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Location-based targeting pays off

News, 12 October 2016

SAN FRANCISCO: Location-based audience targeting is not only more accurate than traditional designated-market-area targeting in mobile but it also drives more foot traffic and is more cost effective, new research suggests.

IPG Media Lab, the creative technology arm of IPG Mediabrands, partnered with Thinknear, a location-based marketing platform, and retailer Office Depot, to conduct a quantitative media trial aimed at determining the true value of location-based audience targeting (LBA).

This uses opt-in mobile location data to help marketers understand where individual consumers live, work, shop and play, while alternatives like designated-market-area targeting (DMA) are more broad-based and rely on exclusive geographical areas.

The research findings, which appear in Harnessing the Power of Location, indicated that foot traffic increased 29% with LBA targeting compared to a standard ad – significantly higher than the industry norm of a 3.1% lift in store visits.

And this rose to 31% when the LBA targeting was paired with a dynamic location-aware advertisement.

Using this combination, intent to visit the store increased 116% among key audience segments; generic DMA targeting, however, had no measurable impact, the research said.

Consumers reached through LBA targeting were 10% more likely to fit into the brand's key psychographic target and this approach was also more effective at reaching potential new customers, such as those who purchased office supplies at rival outlets.

LBA targeting was found to be highly cost effective as well, as the research reported a $1.02 cost per incremental store visit compared to the general industry benchmark of $6.39.

"It makes sense that the more we can refine our audience targeting to speak to the needs of individuals, not broad categories, the more positive impact we'll see for advertisers, including both digital and brick and mortar businesses," said Kara Manatt, SVP, Intelligence Solutions & Strategy at IPG Media Lab.

"What's highly encouraging is that we're proving there are ways to both improve performance but to also do so at a much cheaper rate."

Data sourced from IPG Media Lab; additional content by Warc staff