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Location-Based Advertising: Privacy

  |  December 1, 2011   |  Comments   |  

Advertisers must work with service providers to develop a customer-centric privacy plan in location marketing campaigns. Second in a three-part series.

There are clear and measurable propositions for advertisers to consider location-based advertising (LBA) as a medium to reach the increasingly out-of-home and mobile customers. However, advertisers must be mindful of the medium's intrusiveness, since most wireless users carry their wireless phones throughout the day. Advertisers must also respect the consumer's right to decline receiving such messages.

Privacy issues surrounding location-based advertising and facing wireless users can be separated into two main categories:


Over time, historical location data is collected and stored in databases; this information may enable advertisers to deliver helpful, location-specific information to wireless users. However, this information also enables a service provider to build a very detailed and invasive dossier of wireless user's travel patterns, movements, and other habits.

Unanticipated Incoming Messages

The second issue is related to the real-time location data that would be used to send advertising messages to the wireless user supposedly at the right place to make the message relevant, which could be very intrusive if such advertising is unanticipated by the user.

To address these issues, advertisers should work with location-based advertising service providers to ensure the following parameters are met before beginning any location-related campaigns:

Users Must Opt In to Receive Incoming Messages

The legalistic approach to mitigate users' likely frustrations as they receive unanticipated advertising messages is to ensure that they categorically accept to receive such messages. This is known as "opt-in" whereby mobile users willingly accept the option to receive the messages. For example:

  • A mobile user enters into the targeted zone where LBA messages are expected to be delivered by the advertiser will receive one non-chargeable SMS message.
  • This SMS message will request the subscriber to accept an LBA message from the advertiser (with clear description that it is non-chargeable).
  • The subscriber will indicate the intention to receive the proposed LBA message by replying a specified keyword to the designated shortcode.
  • Upon receiving the SMS reply from the mobile user, the intended LBA message will be sent to the opt-in subscriber.

Invariably, any mobile user who chooses not to reply within a fixed period of time or opt out from receiving LBA messages, will not receive any SMS from the advertiser.

Managing Users' Acceptability to Intrusive Messages

Since the objective of an LBA campaign is to deliver a marketing message near an actionable location where buyer behavior can be most immediately influenced, it is therefore important that the users' "buying psychology" is not negatively impacted by untimely LBA messages and risk non-conversion of a potential sale.

Thus, advertisers working with service providers must:

  • Have a clearly defined thought process behind the entry of the mobile users in targeted geographical locations.
  • Manage and control the sending of messages once the mobile user enters the targeted location.

This is described in the following sections:

  1. Mobile Users Entering a Targeted Geographical Location
    • A target zone is being defined (e.g., Orchard Road in Singapore, Chatuchak Weekend Market in Bangkok, or The Shilin Night Market in Taipei).
    • As a user enters the target zone (physically crosses the boundary), it triggers a signallng message to the LBA system.
    • The LBA system captures both the location and the mobile ID and then passes the data to the application server (hardware that controls how the messages are to be sent to the identified mobile user).
    • The application server checks the data against a set of business rules and decides whether or not to send the designated LBA message to the mobile user.
    • Such business rules will include send messages only to users that are still detectable in the designated zone after a variable period of time (this is to prevent the LBA application to send SMS to users moving through the designated zone in fast-moving vehicles).
    • As a mobile user exits the target zone (and depending on the business rules), the application server may send an LBA message to the departing user:
  2. Controlling Messages Sent to the Mobile User in the Targeted Location. A typical mobile user entering the zone is likely to have one of the following characteristics:
    • User not engaged in conversation on the mobile handset.
      • User enters the designated zone with the phone switched on but not necessarily talking on the phone.
      • User will get a welcome SMS, which will be followed by invitation for promotional SMS (i.e., LBA message).
      • User leaves the designated zone with phone switched on but not necessarily talking on the phone.
      • A short while after departing from zone, user receives a goodbye message.
    • User engaged in conversation on mobile handset.
      • Any user entering the designated zone while talking on the phone will receive a SMS as soon as the conversation ends requesting for the right to send a promotional message (i.e., LBA message).
      • Once user leaves the designated zone with mobile phone switched on and engaged in conversation, user will get a goodbye (or "follow-up") message a short while after departing from the zone.

It may sound complex for some advertisers (and presumably service providers as well), but the principles behind the thought process is to ensure that the mobile receiver (i.e., target customer) remains the focus of any LBA service. Having the latest LBA technology is a great start, but it is how an advertiser or service provider designs the service to minimize the service's intrusiveness and maximize the "influence" of the contextual message that is key to the success of LBA services.

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Darren Yan

With more than 16 years of experience in mobile, digital media/advertising, and e-commerce, Darren has successfully developed and launched pioneering mobile Internet initiatives such as subscription-based mobile news services, location-based advertising, behavioral targeting using consumer analytics in Singapore Press Holdings, SingTel, Cisco Systems, and DBS.

At InterContinental Hotels Group (IHG), Darren will serve as the regional subject matter expert on mobile and drive overall utilization of mobile to increase revenue and engagement in Asia, Middle East and Africa (AMEA). His mandate includes developing, implementing, and managing mobile marketing strategies to generate greater brand awareness and revenue through owned, paid, and earned media.

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