“Location, location, location,” a saying that has been around in the real estate world since the 1920s, couldn’t be truer today when it comes to mobile-based apps. Location could be a huge opportunity for publishers and advertisers alike—but it could be one with significant challenges.
“It’s fascinating to think about the historical importance of location,” said Josh Crandall, principal analyst at Netpop Research. “As a proxy for the importance of location we can refer to that oft-quoted saying from the real estate industry, and you could say that location has been critically important to humankind ever since we settled down from a nomadic existence.”
Location is more important than ever because of the way that content is now being consumed. What was once just considered the “third screen”—after the TV and computer monitor—today mobile devices are increasingly becoming the way people connect with the outside world. U.S. adults now spend more than three hours, 35 minutes per day on mobile devices, and by next year mobile will surpass TV as the medium attracting the most minutes, according to research from eMarketer. Apps also account for 90 percent of internet time on smartphones, and location based apps are playing an increasing role as well.
“Location-based apps are being prominently leveraged for marketing purposes,” said Brock Berry, founder and CEO of AdCellerant. “For bigger brands, location-based data is a way to predict user behavior of their products.”
Location data can be used in various ways beyond just selling products, as the concept of “checking in” has become part of many mobile device users’ daily routine.
“It can be used to identify audiences based on real-world behaviors and movements—(such as) business travelers, fitness enthusiasts, McDonald’s loyalists,” said Greg Sterling, vice president for strategy and insights at the Local Search Association. “It can be used for attribution and to provide that ads generated store visits—even sales in many cases. It can be used for operational or competitive insights and to support business decision-making.”
For newspaper publishers this “localization” could present huge opportunities for advertisers.
“Most newspaper advertisers are local or in-market,” Sterling told E&P. “They would be interested to determine how effective ads in the paper or online are. Using location data for attribution could help. It might also help publishers do better audience profiling. People at this address have these behaviors, etc. These profiles would be rolled up into groups or categories.”
The Importance of Location
While location as it relates to the surroundings—proximity to a river, town center, good schools, etc.—has long been important, the role that location has with mobile apps is actually fairly new. We can thank the Cold War for making it possible.
According to Crandall, “Our Global Positioning System, or GPS, has been used by the U.S. military since 1960, but was only available to the public in (the year) 2000 after President Clinton ordered the military to stop scrambling the signals used by civilians.
“To contemplate that, location-based apps have only been around for 18 years is eye-opening. We’ve come so far in only 18 years. Today, the world gets from point A to point B via Google Maps, Waze and Apple Maps. People look to their smartphones for local restaurant recommendations and places to go many times a day. Social media apps add geo-locational information to photos and posts everywhere, and some are even designed for in-person meet-ups on the fly.”
And yet advertisers have known about the power of “place” for much longer than 20 years, so the past two decades has seen this convergence of the power of location with the ability to direct the ads literally to the palm of the hands.
“Out-of-home advertising, (such as) billboards, kiosks and bus stops have been part of the media plan since the beginning,” Crandall said. “GPS brings that power to an online audience that’s bigger and more influential than ever. Today, many advertisers are willing to pay a premium for impressions and clicks if they know the user is nearby rather than miles away. Advertisers value any chance they get to know more about their target, and location is a relatively easy and important signal.”
That ability to put such a narrow focus and zero in on users has already proven to be more effective than ads blasted to the masses.
“I’ve been surprised that newspaper publishers haven’t embraced more location-based apps,” said Lee Little, president and CEO of Bar-Z, a developer of mobile applications.
Little compared how ads can play into location-based news—such as how a story about Manhattan could be seen as a general interest piece, whereas a story more specifically about the Rockefeller Center district becomes one about location.
“That is hyperlocal, and this paradigm of hyperlocal hasn’t been embraced as much as could be,” he said. “Location-based advertising can thus become like a dining guide or shopping guide that is very specific to the user.”
The Revenue Stream of Localization
Location-based mobile apps have the potential to create greater revenue for content publishers as the ads can more effectively target their respective audience.
“Anything that adds precision also adds value,” said Seth Rogin, president and CEO of Nucleus Marketing Solutions. “That is a key value, and if the canvas for creativity is about data than location most certainly becomes an important part of this mix. Location gives you the ability to target people when they’re on the go and generate ads that are especially relevant to them at that exact moment.”
Content providers can utilize the apps to better target the audience and advertisers can thus better determine the results from a particular advertising effort.
“The ad platform may make money by doing a better job providing return on investment (ROI), and encouraging additional spending by marketers,” added Sterling. “Insight may indirectly generate revenue—better site selection, competitive decisions based on share of foot traffic, and so on.”
Geotargeting of business locations has become a norm with mobile apps, and it could become part of every ad campaign on mobile.
“I can’t imagine a mobile campaign that doesn’t make use of location,” said Rogin. “That is like painting the sky without the color blue.”
Challenges of Location-Based Apps
While location-based apps allow for greater targeting of ads, the ability to so closely monitor and track users is not without issues or concerns. Facebook and Google are just two examples of companies that have come under scrutiny for tracking users movements in a way that some would find in violation of personal privacy.
