Location-Based Marketing – Taxonomy & Types

copyrights:Aleksander Buczkowski 2011-2012

Marketers have a wide range of possibilities to location enable a campaign based on campaign strategy, objectives and budget. When preparing a marketing strategy companies usually perform several steps: market segmentation, selection of target groups, positioning the product within the target group and preparing a value proposition to the target group. This process is revealing whether some sort of the location-based marketing is meeting the objectives of the marketing strategy of the organization. Depending on the needs of the organization there are several types of LBM:

  • Location Triggered advertisement
  • Location Based Social Media
  • Check-in Based Contests and Games
  • Local Search and Exploration Advertising
  • Location Branded Application
  • Proximity marketing
  • Icons Embedded in LBS Applications

Location Triggered advertisement

Location triggered advertisement is the first and most basic type of mobile LBM. It uses user location obtained by one of positioning technologies to provide messaging (text or multimedia message) or application alerts based on user preferences and opt-ins. These services usually require from users to opt-in or/and install application on a mobile device. Location Triggered Notifications can run on both smartphones and feature phones. The most common technology used in this kind of mobile marketing is geofencing – setting up a virtual boundary around a physical venue. Once opted-in, messages are delivered whenever a consumer enters inside the geofenced area. When applied to indoor LBM a distance to a venue can be at the level of several meters up to a few kilometres when used outdoor.

The advantage of text notifications is possibility to reach every mobile phone with access to cellular network. From the other hand the smartphone application alerts give opportunity for rich user interaction. The topic of location-based text messages will be discussed in details in a separate chapter due to its significant potential of market coverage. Possibilities of consumer targeting in smartphone applications is also significant. Number of active users is one of the most important factors for marketers to choose a particular advertising platform therefore Location-Based Social Networks with number of users often exceed one million are attractive in that matter.

Location Based Social Network Loopt allow users with smartphones to discover venues around them, broadcast their location to friends, and to ‘save money’ by displaying nearby promotions. Company partnered with Groupon –  internet service that features daily deals in a form of discounted gift certificates. Groupon deals are pushed in a form of alerts or notifications to opt-in users that are nearby a location of a deal. The application allows as well to purchase a coupon directly via mobile device.

Location Based Social Media

Presence in Location Based Social Media including services like Foursquare, Facebook Places or Twitter gives possibility for a two-way communication and direct contact with the customer. It can provide for business opportunity to create an interactive experience in-store that leverages the technology in the pocket of their visitors—an experience that will convert them from browsers to buyers and from one-time customers to loyal fans who act as advocates in both the real and virtual worlds. Due to the importance of this topic for marketing it will be discussed in details further in the thesis.

Check-in Based Contests and Games

This type of location Based Marketing reward users with virtual or/and tangible prizes for visiting particular locations and “checking in” or/and completing a particular tasks. Although many Location-Based Social Networks are using elements of gamification there are several dedicated platforms and specific marketing campaigns that differentiate both cases.

There are two types of location-based contest and/or games used for marketing purposes:

  • using existing location-based gaming platforms
  • using one or multiple location-based social media

Some organizations partner with location-based gaming platforms to engage customers. One of the most popular platforms is SCVNGR. This platform allow companies to create challenges to customers. User has to perform a certain task e.x. take a picture or eat particular dish to earn points,  which are redeemable for real-world rewards.

There are as well several examples of successful location-based marketing campaigns that were utilizing potential of Location-Based Social Media to engage customers into active interaction with the brand. One of the most well know marketing campaign of that type was organized in April 2010 in London by Jimmy Choo –  fashion house specializing in luxury shoes, designer bags, and accessories. The campaign called “To Catch a Choo”  was a treasure hunt engaging users on multiple platforms: Twitter, Facebook and Foursquare.

The concept was that a Jimmy Choo representative would place a pair of company’s sneakrs worth $500, take a picture, post it on the campaign twitter account, and finally check in with Foursquare in order for users to know the location of the sneakers. The person who found both the shoes and representative and approached him/her with the phrase “I’ve been following you’, won a pair of the sneakers.

By including the element of the verbal confirmation as well as the location tracking using Foursquare, Jimmy Choo’s was able to counter the issues of GPS unreliability and the system being gamed, which are especially important considerations when handing out high-value prizes.

Local Search and Exploration Advertising

Local Search Advertising is advertising for listings of local points of interest (merchant retailers, restaurants ect.) depending on a geographic position of a mobile device. There are many services that offer this kind of mobile service utilizing Location Based Services including CitySearch, Dex, YellowPages, Google Places, Yahoo Local, AroundMe ect. Recommendation services Yelp or Location Based Social Networks like Yelp and Foursquare have also functionality of local search. Sponsored listings may be included in the listing in some services.

Usually this kind of applications have functionality to perform a local search based on different categories of venues as well as browsing venues on the map. The aim of marketers is to promote their venue within the service. These kind of solutions started to utilize the concept of augmented reality in order to be more attractive for users.

Augmented reality Apps like Nokia City Lens is good example of exploration features:

Location Branded Application

The usage of LBS technology to enhance brand-owned mobile media services. Within this type of Location-Based Marketing there are two models used by organizations:

  • General applications (the weather channel)
  • Sponsored location-based App (SitOrSquat App by Charmin)
  • In-store value-adding applications (Maijer hipermarket chain)

Media brands are the most ardent supporters of the first group of apps.  One of the best examples here is Weather Channel App that has a functionality to display weather forecast at the location of the user.

The next great example is the SitOrSquat App which is the first Bathroom Finder which presents info on near by public restrooms. Additionally you get user reviews, hours of availability and even photos. It’s sponsored by Procter & Gamble Co.’s Charmin which is well-known brand in toilette paper industry. “Our goal is to connect Charmin with innovative conversations and solutions as a brand that understands the importance of bringing the best bathroom experience to consumers, even when they’re away from home,” explained Jacques Hagopian, Brand Manager for Charmin in the press release. “Helping people find a bathroom that is clean and comfortable is exactly what the SitOrSquat project is all about.” 

The other group of applications are branded LBS services that are adding-value to customers of a particular brand. Meijer – American hypermarket chain (in cooperation with Point Inside Inc.) released the “The Meijer Find-it” application. The aim of the application is to pinpoint the items that customer is looking for on an in-store map and navigate user to this location. The application allow to activate discount coupons ect.

Proximity marketing

Proximity marketing refers to localized wireless distribution of advertising content associated with a particular place. This kind of Location-Based Marketing is not linked with geographical coordinates but with a distance to short-range wireless technologies including Bluetooth, WiFi, NFC (Near Field Communication).

Due to several technological issues Bluetooth as well as WiFi proximity marketing although still used did not achieve a major market acceptance. The technology that seems to have a potential to be widely used is Near Field Communication. Interest in NFC has surged in 2011, primarily because Google recently joined a cadre of wireless carriers, banks, and credit card companies planning a number of ways to use the technology for mobile payments in the United States. NFC is a radio communication that is enabled when two devices or device and NFC chip are touching each other or are in a close proximity (usually no more than a few centimetres . This gives marketers a field to create whole new level of in-store interaction with a customer.

Icons Embedded in LBS Applications

Icons embedded in LBS applications is a sponsored embedded advertising. Sponsored embedded advertising that is displayed without a search in a form of icons or logos displayed in maps or augmented reality.