Locations Are Pointing the Way Forward After Third-Party Cookies

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With location-enabled mobile phones increasingly prevalent across the globe, the market size for location-based services has been projected to grow to over $180 billion by 2027. With those numbers, you would think it’s impossible that locations could be under-hyped, right? Think again. There is a whole new dimension to locations that has yet to be explored and, in light of recent changes to the way location data must be obtained and handled, this might actually be the perfect time to start mapping more innovative marketing possibilities.

When the market discovered the potential of mobile user engagement combined with the real-time context of physical location, location-based services became an exciting, though still somewhat niche, part of the digital marketing puzzle. Now, as consumers around the world gradually emerge from lockdowns, there is even greater desperation to reconnect with customers as they rediscover their mobility.

Location-based services typically entail setting up “geofences” around certain locations or areas and triggering the system when a user’s location has been identified while “crossing the fence.” This is useful for triggering “welcome” messages, promotions for businesses in the area, or alerts regarding products and services that are locally available. Location-based approaches can also be used to impact the user experience itself, for example, by showcasing products that are contextual to the area (think of a retail chain offering beach wear in every location that’s near the ocean). Companies that are able to apply a certain level of personalization can take that a step further by being even more precise (for example, offering beach wear based on gender, age, or brand preference). 

This is an effective way to engage users, but it comes with one glaring drawback: In most cases, the user’s location needs to be shared, in real-time, across the internet and stored somewhere on a server. Over time, this has become an increasingly tougher proposition for consumers, regulators, and compliance-minded board members to accept. Doubt has crept in with regard to this exciting marketing technology, creating headwinds when a more promising horizon is within reach.

Taking locations to the next level

The full potential of locations hasn’t been tapped yet. Smartphone-based location technology isn’t just about where users are; it can also tell us a lot about who they are. Which shops do they visit, in which part of town do they spend their time, how long is their commute, and how much exercise do they get? The market is being forced to recover from an addiction to third-party data, and there is a scramble to fill the void left by the expected demise of intrusive digital trackers (like the IDFA) and third-party cookies. Being able to combine first-party data gleaned from user interactions with insights based on first-party data about actual real-world behavior can boost the effectiveness of a marketing campaign. Since this data is constantly refreshed, it provides an accurate, multi-dimensional reflection of what the user is currently interested in, rather than focusing on an exclusively digital past. For many apps, this can mean that for the first time, customers can be engaged in the context of, for example, their physical activity, local weather conditions, or mobility preferences.

For location-based approaches to be viable, marketers must give first-party data the protection it deserves. While some users are very casual about their personal data, many will hesitate to share detailed information of their whereabouts, even with the brands they trust the most. And rightly so. 

So let’s avoid sharing location data (and any other type of personal data). We can keep it on the phone and analyze it locally, thereby keeping it inaccessible to prying eyes. This means taking all the processing that is mostly done today in the cloud and shifting that heavy lifting to the device itself. Thanks to developments in Edge AI, embedding such capabilities in a mobile app is not only a possible solution — it’s the most logical one. 

When marketers store and analyze location data on the device, they reap the benefits of location-based marketing without running afoul of privacy standards. They are able to marry real-world insights with other types of data such as app behavior and online interactions while keeping all the consumer’s data on their phone. In this way, locations augment any hyper-personalized strategy (the retail chain can now offer beach wear to those who actually go to the beach, golf fashion for those who enjoy it, and party outfits to those who spend their nights out dancing).  

At Anagog, we have found that introducing artificial intelligence on the phone also makes location detection much more scalable. Rather than trying to map out, in advance, all the places that your users might visit, the locations of tens of thousands of POI (points-of-interest) are loaded onto the device, and all visits are identified locally. The bonus is that this can help win over more hesitant users; instead of discovering that their locations have been identified, they can review and edit their visits by themselves at any time since they literally hold them in their hands. This approach ticks all the boxes for regulators, too, since personal location data is not handled, stored, or shared by anyone outside of the phone.

Unlocking Online-to-Offline Opportunities with Locations

Post-Covid marketing strategies will gravitate toward hybrid experiences, those that seamlessly merge online and offline elements of the customer journey. With crackdowns on digital tracking and the stronger enforcement of privacy measures, companies who are able to expand their toolkit by making use of location data effectively, scalably, and ethically will enjoy a clear advantage. It’s time for companies to take a second look at how using location data the right way can position them exactly where their customers need them to be.

Sefy Ariely is head of marketing at Anagog.