“This is a serious concern,” said Michael Priem, founder and CEO of Modern Impact, an analytics firm that works to improve ROI for programmatic advertising. “The first thing that publishers need to think about when utilizing location-based apps or any tracking technology is how it relates to privacy regulations such as CCPA.”
Understanding how these new privacy regulations fits in with location-based apps and other personal data is the key for content providers to ensure that they’re not violating any new laws.
“The most important thing to understand is that publishers could be violating personal identification privacy acts, based on how they are tracking users and whether personally identifiable information is blind to their user data,” Berry said. “For example, you can track the phone’s device ID, but you shouldn’t co-mingle that data with their personal information that you might have from subscriptions.”
This level of scrutiny around location-based apps on mobile devices is only going to increase. At the present it will be the makers of the operating systems—including Apple with its iOS or Google with its Android—that have to deal with these privacy concerns, said Berry.
Publishers should generally be in the clear for now, but too much personal information being co-mingled with a user’s location is what experts see as a bad mix.
“Unfortunately, the rise in GPS and location-aware devices and apps isn’t all positive,” said Crandall. “There aren’t many places left where our digital footprints aren’t tracked, logged and crunched in the cloud. Many say that this is erosion of our privacy, but I believe that there’s something more to it than the erosion of privacy. I’d say that it’s an erosion of our sense of personal freedom. When companies—and governments—are constantly tapping into your whereabouts, it’s hard to feel completely free to be frivolous and push the limit. With location tracking and video surveillance, there’s a sense that we’re always being watched.”
One way for content providers to reduce this sense that “Big Brother” might be watching is to limit how often location-targeted ads are sent out.
“The frequency is something very important to consider,” said Priem. “If you are sending out any ad too frequently, you will leave a bad taste with the customer, but with location-based ads this only becomes magnified.”
Newspaper publishers could risk breaching its contract of trust with its readers due to overly specific targeted ads.
“That element of trust doesn’t end at the newsroom door,” Rogin said. “The ad department has to maintain the same level of trust with the reader as the newsroom. We expect newspapers to be held to this higher standard, which is why it is important that publishers work with companies that are aggressively transparent in how we are using their data.”
Transparency may be just one aspect of it, but with location-based data—especially as new regulations regarding privacy are on the horizon—publishers will need to be proactive when it comes to informing the consumer how this data may be used.
“We have to communicate clearly to the consumer that we’re providing a service based on location monitoring without stalking them,” Priem said. “Too much personal information about their location freaks them out and rightfully so.”
Location Will Be the Future
The way that content has been consumed online will continue to be impacted by location-aware news apps, especially as the mobile devices overtake other platforms.
“Today, it’s all about global or hyperlocal trends,” said Crandall. “Anything in-between tends to fall through the cracks. The New York Times offers advertising for readers in California. News aggregators like Google, Apple and Yahoo also take location into consideration when deciding on which stories to present to their readers. People care more about content when it speaks to ‘their world’ or global stories that they can’t overlook.”
This is likely only to increase due to the adoption of smartphones, which went from a small minority of users a decade ago to the masses.
“As readers and revenues continue to shift online for newspapers, presenting content that is meaningful to readers is a key to retaining an audience,” Crandall said. “Hyperlocal content is one need where newspaper editors and staff writers have an edge over other content sources. Location offers an important signal around what content should be prioritized for different readers. Publishers must heed the importance of location when it comes to strategic initiatives or suffer the consequences.”
As with real estate, for publishers, it is about location.
“I can’t imagine a newspaper that hasn’t found success so far,” said Priem. “But even those that haven’t will soon have to embrace it.”
Case Study: The Success of Location
This past summer digital advertising firm AdCellerant called up the concept of “microproximity” to target motorcycle and all-terrain enthusiasts at certain sporting events, fairs and motorcycle shows before a large expo in Ohio. From nearly 3.4 million total impressions, the overall click-through-rate (CTR) was .14 percent, while there were at least 850 confirmed conversions from the tickets purchased receipt page.
“This targeting was done in real time, which is where microproximity becomes really important,” said AdCellerant account executive Fatima Manning. “We were able to present fresh messages to consumers not only in Ohio, but we found that we reached targets in Illinois and Pennsylvania as well.”
The audience data collected during that campaign can be used again for future expos, and the key to it was the microproximity.
“That involves using device’s IDs in mobile phones and targeting them in real time,” said Brock Berry, founder and CEO at AdCellerant. “The device ID lets us know where people had been, so we can provide a fresh message to those who were at the expo.”
Another campaign that the firm launched focused on those doing home remodeling and was aimed at consumers visiting big box home centers.
“Those people might be researching the best prices for flooring or new appliances,” said Berry. “Location-based advertising allows us to connect with those people as they’re ready to make a purchase, as they’re likely to be checking prices.”
From this campaign, the total impressions were nearly 4 million, which translated to about 5,700 total clicks with a CTR of .14 percent. While the percentage is small, the important takeaway is that this audience was more likely to be in the market for home improvement based on current and recent physical locations.
“This is about targeting those people specifically,” Berry said. “Targeting people who are already shopping is a great way to attract potential customers.”