3 Trends Marketers Need to Know About Location-based Advertising

Location-based advertising has exploded in recent years as brick-and-mortar brands shift digital and traditional budgets to mobile.  The result has fueled the growth of one of the quickest moving sectors in an already chaotic ad tech industry where tactics, strategies and capabilities are changing as fast as the companies offering them.

These changes have implications for a host of stakeholders in the local marketing industry. Tectonic shifts in the way the advertising industry operates — namely, the growth of programmatic advertising — will alter the way advertising spending flows. Meanwhile, the development of more refined technology will alter the tactics used by companies to across the industry run campaigns.

At the Local Search Association’s Conference in Los Angeles Wednesday, executives from a handful of mobile marketing firms discussed some of the key shifts in location-based advertising and outlined the implications for publishers, brand marketers and small businesses.

Programmatic
The machines are taking over the advertising industry. Within a few years, a majority of desktop inventory will be bought through software, according to eMarketer, and programmatic already dominates mobile — the fastest growing category of the ad industry.

But the shift to programmatic isn’t just about creating efficiencies for large brands — it could materially change the way small businesses buy media, says Victor Wong, chief executive at PaperG, which sells dynamic creative software. Wong says that the ability to buy inventory through software effectively reduces the cost floors typically required by premium publishers, allowing a small business to potentially advertise on ESPN.

“The fact that transaction costs are so much lower, [the advertiser] can get just what he or she wants instead of buying wholesale,” said Wong during a panel Wednesday. “It has allowed small businesses to have the same technology as the big guys, but to pay only what they can afford.”

That shift — the ability to buy an ad without a formal relationship between advertiser and publisher — is starting to “democratize” the media business, says Wong.

Points to polygons
There’s an often-overlooked difference between location and place. A location is a point on a map — a latitude-and-longitude that often comes down to a nine digit number. But to understand what is at that location — say a mall or stadium — technology companies need to understand where one place ends and another begins. That’s a much more difficult, and time-consuming process.

Over the past few years, location technology companies have identified millions of places, creating zillions of polygons that represent everything from Best Buys to book stores. The ability to attribute a person to a place — not just location — has opened doors for technology companies to begin to flesh out a clear picture of the people behind the data.

“You create a gradual image of broad behaviors rather than making a massive assumption from a single data point,” said Tyler Bell, director of product at Factual, one of the largest location data startups. “All of these observed activities, where people are moving from one point to polygon, give you a holistic broad-based view of the user.”

Better creative
“When you can blur that line when consumers no longer realize that they are seeing a templated ad — that’s when things start to take off,” said Greg Crockart, CEO of North America at WPP-owned creative agency Candyspace. He was talking about the need for marketers to continue to push the creative used by firms on mobile.

Crockart says his agency has started to invest increasingly in mobile campaigns that tie into other forms of media as a way to buttress both experiences. For instance, the company ran a campaign for the the film Hot Tub Time Machine last year where it allowed users to digitally throw a beach ball from a mobile phone to a digital-out-of-home ad placed in Times Square.

We’re getting that double impact of hitting on both screens,” said Crockart. That’s another form of retargeting for us, and the data proves that if you hit people across multiple screens you will increase engagement.”

Steven Jacobs is Street Fight’s deputy editor.