Marketers have long talked about the promise of location-based marketing, but for years, employing it has been challenging.
That is quickly changing, however, and today numerous technologies are mature enough to be considered for campaigns. But which one is the best?
The most commonly-used technologies used to execute location-based marketing initiatives are beacons, WiFi hotspots, geofencing and location-awareness platforms. Let’s take a look at each.
One of the first technologies used to implement location-based marketing campaigns was the beacon. Beacons are Bluetooth-based low-energy hardware devices that are placed in a physical location, such as stores, that broadcast information to devices capable of receiving their messages.
Beacons are often used to alert customers to deals and special offers when they enter a store, but they can also be used in other ways, such as to deliver special experiences for valued customers.
Beacons are attractive because they are easy to install and relatively inexpensive. Thanks to platforms like Apple iBeacon, building beacon-based apps doesn’t have to be a huge technical undertaking.
However, beacons aren’t without some disadvantages. First, having to physical place hardware can be a hassle, especially for companies with lots of physical locations. And because beacons need to be used in conjunction with apps that are designed to work specifically with them, marketers need to develop a strategy that aims to convince customers to install their beacon-based apps on their smartphones – although some platforms, like Google’s, offer a way around this.
For small and mid-sized companies, this can be especially costly and challenging, which is why some use beacons offered by third parties like Facebook. While this addresses the app installation issue – marketers get to rely on another company’s massive install base – they can only use those beacons to deliver the kind of information the third party allows.
With more and more companies, particularly retailers, offering WiFi in their stores, it’s no surprise that marketers are increasingly look at WiFi hotspots as a channel through which location-based campaigns can be executed.
Companies like Turnstyle, which was acquired by Yelp in April, help brands set up WiFi hotspots that can be used to deliver marketing messages, such as offers and promotions, to customers who log on. WiFi hotspots can also be used to collect data, such as names and email addresses, from customers.
The greatest advantage of WiFi hotspots is that virtually every connected device, from smartphones to tablets to laptops, is capable of connecting to WiFi and there’s a fairly compelling hook that encourages individuals to connect: free and sometimes faster internet access.
The big disadvantage of using WiFi hotspots to engage in location-based marketing is that individuals have to connect to them to be reachable. While some kinds of stores, such as coffee shops, have lots of WiFi use, other kinds of physical locations, such as convenience stores and sit-down restaurants, are less likely to see significant WiFi usage, limiting reach.
Geofencing refers to the process of creating a virtual geographic boundary, typically using GPS. For example, a company could identify the GPS boundaries of its physical locations and build a mobile app that identifies when the user enters one of its boundaries (i.e. is inside or in close proximity to a store).
The primary advantages of geofencing are that, when GPS is used, no physical hardware needs to be installed in a location. And since most smartphones have GPS capabilities, unlike with beacons, marketers don’t have to worry that some customers won’t have a smartphone that doesn’t support their chosen platform.
But geofencing isn’t without its challenges.
For example, the process of defining geofences can take some effort, particularly when lots of physical locations exist. And defining precise GPS boundaries can sometimes be tricky when dealing with small physical locations or regions within physical locations, such as a specific section of a store.
Finally, as with beacons, marketers face the challenge of app adoption. If a company is not able to get individuals to install its app, it cannot reach them when they enter a geofenced area.
To help marketers and others make better use of location, a number of companies offer location-awareness platforms.
Placed, for example, which was recently acquired by Snapchat, not only has a database of 90 million locations that marketers can tap into; its platform also gives marketers the ability to target customers by attributes such as age, income, gender and education, as well as to segment customers into affinity groups.
And then there’s Foursquare’s Pilgrim SDK, which was unveiled earlier this year. Like Placed, Foursquare’s platform already has a database of locations – some 93 million to be exact – and it claims the quality of its data is unrivaled. “We don’t rely on satellite imagery or radius targeting because we have the most accurate map of phone sensor data built by real people so we don’t have to guess where phones and the people that carry them are going,” Foursquare boasts.
Using a platform like Placed or Pilgrim, companies don’t need to create their own geofences. Instead, they can outsource their location needs to companies that have invested years in building their own location tech and sourcing data from from real-world, first-party sources, including widely-used consumer apps.
As with beacons and home-grown geofencing solutions, however, location-awareness platforms don’t solve the app adoption challenge for marketers.
So which technology is the winner?
Surprise: there’s no one-size-fits-all answer to this question. At the end of the day, marketers should evaluate location-based marketing technologies based on the needs of their business and the campaigns they are developing.
That said, a few generalizations can be made.
Location-awareness platforms make home-grown geofencing a lot less attractive
The rise of sophisticated platforms like Placed or Pilgrim calls into question the future of homegrown GPS geofencing. For most companies building location-aware apps, defining GPS geographic boundaries for their physical locations is now akin to reinventing the wheel and home-grown geofencing efforts will rarely be able to match them for accuracy.
What’s more, most companies won’t be able to match the additional capabilities these platforms offer, such as rich location data and customer segmentation.
Beacons aren’t going anywhere
Despite the fact that beacons require physical hardware, their existing adoption suggests that they are here to stay. While getting consumers to install beacon-enabled apps can be challenging, the ability for marketers to tap into beacon offerings from companies like Facebook and Google can alleviate this.
WiFi is interesting, but might have a more limited life than some expect
Because of the ubiquity of WiFi, some have suggested that WiFi hotspots are a better location-marketing tool than beacons. But marketers should also consider that WiFi’s popularity could wane thanks to the rise of faster wireless networks and unlimited data plans. If that happens, it will be harder to reach customers through WiFi hotspots.
The recent move by Snapchat to add a location feature, Snap Map, to its offering opens up some interesting new possibilities in the location marketing space for marketers to reach and gather data on their audiences, and could potentially be a useful case study for location marketing success.
As long as consumers continue to navigate the world with a smartphone in one hand (or with a similar internet-enabled device), location marketing in its various forms will be a valuable method for bridging the gap between online and offline and helping to drive sales.