inboxes, and even to prevent them from taking actions like cancelling subscriptions, but in terms of actually using it to boost the effectiveness of digital marketing, there’s always been one step missing.

Now it’s looking increasingly like location intelligence data, paired with real-time information about everything from traffic and weather and combined with that existing user data, might be used to deliver on the promise of mobile advertising.

To begin with, it’s important to note that location data has been used successfully for years to improve customer experience in-stores, in transit, and in event spaces. Only this year TFL undertook a scheme to track passengers on the London Underground using its Wi-Fi beacons (despite the technical problems that presents due to the age of the tunnels) and, on July 8, formally announced that the scheme will be more widely rolled out. In addition to learning some fascinating stats about how people choose to get from station to station, the Financial Times’ Martin Coulter points out that such data could allow TFL to price advertising based on area of heaviest footfall, which potentially has huge commercial implications for the organisation.

The benefits for advertisers are obvious: people have proven to be more likely to make a purchase if shown a local product in search, which has yet to be truly weaponised outside of small-scale trials. Small wonder then that, per the LSA Market Landscape Report, spend on location-targeted mobile advertising is set to reach $32 billion by 2021. Paired with the existing masses of customer data to which advertisers have access, and particularly in light of the rollout of new connected vehicles, that means location intelligence can be used to effectively activate customers in a way that hasn’t been possible to date.

Beyond that, location data can be used to defend an existing customer base, or even to attract a new one. The Cannes Lions award-winning Whopper Detour campaign, which sent Burger King customers who ventured within a set distance of a McDonalds store an offer for a discount Whopper, has variously been described as a vision of marketing’s future and an act of “trolling” par excellence.

It’s important to note that, while Burger King gets the credit, hotel apps have been using location data to offer discounts for a while.

There are, however, some potential roadblocks in the way of location intelligence’s rise to the top of everyone’s priorities. For one thing, while apps like Burger King’s or hotel apps make the value exchange of its user data for offers clear, that isn’t the case for many other sources of user location data. It also runs into the thorny issues of user privacy and data retention, which are only going to become more prominent over the next few years.

There’s a fair way to go, and some new tech iterations required, before location data is widely available in a useable and tangible way for all marketers. It is, however, already proving to be a uniquely powerful tool, and one that can finally turn the vast reams of user data to which advertisers have access into an actionable source of revenue.

Chris Sutcliffe

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Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work across the media, information, technology, communications and entertainment sectors, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.