What is location-based advertising (LBA)?

What is location-based advertising (LBA)?


Imagine you are passing by a mall and you get a message of 40% off on H&M clothes. The probability of you visiting the store becomes much higher than you being at home or some other place. Thanks to location, advertising at the right place and moment is possible now. All this is done while you share your location with the apps in your mobiles.

With the increasing use of smart devices, especially smartphones, location-based advertising (LBA) has gained momentum and popularity amongst marketers in leaps and bounds.

It has opened doors to a vast array of opportunities for advertisers to personalize their messages to people based on their current location in real time. Using a person’s location data, obtained from their mobile device, advertisers can send different messages to people depending on where they are.

location-based advertisingWhat are the advantages of LBA?

It has been well established that brands due to complexities involved in ad targeting, challenges around reaching a sizable audience prefer using location-based advertising. Some of the key advantages of LBA are:

Personal touch: As mentioned above, personalized messages draw much more attention and engagement as compared to generic advertising and location play a vital role in it. It not only brings relevance to the ads, but also helps in tracking the demand. So, an ad will be much more effective if it has been calibrated according to the interest of a customer. Location data enables you to do that. You can make offers based on where people are.

Perfect time: One of the major benefits of LBA is the perfect timing of the ads. As location data is served in real time, there is an opportunity for brands to target people at precise moments. A very good example is of how retail brands are using beacons technology to track the movement of people passing by their stores.

Apple had introduced Bluetooth beacons to the market in 2013. Beacons are small, battery-operated wireless devices that transmit Bluetooth signals to nearby smartphones. Big brands take full advantage of this technology to attract customers by sending personalized messages.

Target audience: With more people being smartphones savvy, it has become imperative for marketers to target customers on mobile. While in the past generic display ads still worked, now people are more receptive to ads that come on the digital medium. According to IAB UK study carried out last year, 46% of people say they use ad blockers because ads are ‘often irrelevant’. That means with the amount of data available for marketers there is no excuse for not targeting your messages.

However if ads are targeted well, there will be less probability of getting blocked. Localised ads provide a natural opportunity for targeting because people in different geographical locations behave differently, or at least have their own unique quirks.

While marketers can avail plenty of benefits from LBA, they are few disadvantages that generally the customers have to bear.

What are the disadvantages of LBA?

The issue that tops the list amongst disadvantages of LBA is the privacy issue. Mobile marketers need to understand and respect the fact that users would like their privacy online. So they should only indulge in promotional activity if they have the user’s permission for it.

The second challenge is small screen size of smartphones. The mobile phone usually comes with a small screen and no mouse. This means that navigation on a mobile phone may get difficult for the user, even if it has a touchscreen. In such a case, most ads may go untouched, as the user may find it too tedious to look in detail through each one of them. Besides, mobile platforms vastly differ from each other, using different OS’ and browsers. Hence creating one campaign for all of them can get difficult.

Many companies indulge in providing discounts or coupons on various products as part of advertising gimmick based on the location of customers. While the customers can be easily be misled by these advertisements, there is a equal pressure on businesses to optimize these discounts so that money isn’t lost when customers redeem them.

So, what is the solution? Blockchain can be of major help. In my next blog I would talk about how Blockchain technology can help LBA.

Also Read: BI and Spatial Analytics: A Collaboration We Can’t Do Without